By Benjamin Pimentel
The tech sector battled back into the black, boosted by gains in
shares of Cisco Systems and chip companies.
But the sector was still being weighed down as shares of Dell
Inc. fell on news that the PC giant was buying Perot Systems.
Dell (DELL) was down about 4% after announcing the $3.9 billion
deal in an apparent bid to match rival Hewlett-Packard's (HPQ)
reach in the corporate tech market by boosting its information
technology services portfolio.
"The three most important words for buyers and sellers of
technology products are 'services, services, services,'" said Gary
Beach, publisher emeritus of CIO Magazine, which is geared toward
chief information officers.
"Dell's deal for Perot is a counterpunch to H-P's acquisition of
EDS," he added, referring to H-P's purchase of the IT services
giant. "In the tech world, only the 'strategic' will survive. Dell
needed a ramped up services offering to remain strategic with
global CIOs."
Shares of Perot Systems (PER) soared more than 65%. H-P was up a
fraction.
After sinking in the opening minutes of trading, the Nasdaq
Composite Index (RIXF) battled back and was up a fraction at 2,139.
The Morgan Stanley High Tech 35 Index (MSH) was up 0.2%, while the
Philadelphia Semiconductor Index (SOX) gained 0.4%.
Shares of Applied Materials (AMAT) were down 2.9% after the
semiconductor capital equipment company was downgraded to average
from buy, citing a recent change in top management.
Analyst Ben Pang cited last week's announcement that Randhir
Thakur will take over the company's silicon systems group, which is
focused on its core chip tools business.
"Applied did not comment on the reasons for the change, but we
think it is due to poor market share for semi-equipment," Pang
wrote. "We think this could cause revenues to rebound slower than
expected because semi capital spending is the key growth avenue
over the next several quarters."
Also in the red were Apple Inc. (AAPL), Yahoo Inc. (YHOO) and
eBay Inc. (EBAY).
Among the gainers were Google Inc. (GOOG), Cisco Systems (CSCO),
Intel Corp. (INTC) and Advanced Micro Devices (AMD).
On the video-game front, Activision Blizzard (ATVI) was up 3.8%
at $12.24 after the game publisher announced it was delaying the
release of a racing game called "Blur" into 2010. The company said
strong demand for "Modern Warfare 2" will allow it to maintain its
outlook for the current year.
Shares of Take-Two Interactive Software (TTWO) fell nearly 5%
after the company was downgraded by Wedbush Morgan to a neutral
rating.
In a note to clients, analyst Michael Pachter said the company's
share price "fully reflects an increasingly positive outlook and
the lack of other company specific catalysts."