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Techs ignore Compaq warning
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June 17, 1999: 4:29 p.m. ET
Investors shake off warning by No. 1 PC maker; Net shares climb again
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NEW YORK (CNNfn) - Investors shrugged off an earnings warning from Compaq Computer Corp. Thursday, while Internet issues continued their upward run amid a positive industry report.
Compaq (CPQ), the world's No. 1 PC maker, forecast a second-quarter loss of as much as 15 cents a share. Analysts polled by First Call had expected the Houston-based company to report a profit of 20 cents a share.
In an effort to stem the red ink, Compaq said it will restructure its operations, including an unspecified number of job cuts, which will result in a substantial third-quarter charge.
Compaq shares initially fell on the news but they rebounded later in the day to close 5/16 higher at 22-9/16 on the New York Stock Exchange as investors expressed hope that the restructuring will cure its ills.
While pointing out internal problems, company officials also cited industry-wide issues - such as pricing pressures and Y2K concerns - as contributors to its problems.
Compaq's news had dragged several other PC issues lower through most of the day, but most of those stocks recovered by the market close.
Dell Computer Corp. (DELL) rose 11/16 to 36-1/2. The No. 2 PC maker has the most to gain from Compaq's woes. Gateway Inc. (GTW) rose 1-5/8 to 67-1/16.
Apple Computer Inc. (AAPL), however, lost 1-9/16 to 46-3/8, and Hewlett-Packard Co. (HWP) dropped 1-7/16 to 89-5/16.
Internet shares on the rise
Internet shares continued their upswing Thursday. A study released by CommerceNet and Nielsen Media Research found that the number of Internet users age 16 and older rose 16 percent in North America in nine months, while the number of online consumers jumped 40 percent over the same period.
Among Internet stocks, Web portal Go2Net (GNET) rose 4-1/2 to 119-1/2. The firm's shareholders approved billionaire investor Paul Allen's $426 million stake, giving the Microsoft co-founder a 34-percent interest in the company.
Other portals finishing higher included Yahoo! Inc. (YHOO), up 5/8 to 142-1/4, and Lycos Inc. (LCOS), which jumped 7-1/16 to 89-1/2.
Internet investment firm CMGI (CMGI) added 3-3/8 to 96-1/2. BancBoston Robertson Stephens raised its rating on CMGI to "buy" from "long-term attractive."
Online financial news site TheStreet.com (TSCM) added 3/4 to 26-9/16. The firm signed a one-year marketing pact with DLJDirect (DIR), under which the online broker will offer subscriptions of TheStreet.com to its investors. DLJDirect shares rose 5/8 to 28-9/16.
Elsewhere, cable-based Internet service provider Excite@Home (ATHM) jumped 3-15/16 to 51-5/16; America Online Inc. (AOL) rose 4-1/8 to 110-5/8; and Internet address registrar Network Solutions Inc. (NSOL) added 3-13/16 to 70-11/16.
In the networking sector, Cisco Systems Inc. (CSCO) rose 1-1/8 to 117-3/8 after the data networking firm acquired TransMedia Communications Inc., another deal that bolsters Cisco's efforts to build networks that simultaneously carry voice, data and video.
Finally, among technology bellwethers, Oracle Corp. (ORCL) rose 1-15/16 to 34-7/8; Microsoft Corp. (MSFT) added 1-7/8 to 82-7/8; while Intel Corp. (INTC) slipped 1-11/16 to 58.
For the latest technology news tune into CNNfn's "Digital Jam" tonight at 7:30 p.m. ET.
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