One analyst is calling this the bottom in internets.
Tech stocks slide with Net losses
Chip shares soar; Intel, Applied Materials rise
By Cecily Fraser, CBS MarketWatch
Last Update: 12:55 PM ET May 27, 1999 Tech Report
Internet Daily
NEW YORK (CBS.MW) -- Intel and other chips stocks soared Thursday, but were unable to lift the tech sector as falling cyber shares such as Amazon.com and America Online sent the group spiraling lower.
The Morgan Stanley Technology Index of blue-chip technology issues fell 0.6 percent.
The Nasdaq 100, which includes many top tech stocks, dropped 0.3 percent, and the Pacific Stock Exchange Technology Index was down 0.4 percent.
"There is nervousness with the market in general and Internet stocks are the most vulnerable to get hit because of high price/earnings ratios," said Ivan Gelfand, chairman of Gelfand Maxus Asset Management.
"Investors really want to take some profits, and if they see them (Internet stocks) go down, they'll use them as trading vehicles," he added.
In the broader market, the Dow Jones Industrial Average slid 181 points to 10519, while the Nasdaq Composite was down 9 points to 2417.
Net shares whacked
After posting losses for five of the past six sessions, Internet stocks had little fuel to push higher. The Goldman Sachs Internet Index slipped 1.2 percent, while the Amex Internet Index gave back 1.3 percent. See Net Stocks.
Keith Benjamin, Internet analyst at BancBoston Robertson Stephens said he thinks the Net sector is at an important "inflection point," following recent weakness. "Many investors appear to have given up after recent declines, demonstrating capitulation that typically defines the bottom," he said in his weekly Web report.
Benjamin said, however, that the softer side seen in Web stocks is providing the opportunity to "build a basket of stocks," recommending some well-known names like America Online (AOL: news, msgs); , Amazon.com (AMZN: news, msgs), CNET (CNET: news, msgs), eBay (EBAY: news, msgs), and Lycos (LCOS: news, msgs)
Shares of AOL fell 2 3/8 to 117 15/16, Amazon lost 4 to 116 5/8, CNET dipped 2 15/16 to 102 1/8, EBay was down 3 3/16 to 171 1/8 and Lycos lost 1 1/2 to 100 1/2.
Out of sync with the rest of the group, shares of Inktomi (INKT: news, msgs) were ahead 3 3/4 to 101 7/8.
Semiconductor surge
Chip stocks emerged as winners in the tech group as the Philadelphia Semiconductor Index surged 3 percent. Shares of Intel (INTC: news, msgs) paced the groups gains, up 1 7/8 to 53 9/16 on volume over 14 million shares.
Chip equipment makers were also lending a hand to gains as KLA-Tencor (KLAC: news, msgs) jumped 1 1/16 to 46 3/16, Applied Materials (AMAT: news, msgs) rose 2 9/32 to 56 13/16, while Novellus (NVLS: news, msgs) gained 1 3/4 to 49; Teredyne (TER: news, msgs) added 3 7/16 to 53 7/16.
Steve Singleton, director of equity research at Robert Van Securities said he thinks chip stocks have been oversold. "We were going through a product transition with Intel in the first quarter, which led to lagging purchases of chips across all lines," he said.
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Meanwhile, shares of most PC makers took a hit, sending the Goldman Sachs Computer Hardware Index down 1.4 percent. Shares of IBM (IBM: news, msgs) fell 2 5/8 to 115 1/2. Big Blue's two-for-one stock split took effect after the market closed Wednesday.
Also on the move, shares of Dell Computer (DELL: news, msgs) dipped 5/8 to 33 15/16, while Sun Microsystems (SUNW: news, msgs) lost 1 9/16 to 59 3/16. A.G. Edwards began coverage of EMC (EMC: news, msgs) with a "buy" rating and a price objective of $135. The stock declined 1 7/16 to 101.
Software shares slide
The CBOE Software Index rose 0.7 percent. Fourth-quarter earnings from Computer Associates (CA: news, msgs) are due out after the market closes Thursday. Earnings are expected to hit 83 cents a share, 2 cents more than analysts initially expected. Shares fell 1 15/16 to 43 15/16 in recent trading. See Software Report.
J.D. Edwards (JDEC: news, msgs) posted a second-quarter loss of a 10 cents, two cents ahead of the First Call's poll of analysts. The stock gained 3/16 to 19 3/16.
On the networking front, losses by shares of Cisco Systems (CSCO: news, msgs), down 1 1/8 to 107 15/16, helped send the Amex Networking Index down 0.8 percent. Shares of Lucent Technologies (LU: news, msgs) fell 1/2 to 56 1/16. On the upside, 3Com (COMS: news, msgs) rose 5/16 to 27 5/16, while Tellabs (TLAB: news, msgs) gained 1 1/2 to 56 3/4.
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