Wall Street was sharply higher Thursday as investors forgot all their previous worries about weak earnings and started throwing money once again at tech and Internet stocks.
What's changed? Not much, actually. Micron Technology came out with some rock-solid results, which may or may not indicate that chip makers are out of the woods. But that's about it.
"It's supply and demand," said Jeff Goverman, research director at Pacific Crest Securities. "There's a lot of money out there. Investors want to put their money to work, and tech's where the action is."
The Dow Jones Industrial Average rose 169.55 points to close at 9836.39, and the Wired Index was 18.78 higher at 623.94. The Nasdaq Composite Index gained 69.15 to 2434.43, and the S&P 500 was up 21.33 at 1289.92.
Credit the bargain hunters with getting the ball rolling early on. The market's steep slide a couple of days ago left buying opportunities scattered everywhere. Confidence was bolstered by the onset of military action in Yugoslavia, which at least eliminated one more uncertainty hanging over investors' heads.
Lots of chatter on the Street about International Business Machines (IBM), and whether Big Blue is gearing up to exit the PC business. In a filing to the Securities and Exchange Commission, IBM said its PC operations lost US$992 million before taxes last year, which is more than 500 percent worse than the division performed in 1997. Clearly, traders are thinking, IBM chief Louis Gerstner must be mulling ways to stop the bleeding.
An IBM rep told The Wall Street Journal that "we remain committed to the PC business," but it sure looks like the company is repositioning itself as a leading maker of components, not finished boxes. On Wednesday, IBM inked a $3 billion pact to provide disk drives to data-storage heavyweight EMC, and a few weeks back cut a similar $16 billion deal with Dell Computer.
"There's no glory in PCs," Goverman said. "If you look at the margins in this business, there's no margin in PCs. The money's in service and supplies."
In a letter to shareholders, IBM's Gerstner came right out and declared that "the PC era is over," and that computer networks are the way of the future. If that's not a signal of the way he's leaning, what is? IBM's stock advanced $1.75 to $171.25, boosted by news that IBM and Spain's Telefonica SA will unite in selling telecom services to Spanish-speaking customers.
As for Micron (MU), its shares slid $4.63 to $47.38 as investors expressed disappointment that the company's better-than-expected earnings weren't even better. Boy, tough crowd. Micron came through with quarterly profit of 12 cents a share, crushing the single penny anticipated by analysts. But the "whisper number" on the Street had been as high as 20 cents, so traders were feeling miffed.
Elsewhere in the semiconductor sector, Applied Materials (AMAT) climbed $3.75 to $61.13 as Lehman Brothers reiterated a "buy" rating for the company's stock. Advanced Micro Devices (AMD) rose 38 cents to $16.13, while Intel (INTC) was $1.31 lower at $117.94.
And then there's Microsoft (MSFT), which gained $8.56 to $179.81. The advance came despite a decidedly chilly reception given the company's new let's-be-friends overture to the Feds. Most observers are dismissing Redmond's antitrust settlement offer as a PR ploy, and insist Microsoft will have to give significantly more ground if it wants to get negotiations going in earnest.
Netwise, America Online (AOL) jumped $9.50 to $126.63 after reaching an accord with eBay for the online auctioneer to cough up $75 million in a four-year marketing tie-up. EBay (EBAY) rose $14 to $159.38 on this news, and as the company announced plans to sell more than $1 billion in additional stock to the public.
Is eBay rival Bid.com (BII.TO) in play? The Canadian firm was up 26 percent at $12.85 after telling the Toronto Stock Exchange it knew of no reason why its shares are on the move. Although one reason for the increase is that Bid.com is seeking a listing on Nasdaq, which would considerably raise its profile, the buzz is that eBay is pondering acquisition of the company. No word from eBay as to whether there's any truth to the rumor.
From the IPO trenches, OneMain.com (ONEM) soared 80 percent to $39.56 as the Internet service provider debuted with 8.5 million shares initially priced at $22 apiece. On its second day of trading, meantime, search service MiningCo.com (MINE) was up 24 percent at $58.94.
Net stocks received an additional boost from NationsBanc Montgomery Securities, where Alan Braverman, formerly the Internet guy at Deutsche Bank Securities, settled into a new gig with "buy" ratings for everyone. Among the companies on his shopping list were Amazon.com (AMZN), At Home (ATHM), Lycos (LCOS), Infoseek (SEEK), and Xoom.com (XMCM), each of which closed higher. (Legal fine print: Lycos is now in the process of buying Wired News' parent.)
The only party pooper here was Millionaire.com (MLRE), which tumbled 28 percent to $3.63 after federal regulators came knocking at the door demanding a peek in the company's files. The high-end auction house apparently is under scrutiny for its capital-raising efforts.
In telecom, Qualcomm (QCOM) gained 13 percent to $98.44 after resolving a patent dispute with Ericsson over wireless technology, opening the door to a possible global standard for mobile phones. Nokia (NOK/A), meanwhile, was $7.50 higher at $150.50 as Morgan Stanley Dean Witter upgraded the company's shares to "outperform" from "neutral."
Speaking of Morgan Stanley (MWD), the company's own stock advanced $5.69 to $104.06 after the investment bank posted first-quarter income of $1.76 a diluted share, way ahead of the expected $1.34. Morgan said big gains from trading were responsible for the impressive showing.
Lastly, it's online casino operator GLC (GLXW) climbing 39 percent to $12.50 on word that its GalaxiWorld subsidiary will join with Playboy to create a "Playboy Play 4 Fun" gaming channel at the bunny's site. Playboy (PLA) was up $1.56 at $24.75.
Believe it or not, Playboy is getting back into the gambling biz in a big way. The company plans to open a new casino on the Greek island of Rhodes this year, and says it's "aggressively exploring" other such opportunities. Anyone want to roll the dice on a future Playboy presence in Vegas?
