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Chips are up, up & away
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January 14, 2000: 5:49 p.m. ET
Tech sector rides wake of Intel's potent 4Q earnings; Microsoft up after Gates exit as CEO
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NEW YORK (CNNfn) - Technology stocks rallied Friday after the world leader in semiconductors soared past Wall Street's earnings targets and set an upbeat tone for top chip and chip-equipment makers.
Intel (INTC) soared 12 to 103-1/16, or 13 percent, after the chip giant reported fourth-quarter income that topped analysts targets by 6 cents per share, due to solid demand for the personal computers that its chips power.
However, at least one Wall Street analyst pointed out that Intel's stellar performance was helped by its non-operating results, including investments in other companies.
"[Intel] booked much higher level of gains on its investment portfolio than they had indicated they
would," said Joe Osha, a Merrill Lynch analyst who has a near-term "accumulate" rating and a long-term "buy" on Intel. "About 4-1/2 cents to the upside there didn't come from making semiconductors. It came from making investments."
Still, in a statement, Intel's chief executive officer, Craig Barrett, said he expects Intel's revenues from its networking, communications and wireless businesses to grow by 50 percent in 2000.
Intel said unit shipments of microprocessors, chipsets, motherboards and flash memory all set new records during the quarter, and that because of stronger-than-expected demand, average selling prices rose slightly during the fourth quarter.
Trailing in the wake of the Intel steamship were some of its customers, which make the equipment Intel uses to pound out its chips, largely because the chip giant said it's ready to invest more in capital expenditures in the coming months.
Intel spillover is widespread
Topping the list: Applied Materials (AMAT), the leading maker of chip-making equipment and one of Intel's leading suppliers, which rocketed 11-1/8 to 135-5/8.
Etec Systems (ETEC), a maker of equipment used to make tiny masks used in chip production Applied Materials agreed to buy Wednesday, rallied 7-1/4 to 83-1/16, despite a downgrade from Tucker Anthony Cleary to "accumulate" from "buy."
Also on the upswing, Novellus Systems (NVLS) jumped 12-5/8 to 155-7/16, Lam Research (LRCX) rallied 16 to 129-3/4, Semitool (SMTL) rocketed 1-13/16 to 24 and KLA-Tencor (KLAC) blasted up 18-1/4 to 138.
Top Intel rivals got in the groove as well. Among them, Advanced Micro Devices (AMD) rose 2-5/8 to 40-3/8 and Motorola (MOT) added 12-3/16 to 150-3/4.
The Philadelphia Stock Exchange's semiconductor index, surged 8.1 percent, finishing up 60.89 points at 809.97.
Microsoft shake-up lifts stock
Elsewhere, in the software business, sector heavyweight Microsoft (MSFT) added 4-7/16 to 112-1/4, after Chairman and CEO Bill Gates said he's handing off the CEO title to his No. 2, President Steve Ballmer.
And among other technology bellwethers, fellow Dow industrials issue IBM (IBM) rose 1-3/8 to 119-5/8 after Big Blue said it has formed a $500 million fund to invest in Internet firms that use the Web to link companies with their suppliers and partners.
The Internet sector was mixed, with the Goldman Sachs Internet index down 0.35 percent, while the Dow Jones Internet Commerce index climbed 1.9 percent. 
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