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Techs held back by Dell
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May 19, 1999: 5:10 p.m. ET
Fallout of slimmer profit margin at PC maker keeps a lid on sector's gains
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NEW YORK (CNNfn) - A top personal computer maker, facing high expectations for its performance, prevented the technology sector from a breakout day on Wednesday.
The kingpin of direct-selling PC makers, Dell Computer (DELL), shed 4-1/4 to 39-13/16 after reporting late Tuesday earnings that met analysts' targets but showed a narrowing of its profit margins.
Warburg Dillon Read cut Dell to a "hold" rating from "buy" on Wednesday, while Piper Jaffray cut its fiscal year 2001 income target to 93 cents per share, from $1.
But CS First Boston raised its fiscal 2000 estimate by 3 cents, to 73 cents per year.
Dell was the primary brake on the Nasdaq Composite index, which still rose 19.04 points to close at 2,577.40.
Elsewhere on the earnings front, chip-equipment titan Applied Materials (AMAT) added 2-3/16 to 65-5/16, topping the analyst earnings estimates by 9 cents per share.
And Internet portal Lycos (LCOS) rose 4-1/16 to 117, buoyed by two analyst upgrades, after reporting late Tuesday a narrower-than-expected 2-cent loss and unveiled a 2-for-1 stock split.
Merrill Lynch raised its long-term rating to "buy" from "accumulate" and Volpe Brown Whelan raised its rating to "strong buy" from "buy."
Creative Computer (MALL) climbed 9-1/16 to 39-1/8, after the online vendor of personal computers said it will distribute its remaining stake in uBid (UBID) to shareholders.
Dialing up deals
Enjoying its own prescription for success, Healtheon (HLTH) roared up 24-3/8 to 80-1/4, or 43 percent, after agreeing to a $5.5 billion merger with the medical information provider WebMD.
CNN has a minority equity stake in WebMD. Other prospective investors include Microsoft (MSFT), Intel (INTC), and Excite (XCIT), a Web portal, Reuters reported.
For its part, Microsoft rose 5/8 to 79-5/16. The software giant said it would invest $150 million in Pakistan to set up training centers for Microsoft-certified instructors.
Diversified manufacturer Tyco International (TYC), eyeing a larger domain in electronics, offered $2.9 billion in cash and stock for the component maker Raychem (RYC).
Shares of Tyco rose 4-1/8 to 93-1/2, while Raychem, which is valued at $37 a share in the deal, soared 5-1/8 to 36-1/4.
Meanwhile, electronic test systems maker Teradyne (TER) rose 4-1/4 to 58-1/4. CS First Boston raised its earnings-per-share target for fiscal 1999 and 2000 by a nickel to $1.70 and $2.85 respectively, amid strong orders.
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