Mircosoft (MSFT) consistently warns investors not to get their hopes too high about the company's future performance. Investors consistently disregard that advice and pump cash into the software giant's stock.
Friday was no different. Microsoft shares rallied after the No. 1 PC software company reported better-than-expected earnings. It muscled the entire tech sector higher.
The strong showing helped the Wired Index finish the week up 8.87 points, or 1.96 percent, at 461.24. Other indices also closed shop in record territory.
After reporting quarterly profit of 50 cents a diluted share following the closing bell Thursday, Microsoft's chief financial officer, Greg Maffei, was quick to warn that earnings growth should slow because of slumping sales in Asia. He also sounded a cautious note about Windows 98, which was released only a few days prior to the end of the quarter.
Traders gave the warnings an indulgent smile and promptly expanded their Microsoft holdings, driving the stock up 81 cents to US$118.19.
"Everyone on the street knows Microsoft is going to pooh-pooh the future," explained Jeffrey Maxick, an analyst with Madison Securities. "We accept the wink and make plans accordingly. Microsoft has a long history of crying wolf and trying to lower investors' expectations."
Microsoft wasn't alone on the happy-news front. Sun Microsystems (SUNW) also posted solid numbers, with fiscal fourth-quarter earnings of 73 cents a share. The company's stock jumped $2.44, or 4.9 percent, to $52.38 amid anticipation that Sun now poses a more formidable threat to Wintel's hammerlock on the PC industry.
Dell Computer (DELL) soared $3.31 to $117.06 after CEO Michael Dell told shareholders that the company's online sales have skyrocketed to $6 million a day, and that overseas sales should hit $6 billion this year. Dell's stock has risen more than 2,000 percent over the past few years, bumping quite a few cheerful investors into new tax brackets.
Intel (INTC) gave up $1.06 to $83.19 after rival Advanced Micro Devices said it will team with Motorola's chip division to develop copper-based chipmaking technology. Copper chips would be smaller and faster than those made with traditional aluminum circuits, and are expected to have a major impact on the semiconductor industry.
Yahoo (YHOO) slid $1.25 to $185.44 after rivals Excite and Inktomi posted yet more quarterly losses. On the other hand, America Online (AOL) jumped $4.63 higher to $127.25 after Salomon Smith Barney's technology strategist, Andrew Barrett, reminded investors in an interview that AOL is one of the few online enterprises actually making money.
Among other gainers, data-storage dynamo EMC (EMC) climbed $4.50, or 9.3 percent, to $52.75 after reporting a 47-percent boost in quarterly profit. Incyte Pharmaceuticals (INCY) advanced $1.81, or 4.5 percent, to $42.31 after reporting quarterly net income of $5.2 million, up from $1.3 million a year earlier.
Discount broker Charles Schwab (SCH) was the day's biggest mover, rising $5.25, or 14 percent, to $42.06 after reporting its own profit increase. Schwab was said by The Wall Street Journal Europe to be closing in on a merger with Credit Suisse First Boston.
Speaking of which, Cisco Systems (CSCO) accelerated $3.63 to a record $99.38 after CS First Boston initiated coverage of the networking powerhouse with a "strong buy" rating. In transportation, AMR (AMR), parent company of American Airlines, spiralled another $4.44, or 5.6 percent, to $74.25 amid worries about future earnings for the airline industry.
The Dow Jones Industrial Average finished the week 10.04 points higher at 9,338.23. The Nasdaq rose 8.4 points to end at 2,008.96 -- its second day above the 2,000 mark. The S&P 500 gained 1.72 points to 1,185.74.
