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Markets sway with earnings reports
©Associated Press
© St. Petersburg Times, NEW YORK -- Last-minute bargain hunters boosted the stock market Thursday, turning around losses triggered by a profit and revenue warning from Ciena and concerns about earnings by Dell Computer and Hewlett-Packard. After the close of regular trading, Hewlett-Packard said its third-quarter profits fell 89 percent, but the computer and printer giant managed to beat Wall Street's dramatically reduced expectations. Dell reported a $101-million loss for its fiscal second quarter, but excluding a hefty restructuring charge, it matched earnings forecasts. The Dow Jones Industrial Average rose 46.57 to 10,392.52 after falling as much as 74 points earlier. The market's broader indicators followed the same rocky path as the Dow. The Nasdaq Composite Index finished up 11.43 at 1,930.32, after closing Wednesday at its lowest level since April and reversing a 39 point loss earlier in the day. The Standard & Poor's 500 index, Wall Street's broadest measure, rose 3.64 to 1,181.66 after falling nearly 12 points earlier. Wall Street's gains came at the end of a session marked by sharp losses -- volatility analysts attributed to a conflict between investors' fears about the uncertain economy and their desire to snatch up stocks at cheaper prices. Given the choppy trading and the fact that most companies are unable to say that business is improving, analysts are doubtful any gains will be long-lived. "There is a hesitancy to buy here. Investors are waiting for signs that the economy is indeed on the mend, so that companies, whether they are in the old industry or new industry can show real earnings growth," said Joseph V. Battipaglia, chief investment strategist at Gruntal & Co. The market's vulnerability Thursday was attributable to Ciena, which plummeted $8.50, or 30 percent, to $19.62 after sharply reducing revenue and earnings estimates for its fiscal fourth quarter and 2002. Ciena's warning came as it reported third-quarter net income of $5.7-million, or 2 cents per share, beating expectations by a penny a share. In a conference call, Ciena officials said they expect fourth-quarter revenue to be down 12 percent to 20 percent from the third quarter's $458.1-million; fourth-quarter earnings are expected to be between 2 cents and 7 cents per share. Fiscal year 2001 earnings are expected to be between 59 cents and 64 cents. Analysts had expected the company to earn 18 cents a share in the fourth quarter, with revenue growing to $504-million, according to a survey of analysts by Thomson Financial/First Call. The company was also expected to earn 73 cents per share for fiscal 2001. Another struggling tech company, Hewlett-Packard, reported third-quarter net income of $111-million, or 6 cents a share, compared with profits of $1.05-billion, or 51 cents a share in the comparable period of 2000. H-P had warned of such a shortfall July 26, when it also disclosed that it would be laying off 6,000 people, about 6 percent of its work force. Excluding amortization of goodwill and other one-time items, H-P reported pro forma earnings of $218-million, or 11 cents per share. The average estimate by analysts was 4 cents per share, according to Thomson Financial/First Call. Analysts had been expecting 19 cents a share before HP's warning last month. Rival Dell's loss comes to 4 cents per share, compared with earnings of $603-million, or 17 cents per share in the year-ago period. Excluding a $482-million after-tax restructuring charge to account for job cuts and asset write-downs, Dell earned $433-million, or 16 cents per share. Dell and H-P, along with other computer manufacturers, have been hurt by a global economic slowdown that has hit the technology sector particularly hard. "This has been a challenging quarter for us," said chief financial officer Jim Schneider. Dell shares fell 12 cents to $25.38 in regular trading, while H-P gained 3 cents to $24.13.
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From the Times Business report
From the AP
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