Wall Street was mixed in mid-afternoon trading Wednesday. While blue-chip stocks were cautiously higher, tech shares were burdened by Dell Computer reporting strong -- but not strong enough -- earnings for the latest quarter.
The Dow Jones Industrial Average rose 16.80 points to 9313.83, while the Nasdaq Composite Index was down 31.30 at 2282.57. The S&P 500 dropped 0.59 to 1241.28.
Investors, long accustomed to riding the gravy train as far as Dell (DELL) is concerned, knocked the company's stock for a loop after it said fourth-quarter revenue was up just 38 percent, far less than the 56 percent average growth rate for the past eight quarters. Never mind that Dell's quarterly profit increased 49 percent to 31 cents a shares, in line with estimates. The prospect of slower growth was sufficient to disappoint traders, who pushed Dell's shares down US$7 to $81.75.
"It's pretty difficult to be disappointed with growth three-and-a-half times the industry rate," said Scott Butler, an analyst with Pacific Crest Securities. "But it looks like Dell's growth is slowing, and the Street is taking a pound of flesh from them."
Tough crowd. Investors weren't even placated by Dell announcing a two-for-one stock split, its seventh in the last seven years.
Hewlett-Packard (HWP) felt the market's sting as well after posting revenue growth of only 1 percent from a year earlier. Investors virtually ignored the fact that HP's quarterly income reached 92 cents a share, easily whipping the anticipated 83 cents. HP's stock slipped $1.75 to $68.75.
Amid all this blood-letting, traders may be overlooking Applied Materials (AMAT) coming through with operating profit of 11 cents a diluted share, excluding the usual charges and what-not. This is almost double analysts' expectations. On top of that, the leading maker of chip-production gear said it expects to see earnings of as much as 25 cents a share in the current quarter as semiconductor outfits boost spending on new machines.
Applied was $2.13 higher at $70 as Morgan Stanley Dean Witter reiterated a "strong buy" rating for the company's stock and raised its price target to $86 from $80. Meanwhile, Donaldson, Lufkin & Jenrette upgraded Applied to "top pick" from "buy."
Some intriguing speculation from the Net Front: The Wall Street Journal says America Online (AOL) is negotiating with eBay (EBAY) to purchase a minority stake in the online auctioneer. If so, you have to wonder how eBay's already spotty service will handle the crush of millions of giddy AOL members spilling onto the bidding floor. AOL advanced 19 cents to $159.69, and eBay was up $5.88 at $237.
Geoworks (GWRX), a maker of software for wireless phones, surged 54 percent to $5.19 after Amazon.com (AMZN) bought approximately 7 percent of the company for $5 million. Amazon, which has been actively looking to expand its horizons beyond the online shopping business, slipped 88 cents to $97.75.
Lucent Technologies (LU) rose $1 to $99 after announcing a two-for-one stock split, its second in a year. As of 31 January, Lucent had roughly 1.3 billion common shares outstanding, with about 3 million shareholders.
Lastly, online toy retailer eToys filed for an initial public offering to raise as much as $115 million. Although the price and number of shares to be offered weren't specified, all anyone really needs to know is that eToys had a great Christmas, and, as of December, was the fifth most-visited site on the Web with about 4 million shoppers.
Heads up.
