By Benjamin Pimentel
The tech sector eked a small gain Monday, aided by gains in
shares of Palm Inc., even as Dell Inc. stock fell on news that the
PC giant was buying Perot Systems Corp.
Palm (PALM) rose nearly 14% to $15.95. On the other hand, Dell
(DELL) fell 4.1% to close at $16.01 after announcing the $3.9
billion deal in an apparent bid to match rival Hewlett-Packard
Co.'s (HPQ) reach in the corporate 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
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 65%. H-P was up
fractionally.
After sinking in the opening minutes of trading, the Nasdaq
Composite Index (RIXF) gained 0.2% to close at 2,138.
However, the Morgan Stanley High Tech 35 Index (MSH) and the
Philadelphia Semiconductor Index (SOX) each lost a fraction.
Shares of Applied Materials Inc. (AMAT) were down 2.8% 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 Advanced Micro Devices Inc. (AMD), Cisco
Systems Inc. (CSCO) and Google Inc. (GOOG).
On the video-game front, Activision Blizzard Inc. (ATVI) was up
4.2% 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 Inc. (TTWO) fell 4.9%
after the company was downgraded by Wedbush Morgan to a neutral
rating.
In a note, analyst Michael Pachter said the company's share
price "fully reflects an increasingly positive outlook and the lack
of other company specific catalysts."