Tech stocks were solidly higher Monday as last week's sell-off gave way to a determined wave of bargain hunting. The broader market was mixed, though, with fears growing that share prices are in for a rough ride this quarter.
Meanwhile, traders were focusing on how a handful of new tie-ups will affect convergence of wireless communications and the Internet.
The Dow Jones Industrial Average shed 13.13 points to 9291.11, while the Nasdaq Composite Index was 31.30 higher at 2404.92. The S&P 500 rose 4.37 to 1243.77.
The bears were rattling their cage after Ralph Acampora, chief technical analyst at Prudential Securities, issued a report saying that share prices could decline as much as 10 percent in the near future. He's not the first to forecast a setback for stocks this year, but Acampora is counted among those elite few analysts with the clout to single-handedly move the market, so his prediction carries that much more weight, especially for jittery investors seeking any excuse to jump ship.
For its part, the wireless-communications industry has looked at the future, and it sees the Internet. This was clear as Motorola said it was teaming up with Cisco Systems to jointly invest about US$1 billion over the next few years to deliver Net access via portable phones and other such gadgets. Motorola (MOT) advanced $1.88 to $68.31, and Cisco (CSCO) was up 69 cents at $101.94.
Not to be left behind, Nextel Communications (NXTL) joined hands with Netscape Communications (NSCP) to offer Net access and other data services to mobile-phone customers. Nextel gained $1.78 to $32.06, while Netscape, now being acquired by America Online, was $1.50 lower at $67.94.
"The big players are planning to make the Internet ubiquitous," said William Kurtz, an analyst with HG Wellington & Co. "This convergence will make the Internet the communications medium of choice."
If prices for wireless Net access aren't a strictly business-class proposition, this could be just what the industry is looking for to convince a new generation of subscribers that they can't live without a cell phone. A record 163 million wireless phones were sold worldwide last year, up more than 50 percent from the year before, according to market researcher Dataquest. The addition of email and Web-browsing functions would almost certainly push these numbers even higher.
Besides, the traditional Net backbone is under considerable strain. Online broker Ameritrade Holding (AMTD) was the latest to succumb to growing pains as its system crashed for almost a half-hour in the morning. Last week, rival ETrade Group (EGRP) saw its service go kaput three days in a row.
Investors, while somewhat forgiving of ETrade's plight last week, were losing patience as the snafus spread. Ameritrade dropped 16 percent to $80, and ETrade was down $3.19 at $45.75. Even the boutique brokers that were recently so beloved by traders took a beating, with JB Oxford (JBOH) tumbling 30 percent to $8.19 and Siebert Financial (SIEB) down 22 percent at $27.50.
Network Solutions (NSOL) fell 12 percent to $174.13 following a report in The Wall Street Journal that a government-appointed panel would release guidelines after the closing bell for how competitors can get into the domain-registration business. Network Solutions' monopoly on the lucrative practice is nearing an end.
In tech, Microsoft (MSFT) rose $5.25 to $165.25 on a report in the Seattle Times that Redmond is planning a sweeping reorganization that will increase the company's focus on the Net. Separately, Microsoft also staked a claim to the wireless-convergence movement by climbing into the sack with British Telecommunications to develop mobile Net services outside North America.
Today's merger of note: Computer Associates International (CA) is buying Computer Management Sciences (CMSX) for $435 million. The all-cash deal represents Computer Associate's latest bid to boost its business-services operations amid a slowdown in sales for enterprise software. Computer Associates slipped 44 cents to $45.88, while Computer Management Sciences vaulted 17 percent to $27.56.
A company called Free-PC.com popped up with an offer to give away a bunch of computers in return for recipients sharing data about themselves and accepting a barrage of online advertising. Is this a serious threat to the PC power structure?
Apparently not. Dell Computer (DELL) advanced $3.63 to $104.06, and Compaq Computer (CPQ) was up 94 cents at $44.56. Apple Computer (AAPL) gained $1.44 to $37.75.
International Business Machines (IBM) rose $1.25 to $167 as it unveiled a system to allow computer users to download tunes from the Web while making secure payments to record companies for the privilege. IBM is being joined in the venture -- code-named the Madison Project -- by leading music companies, which to date have seen the Net more as pirate-infested waters than as an ideal distribution channel.
Intel (INTC) advanced $4.44 to $132 as it upped the ante in its pissing contest with Advanced Micro Devices (AMD) by slashing prices for its low-end Celeron processors. AMD gained 31 cents to $17.13 after responding with price cuts for its K6-2 chips. Applied Materials (AMAT), meantime, surged 11 percent to $67.44 as its stock was upgraded to "strong buy" from "neutral" by Morgan Stanley Dean Witter.
MCI WorldCom (WCOM) climbed $2.81 to $79.06 after landing a contract worth as much as $1.5 billion to provide telecom services to the US Army and Air Force. MCI won a decade's worth of business from the Department of Defense to offer residential service to military personnel, as well as calling cards, pay phones, and Internet-access terminals.
Plenty of turbulence for AMR (AMR), parent of American Airlines, which shed $2.94 to $57 after canceling about 16 percent of its flights amid a sick-out by American pilots. The pilots are protesting American's purchase of Reno Air, which charges less for tickets but pays its employees less as a result.
Lastly, Marvel Enterprises (MVL) inched just 13 cents higher to $6.50 after appointing a new chief financial officer to help turn the troubled comic-book company around. It needs all the help it can get. Marvel also released preliminary fourth-quarter results showing a net loss of more than $28 million.
Where's the Silver Surfer when you need him?
