Wall Street blasted higher Thursday as International Business Machines demolished estimates with a massive quarter, providing a big boost to tech and blue-chip shares. Solid earnings, and a few stock splits, sustained interest as well in the dot-com crowd.
The Dow Jones Industrial Average remained in record territory, rising 145.76 points to close at 10727.18. Along with Big Blue's strong showing, the Dow found confidence in American Express (AXP) and Proctor & Gamble (PG) reporting better-than-expected quarterly profit.
Tech stocks continued their march back into the light. The Wired Index advanced 23.43 to 672.97, and the Nasdaq Composite Index was 72.63 higher at 2561.71. The S&P 500 was up 22.70 at 1358.82.
"I see no reason why the market won't keep going up," said Les Childress, president of Childress Investment Research. "There will be times when it stalls, but institutional investors generally feel comfortable buying these valuations."
IBM (IBM) surged 13 percent to US$194.94 after announcing first-quarter earnings of $1.55 a share, way ahead of the anticipated $1.41. Trading in the company's stock had to be delayed 20 minutes in the morning due to a crush of buy and sell orders. IBM said surprisingly healthy demand for personal computers contributed to a 17 percent increase in hardware sales. "It's a great start on 1999," noted Douglas Maine, the company's chief financial officer.
Not only that, it's a powerful so-there to all those who had been writing obits for leading tech firms, and PC makers in particular. Coupled with Microsoft also posting impressive numbers this week, it seems that rumors of the computer industry's demise have been greatly exaggerated.
"Technology is not in trouble," Childress insisted. "The problem is the institutional investors and analysts. How many times have we heard them question PC growth? You go to the makers themselves, and they say there's no slide-off in growth. Over and over, companies have been saying that PC sales are growing. But a mindset has taken root among analysts and portfolio managers, and that's how the concerns got started.
"The trick for investors," he added, "is to stand pat during the volatility. And that's a difficult thing to do."
For its part, Dell Computer (DELL) jumped $3.44 to $41.88 as Ashok Kumar, an analyst with Piper Jaffray, observed that "the tea leaves do look good" for the company. He said Dell's unit sales should grow by about 15 percent this year. Not coincidentally, Intel (INTC) rose $3.06 to $61.50, and Microsoft (MSFT) was $2.94 higher at $84.94.
A busy day as well over in telecom, where investor interest was heightened by confirmation that Deutsche Telekom and Telecom Italia had agreed to get hitched in an $82 billion wedding, creating the world's second-largest telco after Japan's NTT. This isn't quite a done deal -- legions of shareholders and regulators still must have their say -- but it does underline the ongoing industry trend of bigger definitely being better.
Meantime, Lucent Technologies (LU), no small potato itself, climbed $2.63 to $61.75 after reporting that quarterly profit more than doubled to 17 cents a share, excluding charges. This was 2 cents higher than expected. Lucent remains exceedingly bullish about its own prospects, and reiterated a fiscal 1999 forecast of revenue increasing by as much as 20 percent, and earnings per share soaring by about 35 percent.
Across the Atlantic, Finland's Nokia (NOK) gained $2.56 to $81.19 as it blew past estimates with a 97 percent hike in first-quarter operating profit, which is a whole lot of euros. "We further solidified our position as the world's leading mobile phone supplier," crowed CEO Jorma Ollila, adding that the company is boosting spending on R&D and Internet-related activities.
Charles Schwab (SCH) advanced $2.38 to $120.38 after announcing a two-for-one stock split, the discount broker's seventh since going public in 1987. The move follows a big run-up in share prices for online brokers, spurred by increasing numbers of investors turning to the Net. Ameritrade (AMTD) split its own stock in February, and ETrade Group (EGRP) in January.
Speaking of online financial institutions, Net.B@nk (NTBK) climbed 24 percent to $182.44 as it matched estimates with first-quarter profit of 9 cents a share. The company said the number of its online accounts has increased 50 percent so far this year, to 27,000.
Web publisher Cnet (CNET) vaulted 11 percent to $133 after breezing past estimates with pro forma quarterly income of 9 cents a share. The company also declared a two-for-one stock split. Meantime, Internet directory operator Go2Net (GNET) eased $10.31 to $167.19 even as it posted better-than-expected earnings and announced its own two-for-one split.
Monsanto (MTC) shed 31 cents to $42.50 after reporting a 33 percent drop in quarterly income. Nevertheless, the biotech firm's profit of 20 cents a diluted share topped estimates by 4 cents. And Xerox (XRX) fell $1.56 to $58.56 despite meeting expectations with earnings of 48 cents a diluted share. The company said its revenues were flat due to economic troubles in Latin America.
Lastly, McDonald's (MCD) dipped 69 cents to $44.69 even as it logged an 11 percent hike in quarterly profit to 29 cents a share, in line with estimates. Mickey D's said sales were up thanks to a new cost-cutting food-preparation system, as well as a run on Happy Meals.
In case you didn't know, this is the final day to buy a Furby Happy Meal. Maybe it's not too late, if you hurry.
