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Techs hold their own
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March 10, 1999: 5:20 p.m. ET
Lycos in play for a second day, as Net stocks keep sector afloat; Nasdaq up
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NEW YORK (CNNfn) - Follow-through speculation about who might control Internet portal Lycos fueled its shares up Wednesday, reminiscent of its upward moves as a pure Net play before a bidder stepped forward.
The hunt for a buyer for Lycos (LCOS) sparked investor attention for a second day. Lycos rose 13-3/4 to 110, or 14 percent after top shareholder CMGI (CMGI) began to look for a better buyout bid than one offered by TV network USA Networks (USAI).
CMGI has hired investment banker Morgan Stanley Dean Witter to press shareholders for changes in the Lycos deal -- or find another suitor.
Press reports Wednesday said CMGI is considering its own outright purchase of Lycos -- and that would be easier now than at the time the USA deal was announced, because CMGI's market capitalization now eclipses that of Lycos.
Analysts started to discount the prospects Barry Diller's USA will now be able to follow through on its complex buyout.
In the weeks immediately following the offer from USA, shares of Lycos tumbled, as many analysts and investors saw the company losing its coveted status as a pure Internet play.
Robert Davis, president and chief executive officer of Lycos, has trumpeted the deal with USA as a plus, because it could leverage USA television properties to boost its presence.
CMGI shares fell 2-3/4 to 191-11/16.
Trouble in PC land?
The latest shoe dropped in the PC sector Wednesday, as the recently strong direct PC vendor Gateway (GTW) fell victim to several pressures that until now had hit only its rivals.
Gateway slipped 5-11/16 to 65-5/8. That comes weeks after PC titan Compaq (CPQ) said sales of commercial personal computers were soft for the first six weeks of its first quarter.
Elsewhere, IBM (IBM) shed 11/16 to 181-1/2, Dell Computer (DELL) lost 3/4 to 43-5/16 and Micron Electronics (MUEI) fell 1/8 to 12-11/16.
Highlighting the tech sector's weakness was software maker Computer Associates (CA), tumbling 5-1/16 to 34-15/16 after Morgan Stanley Dean Witter downgraded the stock to "neutral" from "outperform."
In the telecom business, Canada's Northern Telecom (NT) rose 4 to 62 after the telecommunications equipment maker said AT&T (T) may be considering using Nortel as a switch supplier.
Ma Bell, which lost 1-9/16 to 84, typically relied on one-time subsidiary Lucent Technologies (LU) for its hardware buys. Lucent shares fell 2-5/16 to 106-5/8.
One key Nortel rival didn't spring up on that prospect, however: Cisco Systems (CSCO) dropped 15/16 to 104-3/8.
The tech sector overall struggled to hold its footing. The Nasdaq Composite rose 13.18 points to close at 2,406.12 on Wednesday.
Net stocks light it up again
Keeping the tech sector afloat again were Internet stocks. Merrill Lynch opened a host of companies in the sector with an "accumulate" or "buy" rating.
One such beneficiary was Amazon.com (AMZN), which added 7-3/16 to 137-1/8. after Merrill began coverage with a "near-term accumulate" and a "long-term buy." The online bookseller also announced a marketing accord for co-branded Web sites with Dell Wednesday.
Internet service providers were dialing up strong gains. PSINet (PSIX) rallied 7-1/8 to 42-1/4 after ING Barings upgraded the stock to "buy" from "hold."
And rival EarthLink Network (ELNK) blasted up 2-5/8 to 67-7/8 after CS First Boston said that on a relative valuation basis the ISP is one of the most undervalued Internet stocks.
Vignette (VIGN) exploded up 15-5/8 to 71-5/8 after the company unveiled a latest version of its Vignette Development Center software, a tool used to help companies lower the launch time for web-related business applications.
Early customers include Bank One and the National Association of Securities Dealers, the company said.
Cyberian Outpost (COOL) tacked on 1-15/16 to 20-5/8 after the online vendor of computer products announced a marketing deal with community site operator GeoCities (GCTY).
Neon Systems (NESY), which makes software that helps old systems communicate with newer systems, soared 10-1/2 to 36-1/8 higher again following its initial public offering Friday.
And recent IPO Pacific Internet (PCNTF) rallied 10-5/8 to 45-1/8.
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