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Bounce in chips, Net dips
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February 8, 1999: 5:06 p.m. ET
Semiconductor stocks advance on Intel, AMAT, while Internet sell-off continues
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NEW YORK (CNNfn) - After taking a severe beating last week, the technology sector bounced sharply Monday, led by a strong performance in the semiconductor sector.
Shares of Internet companies continued their downward spiral, however, apparently uninvited to the rally that swept other technology stocks. Wall Street experts say the sector moves on momentum rather than underlying fundamentals, and that investors can expect more volatility in months to come.
Paul Bard, analyst at Renaissance Capital, said he thought the Internet sell-off was "spurred by the broader setback in the technology sector."
The Renaissance analyst added that "when you have companies with high valuations, it's hard to sustain those prices. There's a lot of volatility in the technology sector. The sector really surged, so maybe they're giving back a little."
Semiconductor stocks closed higher, led by bellwether chip maker Intel (INTC), which gained 4-7/16 to close at 132. Also realizing a solid gain was Applied Materials (AMAT), which advanced 6-3/4 to finish at 67-7/16.
Also closing sharply higher were Linear Technology (LLTC), up 5-5/16 to 97-9/16 and Maxim (MXIM), up 3-7/16 to 46-11/16.
The drop in the volatile Internet sector, atop the broader markets sell-off, occurred after Prudential Securities research director Ralph Acampora issued a report saying U.S. stocks could correct 5 percent to 10 percent.
A market source familiar with the report's content said Acampora said computer and Internet stocks had risen so sharply that a decline of 5 to 10 percent in the sectors would not return them to "normal" levels.
Leading the descent were CNET (CNET), which shed 13-13/16 to close at 124-1/4, Yahoo! (YHOO), which tumbled 23-5/8 to 174-1/8, and Network Solutions (NSOL), which dropped 14-1/8 to 158-5/8.
Internet IPOs also took a hit, with Internet service provider Pacific Internet (PCNTF) dropping 12-7/8 to 35-1/8. The stock hit an intrasession high of 88 on its first day of trading Friday after an initial public offering at $17 a share.
Modem Media.PoppeTyson Inc., (MMPT), another volatile Internet company that debuted Friday, lost 5-1/16 to close the day at 39-15/16. Shares had risen as high as 55-1/8 from its $16 IPO price and closed at $45 on Friday.
Elsewhere in the tech sector, Dell (DELL) posted a solid gain of 3-5/8 to finish at 104-1/16, as did Sun Microsystems (SUNW), which soared 3-7/8 to 104-1/2.
Microsoft also rose sharply, advancing 5-1/4 to 165-1/4. The software giant announced a partnership with British Telecom (BT) to develop a new range of Internet, intranet and corporate data services for mobile customers around the world.
-from staff and wire reports
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