Wall Street cautiously stepped into a new month of trading Monday. Stocks were only modestly higher in the mid-afternoon as investors attempted to reconcile the recent flurry of strong earnings and stock splits with an anticipated slowdown in economic growth.
Tech and Internet shares were mixed, while the telecom industry reeled from news of a tie-up between AT&T and Time Warner.
The Dow Jones Industrial Average gained 42.73 points to 9401.56. The Nasdaq Composite Index rose 16.67 to 2522.56, and the S&P 500 was down 0.60 at 1279.04.
AT&T (T) advanced US$2.81 to $93.56 after striking a deal to provide local phone service over Time Warner cable systems in 33 states. With its acquisition of Tele-Communications Inc. almost complete, the telco said it will soon be able to offer a full array of network options to almost half of all US households -- and at prices as much as 20 percent below current rates.
"AT&T has been the most aggressive in moving competition ahead for the benefit of consumers," said Brian Adamik, an analyst with the Yankee Group. "Everything AT&T has been saying is that this is about bringing choice to the market."
It's also about doing an end run around local phone companies that have been doing their damnedest to keep the long-distance carriers from horning in on their action. Not least among the considerations here is a shifting of Internet access from clogged phone lines to high-speed cable systems. "There's no doubt about it," Adamik said. "That's where this is headed."
Time Warner (TWX) was up $1.50 at $64, while Baby Bells like Bell Atlantic (BEL) and SBC Communications (SBC) were both lower. At Home (ATHM), the cable-based Net-access provider with close links to AT&T, rose $2.50 to $127.50.
Consolidation remained the watchword among Internet companies as well. Theglobe.com (TGLO) gained $3.31 to $69.38 after saying it will purchase online department store Azazz.com for about $25 million in stock. Meanwhile, Internet America (GEEK) was $2.25 higher at $37.88 as it acquired the assets of ISP CompuNet for about $2 million.
Lycos (LCOS) climbed $5.25 to $142.25 after grabbing lots of headlines with the unveiling of what it claims is the world's largest database of MP3 audio files -- around 500,000 song titles. While record companies fret that the MP3 format is an open invitation to piracy, Lycos insisted that it's only posting links to the tunes, not doing the actual hosting. Lycos is now in the process of acquiring the parent company of Wired News.
Online brokers were a hot pick following news that the average number of daily electronic trades jumped 34 percent in the most recent quarter. Ameritrade (AMTD) surged 24 percent to $99.75, driven in part by the looming eligibility deadline for its two-for-one stock split, and ETrade Group (EGRP) was up 16 percent at $64.13.
In tech, Compaq Computer (CPQ) shed 75 cents to $46.88 after being downgraded by SoundView Financial Group to "buy" from "strong buy." Bad timing. Compaq simultaneously announced the more upbeat news that it's now selling $1 million worth of personal computers every day via the Net and telephone.
Advanced Micro Devices (AMD) climbed $2.31 to $25.25 on word that it's in talks with Gateway 2000 about having its chips used in Gateway PCs for the first time. AMD looks determined to steal away the low end of the chip market from industry leader Intel (INTC), which was down $2.25 at $138.69.
Cisco Systems (CSCO), on the other hand, rose $4.13 to $115.69 ahead of reporting its quarterly results on Tuesday. The network-systems pacesetter is expected to come through with profit of at least 35 cents a share, and don't be surprised if its announces a stock split to boot.
Lastly, until someone devises an olfactory plug-in for browsers, it doesn't look like fragrances are going to be the Next Big Thing for e-commerce. Perfumania (PRFM), a new site for designer scents, saw its stock tumble 36 percent to $7.06 as investors decided that online perfume sales are a smelly proposition.
