Tech stocks were once again clutching at positive territory Friday after a sudden, and not unexpected, morning decline. Considering the scope of this week's advances, investors couldn't resist the temptation to pocket some cash ahead of the weekend.
But the drop-off soon turned into a buying opportunity for those traders who see tech and Internet shares remaining on the ascent in coming days. The Nasdaq Composite Index was 25.40 higher at 2587.01. The Wired Index slipped 0.42 points to 672.38 in mid-afternoon trading, and the S&P 500 was down 2.63 at 1356.19.
Blue-chip stocks lagged the rest of the market 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 reversed course and was off 14.23 at 10712.86.
"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 instinctively backed off from the company's shares while trying to get a handle on the equation. The telco's stock fell $3.56 to $53.19, but MediaOne (UMG) was 11 percent higher at $77.06. Comcast (CMCSA) rose 94 cents to $67.13.
In related action, At Home (ATHM) jumped $12.06 to $157.50 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 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?
