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Faith in chips boosts techs
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March 16, 1999: 5:10 p.m. ET
Quiet confidence of analysts in computer chip sector highlights calm tech day
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NEW YORK (CNNfn) - The computer chip sector mustered a stealth rally Tuesday as investor attention focused on the Dow's brief, record spurt past the 10,000 mark.
Lurking in the shadows was the chip sector, which garnered a small but important gain in investor optimism. Internet stocks turned mixed, while the latest new offering hit the market.
Overall, analysts said, investors are hoping for new leadership as technology looses the strong footing it once enjoyed.
"Technology has kind of stalled out here, we've got some potholes developing in that former leadership area," Elizabeth Mackay, chief investment strategist at Bear Stearns, said.
Rally in chip sector
But one standout performer was the computer chip and chip-equipment-making segment.
BT Alex. Brown analyst Erika Klauer issued a note on the sector Tuesday, saying she is "very positive" about the chip group right now. The industry is healthy and has seen strong demand, with low inventories.
Leading the way was the world's largest chip maker, Intel (INTC) surging 2-3/8 to 120-1/4.
But its major rivals weren't riding as high: Advanced Micro Devices (AMD) climbed 11/16 to 17 and National Semiconductor (NSM) was up 1/4 to 10-1/4.
Texas Instruments (TXN), a maker of digital signal processors, which transform light and sound into digital signals, climbed 4-13/16 to 104-1/4. Micron Technology (MU), rose 2-1/16 to 51-1/16, bouncing up from recent softness.
LSI Logic (LSI), which makes application-specific chips, soared 2-5/8 to 27-1/8.
National Semi's Cyrix unit is closely aligned with privately-held Microwerks Computer Corp., which unveiled Monday a fully-equipped desktop computer priced as cheap as a TV - starting at $299.
That heightened pricing pressure didn't effect big-name PC makers, Dow member IBM (IBM) lost 1 to 181, Dell Computer (DELL) rose 5/8 to 44-3/8 and Compaq Computer (CPQ) tacked on 1 to 32-3/8.
Snapping up chip-equip makers
Even more stunning than the big chip makers were the chip-equipment makers, those companies that make the machines to churn out chips. There was a distinct lack of news to propel them higher, but one analyst was increasingly bullish.
Morgan Stanley Dean Witter analyst Jay Deahna aired upbeat comments about three chip-equipment players, putting the wind in its sails.
On the list of beneficiaries were Etec Systems (ETEC), adding 3-15/16 to 48-15/16, Dutch-based ASM Lithography (ASML) up 3-1/8 to 45-9/16, and Cymer (CYMI) gaining 2-5/16 to 25-15/16.
The largest chip-equipment maker, Applied Materials (AMAT) climbed 3-1/16 to 63-5/8 after receiving an order from integrated circuits maker VLSI Technology (VLSI).
Teradyne (TER), a maker of chip- and electronics-testing systems, soared 5-5/16 to 56-3/4.
Flashnet in the Pan?
Leaving investors in the Internet sector awe-struck was Flashnet Communications (FLAS), an Internet service provider, up to 26-5/8 to 43-5/8 after pricing at 17 in its initial public offering.
Riding the upward momentum in an otherwise mixed Internet sector, EFax.com (EFAX) rose 3-3/4 to 25-3/8. Also soaring was online bookseller Books-A-Million (BAMM), up 3-1/8 to 13-1/4.
Appearing to finally top out was Bottomline Technologies (EPAY), losing 23-3/4 to 68-1/2 after recent soaring gains.
And Internet portal Lycos (LCOS), the subject of a battle between would-be buyer USA Networks and key shareholder CMGI (CMGI), shed 1/4 to 105-1/2
Lycos Vice President for Finance Thomas Guilfoile said the company expects to file a proxy statement having to do with the USA deal with regulators next week.
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