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Techs post mixed results
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June 30, 2000: 5:21 p.m. ET
Broader sector advances; Compaq, Unisys, Intel slide on poor outlook
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NEW YORK (CNNfn) - Pockets of weakness appeared among some of the bigger technology names, but sector stocks ended mostly higher Friday, capping off what was otherwise a punishing quarter for the tech-laden Nasdaq composite index.
The Nasdaq ended the session up 88.86 at 3,966.09, a 2.29 percent gain on the day. Volume was thin throughout most of the session, but then spiked in the last hour of trade. Roughly 1.9 billion shares changed hands on Nasdaq during the session.
Traders attributed the late-day spike in volume to large orders from fund managers scrambling to adjust their portfolios to match the closely-tracked small-cap Russell 2000 index, which was rebalanced Friday.
 During the quarter, the Nasdaq fell 607 points, or 13.3 percent.
Most of the tech-specific indexes advanced Friday. The Philadelphia Stock Exchange's semiconductor index, or Soxx, finished 12.34 higher at 1,140.53, a 1.1 percent rise on the day. The Goldman Sachs computer hardware index added 14.31 to 574.89, a 2.6 percent gain. The Dow Jones composite Internet index added 5.77 to 288.15, a 2 percent rise on the day.
Investors continue to sell Compaq, Unisys
But investors at the same time were steering clear of some of the better-known technology names.
Compaq (CPQ: Research, Estimates), the world's leading PC maker, remained down after dropping 2-13/16 to 25-11/16 Thursday, following a downgrade by Salomon Smith Barney. The stock ended Friday's session down 3/16 at 25-1/2, even after several analysts jumped to the company's defense.
Salomon Smith Barney's Richard Gardner downgraded the stock to "neutral" from "buy" and lowered his near-term price target to $25 from $45. It was the most actively traded stock on the New York Stock Exchange.
 In a research note issued Thursday, Gardner said U.S. retail PC sales have been weak, and he believes Compaq carries the most inventory in its distribution channel among the major PC vendors, giving it more exposure to sluggish sales or declining prices.
Lehman Brothers analyst Daniel Niles defended Compaq in a research note issued Friday morning, saying investors should be "aggressive buyers of the stock" at these levels.
"We remain confident in our revenue and earnings per share estimates," Niles said in a research note. "In general, we believe that weakness in consumer is being counteracted by strong server and high-end corporate sales."
DLJ analyst Kevin McCarthy also issued a research report Friday defending Compaq, saying the stock "offers very favorable risk/reward at current levels." McCarthy said his conversations with Compaq distributors confirm the company's statement that commercial channel inventories are in good shape. In fact, some distributors have run out of inventory and are seeking more product, not less, he said.
Meanwhile, Unisys (UIS: Research, Estimates), which provides computer services and technology, also failed to recover after losing 8-9/16 Thursday when it told investors that its second-quarter profit will be about half of what analysts had expected.
 Unisys shares closed down 3/16 at 14-9/16, a 1.3 percent decline on the day. Roughly 12.9 million shares changed hands, more than four times the stock's average trading volume.
IBM (IBM: Research, Estimates) slipped 4-7/16, or 3.9 percent, to 109-9/16. Analysts this week said they expect Big Blue's second-quarter results could be weak but that they saw a strong second half.
Qualcomm (QCOM: Research, Estimates), which has fallen sharply this month because of concerns about slowing sales to South Korea, fell another 1-1/2, or 2.4 percent, to 60. The company on Friday said it is laying off some 200 employees, or nearly 3 percent of its 7,000-member work force. At roughly 18 million shares, however, trading volume was just below that stock's average.
Semiconductor maker Intel (INTC: Research, Estimates) ended the session up 1-15/16, or 1.5 percent, at 133-11/16. Earlier in the session, Intel shares dipped after SG Cowen analyst Drew Peck issued a report Friday forecasting a pricing war in the market for PC microprocessors. Peck also said he expects Intel to lose a significant portion of the market share of PC chipsets.
Shares of Advanced Micro Devices (AMD: Research, Estimates), Intel's main rival in the market for PC microprocessors, finished 7/8 higher at 77-1/8, a 1.2 percent gain on the day.
An upbeat sales report from a chip industry trade group added to the momentum in the semiconductor sector Friday.
Also on the upside
Research in Motion (RIMM: Research, Estimates), which makes wireless communications devices such as two-way pagers, rose 6-3/8 to 45-1/4, a 16.4 percent rise on the day.
The Waterloo, Ontario-based company on Thursday reported fiscal first-quarter financial results that were in line with Wall Street's expectations, and analysts Friday praised its plan to boost marketing and research spending to expand its business, despite the fact that this could dent profit projections in 2001 and 2002.
Silicon Storage Technology (SSTI: Research, Estimates) soared 12-1/2, or 16.5 percent, to 88-5/16. The company told investors Thursday that it expects to report a year-to-year revenue increase of more than 300 percent and earnings of more than 50 cents per share for its second quarter.
The company, which makes flash memory products, previously had been expected to turn a profit of 39 cents per share during the quarter, according to analysts polled by earnings tracker First Call.
StorageNetworks (STOR: Research, Estimates), which provides networked data-storage services, soared 63-1/4, or 234.3 percent, to 90-1/4 on its first day of trading. The company made its debut on Nasdaq, selling nine million shares at $27 each through lead underwriter Goldman Sachs
At the same time, EXFO Electro-Optical Engineering Inc. (EXFO: Research, Estimates) jumped 17-7/8, or 68.8 percent, to 43-7/8 on its first day of trading. The company sold seven million shares priced at $26 each, well above the expected price range of $20-to-$22.
UTStarcom (UTSI: Research, Estimates) surged Friday after it announced that a Chinese government agency had ended a month-long review of its technology and allowed it to be used in some areas of the country. Shares in the Alameda, Calif.-based company, which provides voice, data and Internet communications equipment, rose 7-1/4 to 30-3/8, a 31.4 percent gain.
Handheld computing leader Palm continued to post sharp gains after it posted better-than-expected earnings results and provided a bullish forecast earlier in the week. After adding more than 12 percent Thursday, Palm (PALM: Research, Estimates) shares ended Friday's session another 3-11/16 higher at 33-3/8, a 12.4 percent gain on the day. 
-- Reuters contributed to this report
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