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Tech stocks mixed as year opens
By Marc Ferranti

Investors in technology stocks appeared to be somewhat nervous in the first week of the new year, as they braced for earnings reports that will detail 2004 fourth quarter results and set the stage for the rest of 2005. Trading also may have been affected, according to some broker-research notes, by jittery traders who sold stocks to take profits after some sectors showed positive results at the end of 2004.

Trading in tech stocks was mixed, with some bellwether shares moving lower mid-week, flattening out Thursday and ticking upward slightly Friday morning.

There was not much joy for Sun Microsystems Inc. (SUNW), however, as trading on the Nasdaq exchange for the shares was soft throughout the week, closing at US$4.60 Thursday and remaining at that price until at least mid-day Friday. Trading in Sun was influenced by a widely quoted research note by Merrill Lynch & Co. analyst Steven Milunovich, who noted that amid generally positive sales and stock trends at the end of last year, Sun showed a "soft" close in sales in December, ahead of its earnings report later this month.

Milunovich noted that Sun's fiscal second quarter appears to have had sales somewhat skewed toward midrange and low-end products, which generally provide lower margins for the company, and its software business is experiencing slow sales.

Apple Computer Inc. (AAPL) shares were buoyed throughout the week by expectations that it will see strong income on sales of its iPod music player. The Goldman Sachs Group Inc. raised forecasts for the company, and traders showed strong interest in the vendor through the week, pushing shares up by $0.05 to $64.55 on Nasdaq Thursday, toward the high end of the company's 52-week range, which topped out at $69.57 in November.

High expectations for Apple came even as Microsoft Corp. Chairman Bill Gates kicked off the Consumer Electronics Show in Las Vegas Wednesday night with a speech in which he talked about how his company is muscling in on the music and digital entertainment market. Gates pointed to deals with Yahoo! Inc., MTV Networks Inc., TiVo Inc. and Fox Sports Networks that are meant to boost content deployed through Microsoft applications and Web sites.

In an interview with the Wall Street Journal, Gates also mentioned that Microsoft would be interested in working with Sony Corp., a notion later confirmed by a company statement that said the companies have been in discussions about "areas of common interest." Microsoft (MSFT) closed at $26.75 on the Nasdaq Thursday, rising a bit in Friday morning trading and nudging up against its 52-week high of $27.60.

While Apple shares seemed invulnerable to the Gates speech, Microsoft online rival Yahoo! (YHOO) slipped 70 cents to $35.43 in mid-day Thursday trading on Nasdaq, recovering to $35.85 Friday morning.

In other online-company news, Google Inc. (GOOG) shares soared past $200 on Nasdaq Monday, close to its post-IPO high of $203.64, boosted by an upbeat note about search companies from Goldman Sachs. However, Merrill Lynch during the week began coverage of Google with a "neutral" rating, noting the company's high valuation. Google settled back to $191.58 by mid-day Friday.

On the software front, Oracle Corp.'s (ORCL) announcement that it was closing its acquisition of enterprise resource planning (ERP) rival PeopleSoft Inc. on Friday appeared to boost investor confidence in the company, with share prices rising slightly toward the end of the week, closing at $13.22 Thursday and trading at $13.43 mid-day Friday.

Posted January 8, 2005 01:35 AM |