small-capitalization stocks closed lower because they were largely ignored during the session
Small-Cap Stocks End Lower As Tech Sector Leads Nasdaq Higher
By Steven M. Sears
02/19/98
Dow Jones Online News
(Copyright (c) 1998, Dow Jones & Company, Inc.)
NEW YORK -(Dow Jones)- Nasdaq stocks closed higher Thursday on the back of a technology sector rally that incited so much interest that small-capitalization stocks closed lower because they were largely ignored during the session.
Traders appear to have changed their minds about the impact of Asia's financial crisis on tech stocks after Dell Computer said in its strong fourth-quarter earnings report that international sales grew faster than North American sales, while sales in Asia actually increased during the period.
Reinvigorated by this report, traders chased many other large-cap tech stocks up the tape. Dell gained almost 10 points and Intel, a big Dell supplier, gained almost 4 points. Whenever big-tech stocks rally, the tech-heavy Nasdaq market rises.
The Nasdaq Composite Index gained 11.28, or 0.7%, to 1727.01. The Russell 2000 index of small-capitalization stocks fell 0.42, or 0.1%, to 454.27. The Nasdaq index of the 100-largest non-financial stocks gained 16.0, or 1.4%, to 1156.74. The Nasdaq computer index gained 10.24, or 1.42%, to 731.62.
The Dow Jones Industrial Average fell 75.48, or 0.9%, to 8375.58. The New York Stock Exchange Composite Index fell 2.22, or 0.4%, to 535.01.
On the Nasdaq, decliners led advancers, 1,675 to 1,709 on national market volume of 663 million and overall volume of 730 million, compared with 616 million and 684 million, respectively, Wednesday.
Dell's earnings report and the performance of its stock is a reflection of the emotionalism in the investment community and of how discounted some technology stocks have been due to concerns that the sector would get hurt by Asia's financial crisis.
"The earnings for most of the companies have come in reasonably well in spite of the worries," said Al Kugel, senior investment strategist at Stein, Roe & Farnham, a money management firm.
However, the absence of another positive surprise in the technology sector could cause a sell-off once the market has absorbed Dell's news, Kugel cautioned.
M/A/R/C fell 3, or 17%, to 14 1/4 after the marketing concern said late Wednesday that it earned 24 cents a diluted share in the fourth quarter, compared with earnings of 31 cents a diluted share in the year-ago period. The company said in late January that its fourth-quarter results would be below expectations because its research business' project work didn't reach anticipated levels.
Mastering gained 2, or 21%, to 11 1/2 after the computer-communications and training concern said it an agreed to be acquired by Platinum Technology, a business-software developer, in a stock swap valued at $139 million. The companies said Platinum will exchange 0.448 shares for each share of Mastering.
BTG gained 1 3/16, or 15%, to 9 5/16 after the information-technology concern said it will receive 328,325 Cisco Systems shares, valued at $21.4 million, for its stake in WheelGroup. As reported Wednesday, Cisco agreed to acquire WheelGroup, a network-security software producer, in a stock transaction valued at $124 million.
Kendle International gained 3 1/4, or 17%, to 23 after the provider of clinical-research and drug-development services to the pharmaceutical and biotechnology industries, said it earned 16 cents a diluted share in the fourth quarter, compared with earnings of 7 cents a diluted share in the year-ago period.
Advanced Aerodynamics & Structures gained 3/16, or 6%, to 3 7/16 after the development-stage company said it received 31 additional Jetcruzer 500 aircraft orders valued at about $36 million. The company said it now has confirmed orders for 117 aircraft, increasing backlog to more than $140 million.
BTU International fell 3/4, or 15%, to 4 7/16 after the thermal-processing systems company said it expects first-quarter sales to fall below expectations because of liquidity problems in the Far East. The company said it has seen delays in certain orders. The decline comes despite the company reporting fourth-quarter earnings of 10 cents a diluted share, compared with 1 cents a diluted share in the year-ago period.
California State Bank gained 3 3/4, or 9%, to 47 1/2 after the full-service bank with branch offices in California's Los Angeles, Orange, Riverside and San Bernandino counties said it agreed to be acquired by First Security, a multistate bank holding company. Terms of the deal call for an exchange of 1.42 First Security shares for each California State Bank share. First Security's stock fell 1 15/16, or 5%, to 35 1/4 on the news.
Astea International gained 5/16, or 15%, to 2 13/32 after the customer-service software maker said it earned 1 cent a diluted share in the fourth quarter, compared with a loss of 4 cents a diluted share in the year-ago period.
Enex Resources gained 2 3/8, or 20%, to 14 3/4 on news that Middle Bay Oil began a $15 a share tender offer for the oil-and-gas company. Middle Bay, also an oil-and natural gas company, said the offer is set to expire March 16.
Firearms Training Systems fell 1 1/4, or 12%, to 8 7/89 after Robinson-Humphrey lowered its investment rating on the maker of interactive firearms-training systems to market perform from buy.
MDSI Mobile Data Solutions fell 3 7/16, or 24%, to 11 1/8 after the mobile data-systems provider said it expects first-quarter earnings below analysts' expectations because of delays in contract signings that will keep the company from receive revenues from the contracts in the first quarter. The company said it will report first quarter earnings around April 27.
Sonic Solutions gained 13/16, or 30%, to 3 9/16 - building on Wednesday's 20% gain - for reasons analysts attributed to indications the designer of digital random-access editing and processing systems is addressing its cost-structure problems. Analysts also pointed to optimism over the release of a new product, the Sonic DVD Vobulator for Macintosh OS and Windows NT that allows multimedia producers to create content for DVD -ROM and digital broadcast use.
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