STOCKS TO WATCH: AMD, IBM, Microsoft and Sun Microsystems
Expect the following technology stocks to be among Monday's most actively traded issues: AMD, IBM, Microsoft and Sun Microsystems.
Gateway Inc. plans to phase out microprocessor purchases from AMD,signaling Intel Corp.'s renewed gains in the competitive market, according to Monday's Wall Street Journal.
Gateway, which in February brought out its first PCs using AMD chips, won't continue with purchases after its current models are replaced, according to people close to the matter.
The phase-out wasn't unexpected, since Gateway had recently spurned the chip maker's latest high-performance Athlon chip, the device that represents the company's best hope for a return to profitability.
IBM shares fell 4 5/8, or 4 percent, to 125 3/8 after Merrill Lynch analyst Steve Milunovich cut his estimate for hardware revenue growth in the third quarter.
Milunovich said he's concerns that possible slowing computer hardware sales could well set the pace for the way dealers view upcoming earnings for many high-tech companies. He cut estimates due to difficult comparisons with strong year-ago results in its mainframe and personal computer businesses, which constitute the bulk of IBM hardware sales.
The top Merrill technology analyst said he was still confident overall IBM revenues and earnings would be in line with current expectations, but worried that investors could react to the sluggish hardware growth and exit the stock after the third-quarter results are published in mid-October.
"We believe earnings will be reported essentially in line with our expectations but we think there may be a quality of earnings issues in 4Q (fourth quarter) and the stock could react negatively," he wrote, referring to the hardware concerns.
He maintained his buy rating on the stock.
Microsoft should be on the move Monday after the Justice Department said it paid for "impartial" advertisements by a group of academics supporting its position in its ongoing antitrust battle.
Microsoft shares closed up 2 7/16 to 96 7/16 Friday.
CEO Bill Gates also announced plans to offer one billion pounds ($1.6 billion) to secure television rights for England's premier League soccer, a Singapore newspaper quoted Football Association (FA) commercial director Phil Carling as saying.
Microsoft closed up 2 7/16 to 96 7/16.
Sun will be on the move Monday after it announced a 2-for-1 split Friday, its second split this year.
The company set a 2-for-1 split for shareholders of record on Nov. 11, and will pay it Dec.7. Stock splits don't change the fundamentals of a company but investors typically interpret the move as a sign of optimism at a company.
Sun shares closed up 4 to 88 11/16 Friday.>