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Cloud Stocks Jump On APKT Earnings

 February 02, 2011 01:46 PM
 


After a small gap down this morning the market has been quiet during the session, drifting slightly higher. The crickets could be due to the massive winter storm that has blanketed much of the Midwest with more than a foot of snow and brought freezing rain and ice to the New York area, or just digestion after yesterday's explosive move. Despite the indices trading in a tight range, there has still been tradable action in select sectors.

Clouds Rise on APKT Earnings

On a day when the clouds in the sky are heavy, cloud stocks have continued to lift. The high growth, highly valued cloud sector has been prone to painful drops after disappointing earnings and outlook announcements. Back on October 6th, weak outlook from Equinix, Inc. (EQIX) triggered a cloud debacle. The next big drop came on January 19, when F5 Networks, Inc. (FFIV) missed on revenue and lowered guidance.

Since that latest sell-off, cloud stocks have begun to repair their charts. Today we are seeing that a very positive report can indeed have the inverse effect of a mediocre one. Yesterday after the close Acme Packet, Inc. (APKT) beat across the board in its earnings report, prompting a series of price target raises and buy recommendations from analysts. The stock is now trading 16% higher from yesterday's close. We are also seeing the optimism spill over into the entire sector. Rackspace Hosting, Inc. (RAX) and SAVVIS, Inc. (SVVS) are among the strongest, up 6% and 7% respectively, while other big names like salesforce.com, inc. (CRM)-3.5%, VMWare, Inc. (VMW)-2.5%, Quest Software, Inc. (QSFT)-4%, and FFIV-2% have also been strong.

The weather is clear for cloud stocks for now, but it remains a volatile area.

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