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IBM tops tech movers
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March 4, 1999: 5:08 p.m. ET
Big Blue inks 7-year, $16-billion supply deal with Dell; Intel to buy Level One
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NEW YORK (CNNfn) - IBM Corp. arranged for a hefty revenue stream over the next several years on Thursday, highlighting an upbeat day for tech stocks.
Leading a late-day revival for tech stocks, IBM (IBM) rallied 4-1/4 to 171, after direct vendor of personal computers Dell (DELL) unveiled a 7-year, $16-billion pact to purchase storage, networking, microelectronics and display technology from Big Blue. IBM shares had hit as high as 177.
Dell shares closed at 81-7/8, up 15/16.
The supply accord could lead to other such deals for IBM, one analyst said. Lou Gerstner, IBM's chairman, is trying to retool Big Blue as a technology leader, not just a PC company.
"IBM is free to sell this to any other vendor, whether it be Gateway, Compaq, you know any other competitor," said Sam Albert, IBM analyst at Sam Albert Associates.
For its part, he said, "Dell has made this deal so that they can get a leg up on this technology and their machines will be the latest and the greatest."
AT&T says no-go for AOL
Separately, long-distance giant and Dow member AT&T (T) rose 1-1/16 to 84-7/16 after Chairman and Chief Executive Officer Michael Armstrong quelled recent rumors Ma Bell was interested in buying America Online (AOL).
Press reports in recent months suggested AT&T had been eyeing a greater chunk of the Internet service provider market through a buy of AOL.
But web hosting company Verio (VRIO), rallied 4 to 36-1/2 after announcing an alliance with AOL by which it will pay the online giant $42 million to receive some 7,000 AOL web hosting customers.
AOL shares lost 13/16 to 86-1/4.
Among smaller AOL rivals, EarthLink (ELNK) added 11/32 to while MindSpring (MSPG) closed up 2-15/16 to 90-1/2.
Intel rising to Level One?
Chip giant Intel (INTC) fell 1-5/16 to 113-3/8 shortly before unveiling a $2.2 billion deal after the bell to purchase the high-speed chip and networking gear maker Level One Communications (LEVL).
In a sign the investors had no idea the deal was coming, Level One sank 5-1/4 to 27-1/8 Thursday, after Adams Harkness downgraded the stock citing concern about earnings.
The Intel buyout bid offers a 80-percent premium over Level One's current stock price.
The announcement comes against the backdrop of tough times for chip makers, as PC prices continue to come down, putting the squeeze on profit margins.
Elsewhere in the chip sector, Advance Micro Devices (AMD) added 3/8 to 18-1/2 and National Semconductor (NSM) edged up 1/16 to 10-7/16.
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