Tech stocks held their ground on Monday in the face of a late-afternoon sell-off among blue chips. Investors were skittish amid uncertainty in Yugoslavia and chronic worries about inflation.
But Internet stocks were back to their typically bubbly selves, with investors cheering on a report that USA Networks is on the verge of dropping its acquisition of Lycos. Since NBC is angling for an increased online presence, could there now be another TV network in Lycos' future?
Despite spending much of the session in positive territory, the Dow Jones Industrial Average ultimately fell 24.34 points to close at 11007.25. The slide was limited in part by reports that Chevron (CHV) may be in talks to purchase Texaco (TX) for about US$42 billion.
Tech stocks found renewed confidence in a decision by Compaq Computer to streamline its distribution network. The Wired Index rose 2.25 to 644.98, and the Nasdaq Composite Index was 22.77 higher at 2526.39. The S&P 500 was down 4.70 at 1340.30.
After opening weaker, the market had rallied when the Yugoslav army said it would begin a partial withdrawal from Kosovo. NATO isn't yet sure what to make of the announcement -- and it's not as if the Serbs enjoy much of a reputation for levelheadedness -- but investors were clearly heartened by any development that promoted regional stability, thus allowing businesses to get back to business.
Their enthusiasm gradually waned as fears of rising inflation returned to the fore and as traders started dumping high-priced pharmaceutical stocks. Among Dow components, Johnson & Johnson (JNJ) shed $2.69 to $93.44, and Merck (MRK) was $2.13 lower at $72.38.
And there was some wariness on the financial front as British banking giant HSBC Holdings announced plans to buy Republic New York (RNB) for more than $10 billion. The move will significantly enhance HSBC's global stature, adding to its already extensive European and Asian holdings.
Closer to home, Lycos (LCOS) jumped 18 percent to $105.25 after The Wall Street Journal quoted "people familiar with the matter" as saying USA Networks (USAI) is set to throw in the towel on its much-maligned acquisition of the portal. Shareholders, led by venture firm CMGI, made no secret of their deep displeasure that Lycos would hold a subordinate position in the merged entity to USA's electronic assets, and that the complex deal placed a minuscule premium on Lycos' market value.
"It just didn't make sense from a value perspective," said Rob Martin, an analyst with Friedman, Billings, Ramsey. "People thought Lycos was worth more."
Of course, those same people seem to be forgetting that Lycos, soon-to-be parent of Wired News, reportedly shopped itself around to a variety of other potential suitors before settling on USA's offer. There's no reason to think that the portal, and its legion of surly shareholders, would find the going any easier this time around.
Martin sensed a potential clue to future activity in news that NBC had cut a deal to merge its online assets with those of Snap.com and Xoom.com, creating a new publicly traded critter called NBC Internet, or, cooler still, NBCi. "The move shows that offline media guys are still interested in online," he said. "CBS is still without a portal."
Snap's operator, CNET (CNET), climbed 20 percent to $136.19 on word of NBCi's birth, and Xoom (XMCM) was up $6.75 at $81.88. Elsewhere on the Net, America Online (AOL) gained $11.31 to $129.50 and eBay (EBAY) was $16.69 higher at $193.38, as Rajiv Chaudhri, founder of the Digital Century hedge fund, sang the praises of the two companies to Barron's.
Here's something you don't see every day: Findex.com (FIND) surged 889 percent -- that's right, 889 percent -- to $11.13 after changing its name from EJH Entertainment and obtaining an easy-to-remember trading symbol. Findex.com is a supplier of online financial information.
Guess we know how the day traders spent their afternoon.
In tech, Compaq (CPQ) rose $1.50 to $26.25 as it went about trying to boost efficiency amid tumbling PC prices. For its part, Dell Computer (DELL) advanced $2.06 to $42.25 after BT Alex. Brown upgraded the company's stock to "buy" from "market perform," and International Business Machines (IBM) was $1.31 higher at $218.56.
Just days after a much-rumored purchase by MCI WorldCom went sour, Nextel Communications (NXTL) gained 56 cents to $36.94 on news that Microsoft is buying a roughly 5 percent stake in the firm and will launch a portal for wireless Internet services. The idea, and it's a good one, is to make it easier for a new breed of smart phones to handle Web data. Microsoft (MSFT) was up 63 cents at $79.69.
Cisco Systems (CSCO) rose 75 cents to $109.25 ahead of posting its quarterly results on Tuesday. A profit of 37 cents a share is expected. And Wal-Mart Stores (WMT) was up 44 cents at $45.19 prior to reporting its own earnings. An income of 22 cents is anticipated.
Lastly, biotech outfit Zonagen (ZONA) watched nearly half its market value go poof as its shares plunged 46 percent to $10.69. The company said it doesn't expect federal regulators to give the go-ahead for Zonagen's very first commercial product, an impotence pill intended to compete with Pfizer's Viagra. Zonagen said that further research is being conducted by its partner, Schering-Plough.
Maybe they'd want to take this opportunity to come up with a better name for the pill. It's called "Vasomax," which sounds like something Austin Powers might use.
