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THE WEEK AHEAD: Pressure on AOL, Microsoft to lift spirits

The only thing missing from this week's collapse on Wall Street was a healthy dose of panic. Yes, inflation seems to be an issue, but with two more weeks of heavy earnings reports on the horizon there's every reason to expect a recovery.

For the week the Dow Jones industrial average plunged 630 points to close at 10,019.71, its largest one-week decline since 1987. The Nasdaq composite fell 154 points for the week to end at 2,731.79.

Since so much of what transpires in the market is psychological, the fact that the Dow dipped below the 10,000-point mark Friday is less than auspicious.

The main culprits for this week's slide were the usual suspects: Fed Chairman Alan Greenspan's typically gloomy quips and the specter of rising inflation.

The bears were given further ammunition Friday when the Producer Price Index report for September was released. Those higher-than-expected figures ignited unbridled selling across the board.

The PPI jumped 1.1 percent in September, its biggest rise since a jump in September 1990. The "core" PPI, which excludes the volatile prices of food and energy, rose 0.8 percent.

All this pessimism despite stronger-than-expected earnings reports from the likes of Boeing, Apple Computer and Sun Microsystems. Indeed, Intel did miss estimates this quarter, but it had little or no effect on the leading semiconductor stocks.

Not surprisingly, overvalued Internet issues were roughed up.

``(Internet stocks) are very sensitive to negative comments from someone like Greenspan," said Conley Turner, an analyst at Wall Street Strategies. "Right now there seems to be some bottom fishing among the more aggressive investors."

Looking ahead to next week, investors will have to contend with a flurry of earnings reports from key technology companies. If these numbers are as spectacular as most analysts expect, it could be just the tonic this oversold market needs.

  • Microsoft Corp. (Nasdaq: MSFT) will report it first-quarter earnings Tuesday with First Call consensus expecting a profit of 34 cents a share.

    Last quarter, Microsoft earned $2.2 billion, or 40 cents a share, on sales of $5.76 billion. That was up 39 percent from the fourth quarter of 1998.

    In its predictably cautious tone, Microsoft officials implied that to expect similar growth through fiscal 2000 would be foolhardy. Then again, Microsoft never seems to disappoint.

    Its shares closed off 2 5/8 to 88 1/16 Friday.

  • America Online Inc. (NYSE: AOL) will have a chance to spark renewed faith in its stock this week when it reports its first-quarter results.

    First Call consensus sees the world's largest online service provider earning 13 cents a share in the quarter.

    Last quarter, it raked in $156 million, or 13 cents a share, on sales of $1.4 billion.

    Expect AOL to announce that it has eclipsed the 18 million-subscriber mark as well as improved revenue and reach figures.

    AOL shares slid 5 3/4 to 109 1/4 Friday.

  • Onsale Inc. (Nasdaq: ONSL) will also give investors something to chew on when it reports its third-quarter results.

    First Call consensus expects it to lose 83 cents a share in the quarter, but like so many other 'Net stocks, analysts will be paying much closer attention to its top line growth.

    Onsale ended up 1 11/16 to 19 1/2 Friday.

    If those earnings don't grab your attention, you have plenty other to choose from next week including: Xircom, Compuware, Citrix Systems, Xilinx, PeopleSoft Ariba and uBid.