Investors, Net firms weather storm

Some say latest dips, rises worst since Great Depression 04/18/2000

By Charlene Oldham / The Dallas Morning News

If he didn't have to take calls from MetaSolv Software Inc. investors, Glenn Etherington wouldn't know what his own shares were worth on a given day. "I have to know what the stock price is doing to know why they are calling," said Mr. Etherington, chief financial officer of the Plano firm.

"But, for me, what the price is today is not as important as what it will be five years from now."

By then, the software company's shares may have regained the lofty 52-week peak it set Feb. 9: $126. But early Monday, shares were changing hands at a 52-week low of $33 on the Nasdaq before recovering to close at $38.13.

Mr. Etherington and his associates are far from alone in weathering the most volatile markets any of them have seen.

The recent dips and recoveries in the Nasdaq and the New York Stock Exchange - sometimes in the same day - haven't been seen since the Depression, traders say.

"Most people, unless they were trading 62 years ago, have never seen anything like this," said Steve Leuthold, an investment strategist with Weeden & Co.

"It's been the most volatile market since 1938 on a day-to-day basis."

Both markets leveled out a little Monday, with the tech-heavy Nasdaq rising 217.87 points, or 6.55 percent, to 3,539.16.

But that, too, contributed to investors' queasiness. After the huge drop last week, Monday's gain was Nasdaq's biggest single-day point jump and the second-largest percentage gain in its 29-year history.

The Dow Jones industrial average closed with a gain of 276.74 at 10,582.51.

And with the flood of earnings reports and economic indicators expected in the next few weeks, technology issues such as MetaSolv aren't likely to settle soon.

Brokers say the market is a lot more jittery than during its last big scare, when American investors were afraid of coming down with Asia's financial flu in late 1998.

The Chicago Board Options Exchange, which measures movement in the Standard & Poor's 100, has been in the low 20s for most of the year.

By Friday - when the Nasdaq shed 355.49 in its biggest point drop ever - the index had soared to a 52-week high of 39.33.

"I know it got as high as 41 during the Asian debt crisis," said Lynne Howard-Reed, a spokeswoman for the exchange.

"Some people call it the fear gauge. It's an indication of how anxious investors are."

Although the index fell 18 percent to close at 32.19 Monday, shares are far from stable - especially among formerly highflying tech companies.

Small technology companies and biotechnology issues soared to what most analysts said were unsustainable highs in the last few years.

"Gone are the days when we really don't care whether there will be earnings for a company," said analyst James Linnehan, who covers Irving-based Data Return Corp. for Thomas Weisel Partners.

Internet technology companies such as Data Return will have to give investors more tangible results, said Nick Sargen, a global markets strategist with J.P. Morgan Private Bank in New York.

"There's going to be a shakeout," Mr. Sargen said.

"There will be some definite winners, but the market has to do a better job differentiating."

"Before, the market was giving every dot.com the benefit of the doubt. Those days are over."

So are the days when tech employees would rather be paid in stocks than salaries, said John A. Challenger, chief executive of the outplacement firm Challenger, Gray & Christmas Inc.

"You wonder how many people spent the last couple of days not doing any work at all and just watching their portfolios dwindle," he said.

"So these companies that are having problems could see the problems multiply as all their top talent jumps ship."

Coming off a quarter when MetaSolv increased net income by nearly a million to $1.47 million and doubled earnings per share to 4 cents, Mr. Etherington said he isn't looking for a lifeboat.

"I don't think the volatility affects our day-to-day business," he said "Our job is just to go out and beat the [analysts'] estimates."

http://dallasnews.com/business/65985_volatility_18b.html

-- Carl Jenkins (Somewherepress@aol.com), April 18, 2000

Answers

Why worry? We have these reassuring words from Al Gore:

"The future will be a better tomorrow."

That does it for me.

-- JackW (jpayne@webtv.net), April 19, 2000.