Most tech stocks refused to budge from positive territory Friday, but a late sell-off pitched the blue chips into the minus column.
Investors were of two minds. On the one hand, they were looking to pocket some cash from recent gains going into the weekend. On the other, they didn't want to miss out should tech and Internet shares remain on the ascent next week. As a result, many shares spent almost the entire session flitting in and out of positive territory.
In the end, though, hard-charging tech stocks held their ground. The Nasdaq Composite Index was 28.69 higher at 2590.30. The S&P 500 was down 2.02 at 1356.80.
Blue-chip stocks were the big laggards as AT&T (T) took a spill following news of an unsolicited -- and very expensive -- bid to acquire cable company MediaOne Group. After being down about 70 points in the morning, the Dow Jones Industrial Average ultimately settled 37.51 lower at 10689.67.
"This was just a little resting period after a strenuous run," said Alfred Kugel, senior investment strategist at Stein Roe & Farnham. "The market is still fundamentally strong, and I think we've set the stage for another up-move next week."
AT&T's US$58-billion play for MediaOne was the talk of the Street. While there had been speculation that the telco might offer a bid, most observers figured that any such maneuver would be too rich for the company's blood following its $48-billion acquisition of Tele-Communications Inc. Apparently AT&T's ambitious chairman, C. Michael Armstrong, doesn't see it that way.
"Together, AT&T and MediaOne will bring broadband video, voice, and data services to more communities, more quickly than we could separately or, in MediaOne's case, with any other company," he said. That "any other company" would be Comcast, which has $48 billion on the table for MediaOne and, until this point, had considered the merger a done deal. Apparently not.
While a buyout of MediaOne would make AT&T the country's single largest cable operator, investors backed off from the company while trying to get a handle on the equation. The telco's stock fell $3.25 to $53.50, and MediaOne (UMG) was 11 percent higher at $77.31. Comcast (CMCSA) slid 38 cents to $65.81.
In related action, At Home (ATHM) jumped $13.06 to $158.50 amid rumors that, should AT&T prevail, the cable-based Net access provider would be merged with MediaOne's Road Runner service. AT&T obtained a controlling stake in At Home through its TCI purchase. The fly in the ointment: Comcast also owns a piece of At Home.
Sometimes the corporate world appears so inbred that it looks like the supporting cast from Deliverance. Market Cap wonders if any bored traders have come up with a Kevin Bacon game for corporate relationships. The Six Degrees of Time Warner?
Hard on the heels of International Business Machines (IBM) reporting a blistering-hot quarter, Gateway (GTW) weighed in with the news that it, too, had topped estimates, with a profit of 62 cents a diluted share. But the PC maker's stock dipped 44 cents to $69.50 as US Bancorp Piper Jaffray downgraded Gateway's shares to "buy" from "strong buy." Analyst Ashok Kumar said that he was concerned about "aggressive posturing" by rival Dell Computer (DELL).
Most other top tech names were in the plus column. "There are a lot of individual investors who were waiting to buy technology stocks on a dip," noted Stein Roe's Kugel. "They got their dip."
That same dip had sent shivers through several IPOs waiting in the wings earlier this week, and the buzz was that they'd been scared off from making their trading debuts. Not any longer. Net Perceptions (NETP), a developer of e-commerce software, more than doubled to $29.81 after unleashing 3.7 million shares initially priced at $14 a throw. And Launch Media (LAUN), an online music site, surged 29 percent to $28.38 as it arrived with 3.4 million shares starting at $22 each.
A day after Charles Schwab (SCH) announced a two-for-one stock split, ETrade Group (EGRP) got into the act with a similar such split of its own. The company's shares gained $8.06 to $104.06. Ameritrade (AMTD), meanwhile, was up $6.38 at $127 as Goldman Sachs began coverage of the firm with a "market outperform" rating.
Similarly, Priceline.com (PCLN), the "really big" online provider of discount airline and hotel tickets, climbed 15 percent to $88 after Goldman placed the company on its "recommended list." But -- oops! -- Goldman then retracted the recommendation, saying that it was supposed to be released on Monday.
Anyway, the cat's out of the bag, and Goldman's analysts say that they like Priceline because of its "unique patented business method." Market Cap hates to rain on anyone's parade, but all money-losing Priceline does is serve as a middleman for other industries. This approach is neither unique nor patented, and pretty much anyone else could come along and do it just as well, if not better. And without William Shatner.
3Com (COMS) vaulted 16 percent to $25.81 on continued rumors that the company is a takeover target. Recently, the buzz was that Intel (INTC) was set to make a play for network-services firm. But now traders are wondering if the most likely suitor isn't Ericsson (ERICY), the Swedish mobile-phone maker.
Pixar (PIXR) advanced 50 cents to $42 after reporting a first-quarter income of 2 cents a share, even though a break-even performance had been anticipated. The computer-animation studio said that its bottom line had been boosted by royalties from A Bug's Life interactive products. The film has raked in more than $350 million worldwide.
Lastly, Kellogg (K) finished a soggy 38 cents lower at $36.63 as it posted a 15-percent decline in quarterly earnings to 36 cents a share, which was still a penny better than expected. The world's biggest cereal maker said profits are slipping because it's spending more these days on product development.
Well, that's understandable. Frosting or no frosting? With raisins or without raisins? The possibilities are virtually limitless.
