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Techs finish on high note
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August 13, 1999: 4:28 p.m. ET
Investors snap up run-down stocks; analyst expects Net rally to continue
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NEW YORK (CNNfn) - Technology shares enjoyed a broad-based rally Friday as Internet shares exhibited continued strength while investors went bargain-hunting for other tech issues that had been run down earlier in the week.
The technology-heavy Nasdaq Composite index rose 85.66 points to close at 2635.15, according to preliminary data.
Internet stocks finished strong for the fourth consecutive session. Keith Benjamin, Internet analyst at BancBoston Robertson Stephens, said in his weekly research report that the sector should continue its run through the second half of the year, though any sustained rally will likely focus on the top players in the field.
"We expect a second-half rally driven primarily by consumers moving up to a considerably higher level of spending online across multiple retail categories with real money flowing across the Web," Benjamin wrote.
"We believe we should be less concerned with picking the bottom of the market and begin to accumulate those stocks whose fundamentals appear to be improving."
Other analysts also believe the smaller players in the field are likely to be left behind as the rest of the Internet sector recovers from its recent woes.
"I don't think everyone will bounce back," said Mark Cavallone, Internet analyst at S&P Equity Group. "Investors are clearly more discriminating about the stocks they buy. They're looking at the top-tier names, not just Internet names."
Among the shares leading Friday's Internet charges was Yahoo! Inc. (YHOO), which climbed 4-7/16 to close at 132-13/16. Benjamin cited Yahoo! as the "least controversial" stock in the sector and said it would be the one most likely to rebound first.
Also on the plus side of the ledger was Lycos Inc. (LCOS), which rose 2-15/16 to 37-15/16. Lycos is scheduled to report its fourth-quarter earnings results next Tuesday.
Analysts polled by First Call expect Lycos to break even for the quarter, but Benjamin said the company "could surprise us next week by reporting a bit of profitability."
Other Internet shares rising in Friday trade included RealNetworks Inc. (RNWK), which added 4-7/8 to 75-1/4; eBay Inc. (EBAY), which jumped 6-5/8 to 98; and Concentric Network (CNCX), which climbed 3-7/8 to 23-1/4.
Chip stocks found themselves in positive territory. Merrill Lynch initiated coverage of three programmable logic device makers: Xilinx, Lattice Semiconductor and Altera.
Xilinx (XLNX) shares jumped 6-3/16 to 73-9/16 after Merrill initiated coverage with a "buy" rating and a 12-month price target of $83.
Lattice Semiconductor (LSCC) added 2-5/16 to 67-7/8. Merrill started coverage with an "accumulate" rating and a 12-month price target of $76.
Altera (ALTR) rose 3 to 42-5/8. Merrill initiated its coverage of the firm with an "accumulate" rating and set a 12-month price target of $48 for its stock.
Elsewhere in the chip sector, Broadcom Corp. (BRCM) soared 6-11/16 to 120-1/16; Intel Corp. (INTC) added 3-13/16 to 79-3/4; and LSI Logic (LSI) rose 3-5/8 to 58-7/8.
In other technology news, satellite telecom firm Iridium LLC (IRID) tumbled 1-3/16 to 3-1/16 after the company filed for Chapter 11 bankruptcy protection. Earlier this week, Iridium disclosed that it had defaulted on $1.5 billion of its outstanding debt.
Motorola Inc. (MOT), Iridium's biggest investor, rose 5-1/4 to 93. The firm expressed support for Iridium's restructuring plan.
Finally, Quest Software (QSFT) soared 236 percent in its first day of trading, rising 33 to 47 from an offering price of $14. Quest makes software for companies that conduct business over the Internet.
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