AFTER HOURS
YHOO, MSFT spur tech buying action
Yahoo surpasses, MSFT to post $2.6b investment loss
By Nicole Maestri, CBS.MarketWatch.com
Last Update: 5:49 PM ET July 11, 2001
NEW YORK (CBS.MW) -- Investors snapped up tech shares in evening
trading Wednesday, spurred by better-than-expected results from Yahoo
and news that Microsoft would top revenue estimates for its fourth
quarter, although it will post a $2.6 billion investment loss.
Yahoo posted second-quarter results that exceeded its downward-revised
revenue and profit objectives, posting a second-quarter profit of 1 cent per share,
compared with the expected break-even consensus.
Its shares rose better than 10 percent to $18.80 on
the Island ECN.
Microsoft said it would post a $2.6 billion fiscal fourth
quarter investment loss and its profit will now be 1
cent a share. But quarterly revenue, however, will top
targets. Shares rose 6 percent after hours.
There were gains to be held elsewhere, as shares of
Sonus added nearly 14 percent after the company
posted a 1 cent per share profit while analysts had
forecast it breaking even on a per-share basis.
Redback Networks also gained as its results beat
lowered expectations.
Motorola shares rose as its quarterly loss was
smaller than expected.
But Idec Pharmaceuticals shares tumbled as it said
it expects to report earnings per share of 15 cents for
the second quarter, which is in line with analysts'
expectations. Shares of Genetech also slid on its
quarterly results.
In the broader markets Wednesday, the major indexes moved in mixed action,
wrestling with a new series of profit warnings and analyst downgrades. The Dow
and the Nasdaq managed to close a touch higher, after a late-day run in tech
issues. Read Market Snapshot.
Microsoft
Microsoft, the world's largest software company, said Wednesday that it will
report a $2.6 billion fiscal fourth quarter investment loss because of a $3.9 billion
noncash pre-tax charge from losses in certain cable and telecom securities.
Profit will accordingly be impacted and now is expected, including the charge, at
1 cent a share.
Quarterly revenue, however, will top targets with a range of $6.5 billion to $6.6
billion vs. earlier estimates of $6.3 billion to $6.5 billion.
Microsoft (MSFT: news, msgs, alerts) said more fourth-quarter and full-year
details are to come on July 19 when the company reports results..
On Island, shares rose nearly 6 percent to $70.40.
Yahoo
Yahoo reported a second-quarter profit of 1 cent a share and revenue of $182.2
million, besting Wall Street's break-even per-share expectation and revenue
target of $175 million.
Last year, the Santa Clara, Calif.-based Internet portal operator said it earned 11
cents a share during the second quarter, when quarterly revenue hit $273
million.
Yahoo also held to its full-year profit targets.
The company also announced new executives in Asia and Europe. Read full
story.
Yahoo (YHOO: news, msgs, alerts) shares had ended the day down 4.5 percent
to $17.03.
Motorola
Motorola (MOT: news, msgs, alerts) reported a loss of 11 cents a share, or $232
million, for the quarter, but slightly ahead of Wall Street's consensus
expectation of 12 cents a share.
The technology giant said earnings were squeezed by the slowdown in two of its
largest divisions: hand-held telecommunications and semiconductor chips.
Motorola rang up sales of $7.52 billion, down 19 percent from the $9.25 billion
reported a year ago.
Chief Executive Christopher Galvin said he is "already seeing signs of recovery"
and expects to see a rise in customer demand, especially for the new "2.5G"
telecom products, in the third quarter.
Semiconductors should "resume a double-digit pattern next year," he said.
Shares closed up 1.1 percent at $15.67 and traded at $16.60 in the third market.
Redback Networks
San Jose, Calif.-based Redback Networks (RBAK: news, msgs, alerts) , which
forecast in June a wider-than-expected second-quarter loss per share, posted a
loss of $37 million, or 26 cents a share, vs. a loss of $5.7 million, or 5 cents a
share, reported a year ago.
Redback, a maker of equipment for broadband providers to manage services and
accounts, was expected to lose an average of 29 cents a share, according to
analysts polled by First Call/Thomson Financial. Previously, analysts expected
Redback to lose 11 cents a share.
On the top line, revenue rose to $59.4 million from $48.7 million in the second
quarter of 2000.
Its net loss, including acquisition-related charges, stock compensation charges,
restructuring charges and charges for inventory and other impairments, was
$460 million or $3.26 per share.
Shares of the company closed at $6.53, down 7 percent, ahead of the
announcement. On Island, shares traded at $7.25.
A year ago on July 13, Redback hit a 52-week high of $173.50.
Sonus Networks
Voice infrastructure products firm Sonus Networks (SONS: news, msgs, alerts)
posted a 1 cent per share profit for its second quarter, surpassing analyst
estimates of break even.
Revenue rose to $52.6 million from $6.5 million in the comparable year-earlier
quarter.
Sonus reported pro forma net income of $1.2 million, or 1 cent per share. In the
second quarter a year ago, the company posted a loss of nearly $9 million, or 7
cents per share.
Its net loss, including stock-based compensation and amortization of goodwill
and purchased intangibles, was $51.4 million or 30 cents per share.
Shares closed up 8.4 percent at $18.93 ahead of the report and surged to
$21.50 on the Island ECN.
Genentech
Driven by strong sales of the company's medications, Genentech said
second-quarter profit jumped 28 percent to $101.5 million from $79.6 million in
the same period a year ago.
On a per-share basis, earnings rose 27 percent to 19 cents, which was in line
with analysts' expectations, according to First Call/Thomson Financial.
Revenue climbed to $516 million from $416 million in last year's second quarter.
The biotech firm said sales of its cancer drug, Rituxan, were up 83 percent to
$187.7 million.
Ahead of the report, shares of Genentech (DNA: news, msgs, alerts) slid $1.10
to $42.75. Genentech shares have been weak since Tuesday when the
company said approval of its asthma drug would be delayed because federal
regulators had requested more information.
In the third market, shares traded at $39.96.
Idec Pharmaceuticals
Idec Pharmaceuticals (IDPH: news, msgs, alerts) said U.S. sales of its cancer
drug, Rituxan, surged to $180 million in the second quarter. While that is up 86
percent, it is below expectations.
Idec said that, based on the sales results, it now expects to report earnings per
share of 15 cents for the second quarter, which is in line with analysts'
expectations.
Biotech giant Genentech (DNA: news, msgs, alerts) has licensed the rights to
market Rituxan and Idec receives a portion of sales. Idec is scheduled to report
full second-quarter results on July 19. Shares of Idec (IDPH: news, msgs, alerts)
gained 18 cents to $61.48 during the regular session but tumbled to $47.04 after
hours.
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