The first half of 2000 was exceptionally strong for most chip stocks and the odd specialty software developer, but money-losing Internet retail and infrastructure stocks took a beating as investors shied away from stocks that were hyped as the next great sectors on Wall Street. Before delving into the statistics, it's important to note that measuring any stock's performance or lack thereof over such a short period of time invariably results in some exaggerated results. One dismal earnings report or a major contract win can make an enormous difference in such a short timeframe. But that disclaimer should take nothing away from Rambus, the DRAM manufacturer that led all technology stocks with a 511 percent improvement in the first half of the year. Surging from just under $17 a share in late December, Rambus moved up to $103 a share by the end of June. It also delivered a four-for-one stock split. Rambus and other chipmakers chip makers have reaped the benefits of surging demand for PCs, network equipment and video game consoles. But perhaps the biggest breakthrough for Rambus came last month when it settled a pair of patent infringement lawsuits with Toshiba and Hitachi. Both Japanese electronics manufacturers agreed to pay royalties to Rambus to use its high-speed memory interface technology. Analysts said more OEMs will be signing on later this year, giving Rambus another healthy revenue stream to accompany its thriving DRAM business. "Those settlements dramatically open up near-term royalty opportunities for Rambus," said Greg Mischou, an analyst at UBS Warburg. "Also, the rapid acceptance of the Sony PlayStation2 in Japan is another catalyst for this stock. Eventually, we see the ramping of desktop systems using its technology as well." Of course, DRAM, SDRAM and DDRAM prices are famous for their instability. As other chipmakers chip makers ramp up production, prices will certainly come down. However, Mischou said Rambus figures to survive the eventual capacity issues because the DRAM market has gone through so much consolidation in the past five years. During the last boom cycle in the DRAM industry in 1995 as many as 12 major vendors were slugging it out for market share. Now, there are only four or five competitors. "We're still 12 to 18 months away from supply issues being a concern," Mischou said. "I'd be more concerned about the demand drivers. Right now, there's strong demand for communications-equipment and broadband customers." Mischou maintains a "strong buy" recommendation and a 12-month price target of $165 a share. Morgan Stanley Dean Witter's Mark Edelstone also calls it a "strong buy" and sees the stock hitting $200 a share in the next year. Advanced Micro Devices was another first-half star, jumping 167 percent so far this year thanks to strong sales of its popular Athlon microprocessor. In the first quarter, AMD shattered analysts' estimates, earning $189.3m, or $1.15 a share, on sales of $1.09bn. Analysts were only expecting a profit of 58 cents a share in the quarter. Along with shipping more than 6.5 million processors in the quarter, AMD said it expects Athlon to see 50 percent sequential unit growth in the second quarter to more than 1.8 million. "[AMD] has had a terrific first half, but the competitive environment gets more intense in the second half," Mischou said. "Intel's getting much more aggressive and is ramping up production of its 0.18 micron processors. It's still an issue of execution with AMD." Ciena muscled its way into the top ten thanks to surprisingly strong earnings and constant takeover rumours. Up more than 190 percent so far this year, Ciena, analysts are convinced, Ciena has a bright future whether it remains independent or joins forces with a major network-equipment vendor such as Cisco, Lucent or Nortel Networks. It wasn't too long ago that Ciena was one of the biggest losers of the year after its proposed merger with Tellabs evaporated back in late 1998. It turns out that Ciena has done just fine on its own, making significant strides in fibre optic communications equipment, widely considered the future of its industry. "Ciena is really something of a turnaround situation," said Jeff Lipton, an analyst at Chase H&Q. "They've made a remarkable recovery in the past year. More than anything, they have great manufacturing capabilities. There's always been a lot of competitive noise surrounding Ciena, but people seem to forget that this stuff is really hard to do." Tricord Systems, a maker of high-performance enterprise servers, hustled up 271 percent in the first half, surging from below $5 a share to $18 a share. Vertel also deserves some praise after it gained 221 percent as demand for its network management software continued to surge. Egghead.com didn't have much fun in the first half, losing 82 percent of its value. The company was pulled down with the rest of the Internet retailers when analysts finally conceded that profits were important despite the impressive revenue growth most of the companies were experiencing. Still, Egghead.com will report sales of more than $620m this year and perhaps as much as $800m next year, good enough to put it in the top ten among online retailers and ahead of investor favorite eBay. "I like to call Egghead.com the Rodney Dangerfield of Internet retailers," said Jennifer Jordan, an analyst at First Security Van Kasper. "They improved their bottom line this year, but the top line has missed estimates. People are still struggling to determine the proper balance between revenue and gross margins." Jordan added that investors might have a hard time warming up to Egghead.com because of the difficulties it endured in its final days as a brick-and-mortar operation. "They've got a strong recurring customer base, about 70 percent of total sales," she said. "If they were to trim some of their marketing expenses, they might be able to improve their margins without losing much from the top line." Novell, one of the feel-good turnaround stories from last year, fell 74 percent after warning that it would miss analysts' estimates by a wide margin in its second quarter. First Call consensus had predicted the network software developer would earn 16 cents a share in the quarter. Novell checked in with a profit of $31m, or nine cents a share, on sales of $302m. It blamed a combination of Windows 2000, Linux-based products, and management and organizational issues for its lacklustre sales. Finally, there's Corel, the software developer that tried to ride the Linux buzz to the top but ultimately missed the boat. A series of earnings disappoints disappointments, layoffs and management departures have left Corel shareholders shaking their heads. For the first six months, Corel shares plunged 74 percent. Company officials told analysts not to expect any dramatic improvement in sales or earnings for the next couple of quarters. See ZDII for US tech investor news. See techTrader for more technology investment news, plus quotes and research. What do you think? Tell the Mailroom. And read what others have said.