STOCKS Flat Panels, SANs Tech Bright Spots In Second Quarter.(INTERNET & TECHNOLOGY)(TECH WRECK)

Byline: Jed Graham

Though the Nasdaq vaulted 17.4% in the second quarter, a lot more tech blood was spilled. And some blue-chip blood, at that.

Nortel Networks Corp., the largest maker of phone network gear, ranks among the quarter's biggest tech losers. Its shares slid 35%, sent plummeting after Nortel said second-quarter sales would be half the nearly $9 billion it took in two quarters ago. The company also said it would slash an additional 10,000 jobs. It had already announced 20,000 job cuts earlier this year.

But though some bombs keep falling, mostly among telecom firms, investors have stopped running for cover. About 40 storage, software, chip and even Internet companies -- with shares priced above 10 and market values above $100 million -- saw their stocks more than double last quarter.

The near-term outlook for tech is neither as dour as Nortel's results suggest nor as rosy as the stock chart of big winners like Genesis Microchip Inc. might lead one to believe, analysts say. Recovery may be here, they say, but it won't be rapid. The shakeout that separates winners from pretenders won't end soon.

"My guess is that the lows we experienced early on in the quarter -- we'll look back on those and say those were the lows," said Don Luskin, chief executive of San Francisco-based mutual fund company MetaMar-kets.com. "But after you've had a crushing asteroid hit like the bear market we've just been through, there's a period of rebuilding. We're still unwinding the excesses, and it will be a slow process, where the winners and losers get painfully sorted out."

So, what accounts for some of the big stock gains last quarter?