Wall Street was mixed in mid-afternoon trading Monday as traders, still dizzy from Friday's record-setting surge in blue-chip prices, relaxed a bit and pocketed some of their newly won profits.
Tech stocks were buoyed by Intel coming to terms with the US Federal Trade Commission over antitrust charges against the chipmaker. Both sides filed a joint motion to have the complaint withdrawn.
The Dow Jones Industrial Average shed 34.55 points to 9701.53. The Nasdaq Composite Index rose 41.07 to 2378.18, and the S&P 500 was up 0.74 at 1276.21.
Just a day before the trial was set to begin, Intel (INTC) and the FTC apparently decided there was room to compromise in settling charges that the chipmaker illegally cut off technical information to companies that failed to license key patents. Intel CEO Craig Barrett called the pact "a win-win for both parties," and said the deal "gives us value for our intellectual-property rights."
Maybe. Or maybe the government decided that hobbling Intel in the same manner that International Business Machines was hamstrung in the '80s wouldn't be in the best interests of the tech-driven US economy. By this thinking, a certain amount of rough stuff not only is to be expected in the industry, but must of necessity be tolerated by regulators.
"Do you want to get cancer or do you want a really bad flu?" asked Clay Ryder, an analyst with Zona Research. "Most people would opt for the flu."
Ultimately, he said, the government may have decided that it would be difficult proving that any misdeeds on Intel's part had a profoundly negative impact on the rest of the tech industry. "Maybe Intel has done a few things that are questionable," Ryder observed. "But it's hard to argue that the entire PC business hasn't thrived in recent years."
Intel's stock advanced US$3.94 to $118.56. The proposed settlement still must be approved the full four-member commission within the next few days.
So what does this say about the government's separate antitrust charges against Microsoft? Most observers figure the case against Redmond is too far along to be summarily dismissed at this stage, but the Intel settlement at least suggests which way the prevailing wind is blowing. The trial is now in recess.
In any case, Microsoft (MSFT) had some news of its own to keep its stock afloat. The company's shares gained $2.44 to $157.38 on reports that Bill Gates will announce an initiative to get hundreds of millions of Chinese online when he visits the bustling city of Shenzhen on Wednesday. The idea apparently is to promote set-top boxes that would provide Net access via one's TV -- and, not coincidentally, provide a boost to making Windows CE the operating system of choice for such boxes.
Microprocessor maker VLSI Technology (VLSI) fell 9 cents to $18.22 as it added some more venom to its poison-pill defense against a hostile takeover by Royal Philips Electronics. If any new shareholder purchases more than a 10 percent stake in the company, VLSI now will automatically deluge existing shareholders with additional stocks, making a takeover try substantially more expensive. Philips had offered about $777 million for VLSI.
Speaking of expensive, Seagate Technology (SEG) slid $1.25 to $28.63 after saying it will take a fiscal third-quarter charge of as much as $60 million to pay for current restructuring moves. The biggest maker of computer disk drives didn't say what this would do to its bottom line, but it now seems a stretch that the company will hit analysts' estimated 46-cents-a-share profit for the current quarter.
Last week, Seagate said it wouldn't be harmed by Dell Computer's decision to purchase $16 billion worth of components from IBM over the next seven years. How convinced do you feel by that declaration?
