NEW YORK (CNNfn) - U.S. technology stocks clung to modest gains Tuesday after the Federal Reserve cut interest rates to their lowest level in nearly four decades.
The computer hardware and semiconductor segments were pressured following bad news from Compaq, which warned of a wide third-quarter revenue shortfall that will cause it to report a loss instead of the profit it had been aiming for.
But the broader technology sector strengthened, with computer software and Internet stocks posting some of the sharpest gains. The Nasdaq composite index, which is weighted heavily with technology names, ended 11.74 points higher at 1,492.20.
Software stocks were among the most active and best performers on Nasdaq.
Shares of Siebel Systems (SEBL: up $2.01 to $15.06, Research, Estimates) rose more than 15 percent. The company late Monday announced the Web-based version of its flagship customer service and selling software and said it had struck a deal to buy nQuire Software.
At its user conference in Chicago, Siebel began demonstrating Siebel 7, the long-awaited version of its popular customer relationship management (CRM) software that has been rewritten to run on the Internet. Siebel expects to begin shipping Siebel 7 products this quarter, and a raft of companies have pledged their support to the new product.
Other software makers moving higher included: Microsoft (MSFT: up $1.26 to $53.05, Research, Estimates), the market leader; Oracle (ORCL: up $0.02 to $12.60, Research, Estimates), which ranks second; Veritas Software (VRTS: up $1.59 to $19.90, Research, Estimates); and BEA Systems (BEAS: up $0.79 to $10.08, Research, Estimates).
The Goldman Sachs computer software index finished 4.45 points higher at 121.94, a 3.8 percent gain on the day.
The technology sector and the broader markets weakened shortly after the Fed announced a half-point cut for the federal funds rate, bringing overnight bank lending rates to their lowest level since 1962.
But after a brief decline, the markets recouped their losses, pushing most of the major indexes comfortably into the plus column.
Online retailer Amazon.com (AMZN: up $0.07 to $6.08, Research, Estimates) was in the spotlight. Its shares rose after Chief Financial Officer Warren Jenson told Reuters Tuesday that the company is well positioned to meet its goal for profits, excluding certain items, in the fourth quarter – but he cautioned that the economy was unpredictable.
At the same time, Jenson said he would neither confirm nor back off Amazon's previously stated goal of reaching operating profitability in the fourth quarter. "Everybody's been dealt a big wild card. We're going to have to watch the economy very, very carefully," he said.
Elsewhere among dot.coms, shares of Internet advertising firm DoubleClick (DCLK: up $0.05 to $5.45, Research, Estimates) moved higher. Shares of online auctioneer eBay (EBAY: up $0.52 to $47.49, Research, Estimates) also were on the rise. Meanwhile, shares of Internet media company Yahoo! (YHOO: up $0.15 to $9.24, Research, Estimates) took back earlier losses to end in the plus column as well.
Elsewhere in technology, the stocks of personal computer makers were pressured following an earnings warning from Compaq, the world's second-largest supplier.
After Monday's close, Compaq (CPQ: down $0.17 to $8.16, Research, Estimates) said it expects to post a third-quarter loss, on much lower-than-expected revenue, because of disruptions to its business caused by the Sept. 11 terrorist attacks and several other extraordinary circumstances.
Executives of Compaq said their business was hurt by the attacks because they effectively robbed the company of a week's worth of orders, slowed transportation, and put a kink in the company's supply-chain management.
They also blamed a falloff in business following the announcement of the company's plan to merge with Hewlett-Packard (HWP: down $0.35 to $15.25, Research, Estimates), as well as a typhoon that affected its operations in Taiwan.
Shares of Dell Computer (DELL: down $0.17 to $18.54, Research, Estimates), the No. 1 PC supplier, also fell. Gateway (GTW: down $0.25 to $4.65, Research, Estimates) shares finished in the minus column as well.
Enterprise hardware stocks brushed off cautious comments from ABN Amro, which lowered its earnings estimates on several such companies. They included: Brocade (BRCD: up $0.53 to $13.43, Research, Estimates); Emulex (EMLX: up $0.01 to $9.26, Research, Estimates); McData (MCDT: up $0.06 to $8.04, Research, Estimates); Network Appliance (NTAP: up $0.31 to $6.85, Research, Estimates); and EMC (EMC: down $0.10 to $11.00, Research, Estimates).
At the same time, shares of IBM (IBM: up $1.06 to $93.77, Research, Estimates), the world's largest supplier of computer hardware and information technology services, moved higher.
The Goldman Sachs computer hardware index fell a fraction of a point to 175.38.
Semiconductor stocks were mixed in early trade but weakened as the session progressed.
Falling out of the plus column and into negative were chip stocks including: Altera (ALTR: down $0.37 to $15.38, Research, Estimates); Xilinx (XLNX: down $0.18 to $22.80, Research, Estimates); Linear Technology (LLTC: down $0.35 to $30.10, Research, Estimates); and Lattice Semiconductor (LSCC: down $0.28 to $14.82, Research, Estimates).
Also moving lower were shares of chip companies including: Intel (INTC: down $0.47 to $19.54, Research, Estimates); Applied Materials (AMAT: down $0.92 to $27.50, Research, Estimates); and Texas Instruments (TXN: down $1.85 to $23.14, Research, Estimates).
Computer memory chip specialists Micron Technology (MU: up $0.52 to $18.27, Research, Estimates) and Rambus (RMBS: up $0.02 to $7.00, Research, Estimates) were among the chip stocks finishing higher. Advanced Micro Devices (AMD: up $0.07 to $8.00, Research, Estimates) also gained ground.
The Philadelphia Stock Exchange's semiconductor index fell 7.88 points to 354.61, a 2.2 percent decline. 
|
