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Rambus, Intel lead rally
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June 19, 2000: 6:34 p.m. ET
Semiconductor segment at the front of a broad-based advance in tech sector
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NEW YORK (CNNfn) - Semiconductor stocks soared Monday as investors once again turned bullish about the chip industry's prospects and went on a buying spree.
At the head of Monday's semiconductor rally was Rambus, which makes money by licensing a technology used to speed up computer memory systems.
Shares of Rambus added 7-7/8, or 9.5 percent, to 91-1/4 Monday, gaining momentum after posting a 45 percent gain Friday after it inked a patent agreement with Japanese electronics firm Toshiba Corp. and received an upgrade from an influential Morgan Stanley analyst.
There was a spate of good news for Intel (INTC: Research, Estimates) on Monday as well, which helped boost its shares 10-7/16, or 8.3 percent, to 136-1/2.
The world's leading computer-chip maker Monday rolled out a new line of low-power mobile computer microprocessors, announced plans to spend $2 billion to expand its manufacturing capacity in Ireland and got a lift from two Wall Street analysts.
Intel on Monday unveiled a series of microprocessors for portable computers, including one that is designed to compete with Transmeta's recently-introduced "Crusoe" chips, which were designed to use less power and run cooler than Intel's Pentiums.
 But with its low-power mobile Pentium III processor running at 600 megahertz, Intel said it has achieved a design that consumes less than 1 watt of average power, which it said will bring high performance to ultra-portable notebook PCs weighing less than 3 pounds. Those processors are priced at $316 in quantities of 1,000.
Transmeta last month landed its first major customer for the Crusoe, which will be used in the Internet access devices PC maker Gateway is developing in partnership with America Online.
Intel also was boosted Monday by comments from Wall Street analysts after the company announced its expansion plans in Ireland.
Lehman Brothers analyst Dan Niles, who has a "buy" rating on Intel, raised his earnings per share forecast or fiscal 2000 $3.10 from $3.07. For fiscal 2001, he boosted his EPS view to $3.60 from $3.50.
In a note to clients, Niles said Intel could boost production by 10 percent to 15 percent in the third and fourth quarters of the year, allowing it to take advantage of rising prices. He added, however, that the increased production will still not be enough to fully satisfy demand.
"We believe that demand is now likely to exceed Intel's processor supply now through the third quarter and possibly into the fourth quarter," Niles said.
US Bancorp Piper Jaffray analyst Ashok Kumar, who has a "strong buy" rating on Intel, also raised his earnings estimate for the company Monday. He bumped his second-quarter forecast to 73 cents per share from 70 cents per share and raised his second-quarter revenue estimate to $8.15 billion from $7.90 billion.
"The stock has successfully tested the lows of April and has been under accumulation while bottoming," Kumar said in a research report. "With the seasonal strength in second half, we expect the stock to outperform the broad averages."
The broader semiconductor segment headed higher as well Monday. The Philadelphia Stock Exchange's semiconductor index, or Soxx, added 76.57 to finish 6.6 percent higher at 1,234.87.
Broader sector rises as rate fears subside
Meanwhile, the technology driven Nasdaq composite index finished 129.29 points, higher at 3,989.85, a 3.35 percent gain on the day and its highest finish since April 11.
Some market watchers said Monday's rally also was fueled by a growing sentiment on the Street that the Federal Reserve's policy-making committee will not raise rates when it meets next week.
 "What you are seeing is the likelihood that interest rates will not go higher next week, making it easier to give these big cap growth stocks high valuations," said Barry Hyman, market strategist for Ehrenkrantz, King Nussbaum.
Among computer equipment makers, IBM (IBM: Research, Estimates) added 6-7/8, or 6.1 percent, to 120-1/8. Hewlett-Packard (HWP: Research, Estimates) rose 3-15/16 to finish 3.5 percent higher at 117-13/16. Gateway (GTW: Research, Estimates) shares picked up 3-9/16 to finish 6.2 percent higher at 61-1/8. Dell (DELL: Research, Estimates) rose 2-1/6 to close at 49-9/16, a 4.3 percent gain on the day.
Cisco Systems (CSCO: Research, Estimates) added 1-1/8 to finish 1.7 percent higher at 68-15/16. Lucent Technologies (LU: Research, Estimates) rose 3/4, or 1.2 percent, to 61. Nortel Networks (NT: Research, Estimates) shares finished 13/16 higher at 68-3/8, a 1.2 percent gain on the day.
The Goldman Sachs computer hardware index finished up 21.45 at 595.37, a 3.8 percent gain on the day.
It wasn't all good news for computer makers Monday, though. Shares of discount PC maker eMachines (EEEE: Research, Estimates) sank 1-3/32, or 29.2 percent, to 2-19/32.
eMachines, the third-leading seller of PCs through U.S. retailers, warned Monday that its second-quarter operating loss will be between 30 cents and 33 cents per diluted share, far more than the penny per share Wall Street had expected the company to lose during that period.
Elsewhere, shares of Microsoft (MSFT: Research, Estimates) rose 1-1/8, or 1.6 percent, to 73-11/16. A federal appellate court agreed Monday to hear arguments on whether to stay a federal judge's order that would place restraints on Microsoft's business practices pending the appeal of his order to split the company in two.
Microsoft also announced Monday that it has finished work on the successor to the Windows 98 home computer operating system, called Windows Millennium Edition, which will be commercially available Sept. 14.
Database and e-commerce software vendor Oracle (ORCL: Research, Estimates) added 4-1/8 to finish 5 percent higher at 86. The company is expected to post its fiscal fourth-quarter earnings results after Tuesday's closing bell. Analysts expect the company to turn in a profit of 25 cents per share.
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Shares of Microstrategy (MSTR: Research, Estimates) soared 3-7/8, or 10.1 percent, to 42-7/16. The customer-management software provider on Monday said it got a much-needed $125 million cash infusion from outside investors.
Microstrategy said it was able to place $125 million in convertible preferred stock with institutional investors led by Promethean Asset Management. Last March, the once high-flying firm saw its shares plummet from 330 to 63 after it restated its earnings for the past two years to comply with new federal accounting guidelines on reporting revenue.
Most Internet stocks also finished on the upside Monday, pushing the Dow Jones composite Internet index 10.12 higher to 289.55, a 3.6 percent gain on the day.
But some of the bigger dot.com names finished lower.
Shares of America Online edged down 1/8 to 54-3/8. The company, which has a pending acquisition agreement with CNNfn parent company Time Warner, unveiled its long-awaited interactive television service Monday. The European Commission also extended an antitrust investigation into the Time Warner deal.
Online advertising firm DoubleClick (DCLK: Research, Estimates) fell 1-7/16, or 3.7 percent, to 37-1/16. Robertson Stephens analyst Lowell Singer on Monday lowered his revenue estimates for DoubleClick, citing softness for online advertising in the second quarter.
Shares of Web portal Yahoo! (YHOO: Research, Estimates) slipped 1-7/8, or 1.3 percent, to 139-1/16.
On the upside, shares of Inktomi (INKT: Research, Estimates) soared 21-13/16, or 18.7 percent, to 138-1/4. The company announced Monday that it has the added six new European customers for its Internet search services.
Internet streaming media technology provider RealNetworks (RNWK: Research, Estimates) added 6-13/16 to finish 14.9 percent higher at 52-11/16. 
-- Reuters contributed to this report
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