CMGI leads tech gains
|
|
June 29, 1999: 6:56 p.m. ET
Internet investment firm soars after AltaVista purchase; chips get boost
|
NEW YORK (CNNfn) - A widely anticipated deal with Compaq Computer Corp. boosted shares of Internet venture capital firm CMGI Tuesday, while the rest of the Internet sector also posted healthy gains.
CMGI (CMGI) said it will buy Compaq's AltaVista Web properties for $2.3 billion. As part of the deal, Compaq (CPQ) will take a 16.4-percent stake in CMGI, as well as a board seat at the firm. Compaq also will retain a 17-percent interest in AltaVista.
The deal sent CMGI shares 12-11/16 higher to finish at 110-3/8.
Analysts said the deal made sense for both firms.
"The combination of Compaq's AltaVista resources -- which include Shopping.com and Zip2 -- together with the CMGI expertise with building Internet properties, looks like a really strong combination," said Paul Merenbloom, Internet analyst at Prudential Securities. "If you think about it, each company gets to do what they do best, and both of them, in theory, will be able to share in the rewards going forward."
Compaq shares, meanwhile, finished 1-1/16 higher at 23-3/8. While the No. 1 PC maker was able to shed its Internet holdings as part of its efforts to streamline its operations, Compaq continues its search for a new chief executive officer.
On Monday, Greg Brenneman, president and chief operating officer of Continental Airlines, said he had decided not to proceed further with negotiations for the Compaq CEO position.
Among other Internet shares, America Online Inc. (AOL) rose 2-9/16 to 106-3/8. The world's biggest online service provider announced plans to release the next version of its access software later this year.
In other Internet issues, Web site manager Exodus Communications Inc. (EXDS) jumped 11-1/2 to 106; Web portal Go2Net (GNET) added 6-3/4 to 79-5/8; and Internet multimedia software firm RealNetworks Inc. (RNWK) added 3-1/8 to 68-5/8.
Investors also showed signs of renewed faith in Internet-related IPOs. Online mortgage provide E-Loan Inc. (EELN) closed at 37, up 23 - or 164 percent - from its offering price of 14.
Other deals of the day
Networking firm Cisco Systems Inc. (CSCO) rose 9/16 to 62-1/2 after announcing a deal to acquire StratumOne Communications, a semiconductor technology developer, for $435 million in stock.
Xerox Corp. (XRX) announced a manufacturing agreement with 3M (MMM) to develop a commercial electronic paper product. Xerox shares slipped 3/8 to 56-7/16.
Meanwhile, Seagate Technology 's (SEG) woes continued Tuesday as the disk-drive maker warned that weak sales and falling prices will cause its fourth-quarter earnings to fall well short of analysts' estimates. Seagate shares fell 2-3/8 to close at 27-1/4.
Chips soar on report
Shares of semiconductor-related issues got a boost from a bullish industry report from Lehman Brothers. Analyst Edward White said the brokerage firm expects chipmakers to show 9-percent growth in 1999 capital spending, citing rising confidence in a healthy global economy and growth in the telecommunications industry.
Among chip shares, Intel Corp. (INTC) rose 2-1/4 to 59-1/4; Broadcom Corp. (BRCM) jumped 8-1/2 to 126-1/2; QLogic (QLGC) added 8-1/2 to 134-1/8; and Rambus (RMBS) finished 5 higher at 95-1/2.
Among blue-chip technology stocks, IBM (IBM) climbed 2-5/16 to 124-7/8; Motorola Inc. (MOT) added 2-1/2 to 94-3/8; and Microsoft Corp. (MSFT) gained 1-1/4 to 88.
|
|
|
|
|
|