Internet stocks came charging out of the gate Wednesday after Amazon.com and eBay posted better than expected results for the latest quarter. But the broader market was finding it hard to keep pace as investors opted to play it safe and cash in on some of the gains from Tuesday's hefty advance.
The Dow Jones Industrial Average shed 28.06 points to 9296.52 in mid-afternoon trading. The Nasdaq Composite Index rose 14.49 to 2447.90, and the S&P 500 was up 3.22 at 1255.53.
Amazon (AMZN) climbed 14 percent to US$131.25 after saying its loss for the fourth quarter wasn't quite as bad as people had feared -- 14 cents a share versus the predicted 18 cents. No matter how much money this company bleeds, investors remain convinced that the game is still Amazon's to lose, and are determined to stick with the stock until they're proven right ... no matter how long this might take.
"It's scary -- it's absolutely scary," said Brian Oakes, an analyst with Lehman Brothers. "Anything that's a high-growth stock is scary. But don't let profit stop you. This is a market that chases growth, and the greatest growth is in the Internet."
You want growth? Try eBay (EBAY) on for size. The online auctioneer soared 37 percent to $303 after whipping the Street's estimates with a 700 percent increase in quarterly profit to 7 cents a share, plus a three-for-one stock split. Never mind the nagging complaints from users about frequent breakdowns, and never mind a confirmation from New York City officials that they are indeed probing the company for alleged consumer fraud -- look instead at the stats.
EBay said its number of registered users nearly doubled as of last month to 2.1 million, and that the total value of goodies sold at its site reached more than $300 million over the last three months, up 57 percent from the previous quarter. The more than 600 percent hike in revenues prompted Donaldson, Lufkin & Jenrette to raise its 12-month price target for eBay's stock to a whopping $360.
Expensive? You bet. "Buy eBay and enjoy the ride," DLJ analyst Jamie Kiggen said in a note to clients. They might want to check their seat belts and air bags first.
Yahoo (YHOO) gained $14.06 to $365.31, after bringing local versions of its service to Singapore, Taiwan, and Hong Kong. Yahoo now boasts 18 separate properties worldwide. Meanwhile, America Online (AOL) was up $8.88 at $163.88 ahead of reporting its own quarterly results after the closing bell. Profit of at least 14 cents a share is anticipated.
Compaq Computer (CPQ) slipped 50 cents to $48.75 after DLJ downgraded the company's stock to "buy" from "top pick." Although Compaq handily beat estimates with quarterly profit of 43 cents a diluted share, the busy brokerage appears to be wary of how much momentum Compaq can bring to future computer sales.
In telecom, Bell Atlantic (BEL) rose 94 cents to $56.50 after posting a 13 percent increase in quarterly net income to 65 cents a diluted share. AT&T (T) was up 56 cents at $87.44, as it unveiled a new service offering customers a flat rate and a single monthly bill for long-distance and wireless calls. Expect more such conveniences in months ahead as AT&T completes its acquisition of cable giant Tele-Communications Inc.
Sony (SNE) advanced 81 cents to $70.56 after saying its group net profit was up in the latest quarter, even though the sky-high yen blasted a hole in the company's operating profit. Considering the current state of Japan's anemic economy, it's a wonder that Sony is keeping its head above water, let alone paying its bills.
Lastly, Disney (DIS) fell 63 cents to $33.94 after reporting an 18 percent drop in quarterly profit to 30 cents a share. And this amount was bolstered by a one-time "benefit" resulting from Team Mickey's purchase of a 43 percent stake in Infoseek. Without that little bit of fiscal largesse, the company's profit would have been 23 cents a share, or a penny less than analysts were expecting.
