Techs back in the saddle
Deals, lower rates, solid economy perk up tech stocks
NEW YORK (CNNfn) - Tech stocks got back in the saddle Friday, powered by a strong U.S. economy, a new round of deals and falling interest rates.
Level One Communications (LEVL) surged 17-7/8 to 45 after microprocessor giant Intel (INTC) said it will purchase the telecommunications chip maker for roughly $2.2 billion in stock. Intel added 1-1/4 to 114-5/8.
The gains at Level One came despite a downgrade from a CS First Boston analyst.
Level One shares over the last three months
Another analyst said he sees a strong upside for Intel, which is charting new terrain with the buyout.
"It's positioned Intel as a stronger player in the networking business and there aren't too many pure networking plays left... actually, after Cisco (CSCO) and 3Com (COMS)," said ABN Amro analyst David Wu.
"So, it's actually a growing area of the business and Intel want to get into that area because that's significant growth there - and probably faster growth than their core microprocessor business," Wu said.
Cisco added 2-9/16 to 100-13/16, but 3Com fell 3/8 to 24-5/8.
Chip sector bounces back
The recently battered memory chip maker Micron Technology (MU) rallied 6-15/16 to 59-15/16. Texas Instruments (TXN) added 8-1/8 to 100-5/8 and the programmable logic device maker Xilinx (XLNX) shot up 7-11/16 to 76-13/16.
Rallying for the second day after announcing a 7-year, $16 billion supply pact with Dell Computer, IBM (IBM) rose 7-1/4 to 178-1/4. Dell added 4-3/16 to 86-1/16.
Meanwhile, among rival PC makers, Gateway (GTW) rose 1-11/16 to 69, Compaq Computer (CPQ) added 7/8 to 34-3/16, Micron Electronics (MUEI) rose 1/16 to 12-1/16 and Hewlett-Packard (HWP) tacked on 11/16 to 68-1/8.
The good fortune for direct PC vendors didn't parlay into delight about computer retailer CompUSA (CPU), which tumbled 1-3/4 to 6-3/8, or 22 percent, after saying late Thursday it expects to report losses in its third and fourth quarters.
CS First Boston, Goldman Sachs, NationsBanc Montgomery Securities and Salomon Smith Barney all cut their ratings on CompUSA's stock.
An analyst at George K. Baum & Co. raised his earnings estimates on CompUSA rivals: BestBuy (BBY), which lost 1 to 92 and Circuit City (CC), up 5-1/2 to 68-3/4.
Nearly doubling in price Friday was Seventh Level (SEVL), up 2-1/4 to 5 as the online education provider unveiled a deal to provide multimedia trading for members of America Online (AOL), the online leader.
AOL shares rose 11/16 to 86-15/16.
Elsewhere for cyber-stocks, online auctioneer eBay (EBAY) rocketed up 18-7/16 to 149-1/4, portal Yahoo! (YHOO), which got an upgrade from Hambrecht & Quist to "buy" from "hold," added 8-5/16 to 159-13/16 and high-tech news provider CNET (CNET) surged 28-1/4 to 168.
Industry analysts said technology stocks also got a boost from the gains in the broad market. The Nasdaq Composite rallied 44.22 points, or 1.93 percent, to 2,337.
Yields on the 30-year Treasury issue pulled back from a recent climb, keeping a lid, at least for now, on borrowing costs for tech companies.
Big swings for niche software firms
On the software front, Smith-Gardner Associates (SGAI) climbed 3-7/16 to 16-1/2. The maker of software used by catalog and e-commerce merchants reported after the bell Thursday earnings of 11 cents a share versus analyst expectations of a 10-cent loss.
The company said Friday its web-order product will power Delia*s (DLIA) online store.
Notify (NTFY) added 1-15/16 to 6 after the maker of telephone message routing tools said it has received a $3 million investment from one of the co-founders of web search engine maker Inktomi (INKT), David Brewer, boosting his company stake.
But IDX Systems (IDXC) plummeted 11-1/2 to 14-1/2 after the health care information systems provider warning of a first quarter loss of 22-28 cents a share, rather than the 35-cent profit analysts expected.
Among the software titans, Microsoft (MSFT) rose 2-11/16 to 154-15/16, Sun Microsystems (SUNW) added 3-1/4 to 104-5/8 and Oracle (ORCL) gained 1-1/16 to 37-7/16.