Investors worried about the state of corporate earnings got no help from Yahoo after the close on Wednesday. Kay Bell - MarketWatch Topics::
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Shares of Yahoo plunged 12% after hours after the company's second-quarter revenues missed analysts' estimates. The Internet bellwether also warned that its third-quarter and full-year results may fail to live up to Wall Street's lofty expectations.
On a year-over-year basis, Yahoo's results were strong, with revenues up 89.5% to $609.1 million, and earnings doubling to 8 cents a share. But with analysts expecting revenues of $611.7 million, and earnings merely in line with expectations, investors were quick to punish the stock.
Yahoo said it expects third-quarter revenues of $610-650 million, compared to $649.3 million estimates. Full-year revenue guidance of $2.46-2.54 billion was an improvement over the company's own guidance issued in April, but at the low end of $2.53 billion analyst estimates.
Salomon Smith Barney had warned last week that Yahoo's stock had gotten ahead of fundamentals.
Also after the close, Siebel and BMC also warned, adding to the software sector's woes.
Stocks put together a a modest rally during the day despite earnings warnings from the likes of PeopleSoft and NetEase.
The Nasdaq added 2 to 1966, the S&P 500 rose 2 to 1118, and the Dow climbed 20 to 10,240. Volume rose to 1.33 billion shares on the NYSE, but declined to 1.77 billion on the Nasdaq. Advancers led 20-12 on the NYSE, but decliners led 16-14 on the Nasdaq. Upside volume was 60% on the NYSE, and 49% on the Nasdaq. New highs-new lows were 180-116 on the NYSE, and 60-102 on the Nasdaq.
Earnings warnings once again weighed on the market, with PeopleSoft, NetEase, Netopia, Secure Computing, Extended Systems, FileNet, Ascential, JDA Software, Semitool and Kana among the culprits.
PeopleSoft blamed the Justice Department-Oracle antitrust suit for its woes.
eBay lost 3% after Prudential said it isn't expecting much upside to the company's second-quarter results.
Nam Tai Electronics jumped 15% after raising guidance, and Broadvision and Quest Software climbed 5% each on positive guidance.
Tellabs and Advanced Fibre slipped after their merger plan cleared the FTC.
Saflink soared 22% on a homeland security alliance with Microsoft.
Corillian jumped 10% on an online banking deal with Wachovia.
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