STOCKS TO WATCH: Dallas Semi, Intel, Mercury Interactive, Microchip, Microsoft and MIPS

Dallas Semiconductor shares will be on the move Friday after it reported better-than-expected sales and earnings in its fourth quarter, earning $19.5 million, or 62 cents a share, on sales of $108.2 million.

First Call consensus expected it to earn 60 cents a share in the quarter.

Dallas Semiconductor shares closed up 1 11/16 to 63 15/16 ahead of the earnings report.

The $108.2 million in sales marks a 27 percent improvement compared to the year-ago quarter when it raked in $14.5 million, or 48 cents a share, on sales of $85 million.

For the year, Dallas Semiconductor earned $68.3 million, or $2.21 a share, on sales of $392.4 million, up 15 percent from fiscal 1998 when it earned $55.4 million, or $1.85 a share, on sales of $342.6 million.

"We are pleased to report record results for both the fourth quarter and year 1999," said CEO Vin Prothro in a prepared release. "It is gratifying that 15 years out of the Company's 16-year history have produced record sales."

Intel finally came through for its investors when it rolled past analysts' estimates in its fourth quarter, raking in $2.4 billion, or 69 cents a share, on sales of $8.2 billion.

First Call consensus expected the chipmaker to earn 63 cents a share in the quarter.

After missing analysts' estimates in each of its past two quarters, Intel answered its critics with aplomb.

The $8.2 billion in sales represents an 8 percent improvement compared to the year-ago quarter when it earned $2 billion, or 59 cents a share, on sales of $7.6 billion.

Intel shares closed off 3/16 to 91 1/16 ahead of the earnings report before moving as high as 95 in after-hours trading.

Looking ahead to the first quarter and fiscal 2000, Intel said it expects first-quarter sales to slip slightly from the fourth quarter due to seasonal factors.

It predicts that gross profit margins will be essentially flat with the fourth-quarter, right around 61 percent. Expenses should decline between 3 to 5 percent to $2 billion primarily due to lower advertising spending.

The business software testing company will split its stock 2 for 1 after shares more than tripled in the last year. Mercury fell 5/8 to 87 5/8.

Microchip should gain ground after it plowed past analysts' estimates in its third quarter, raking in $28.2 million, or 52 cents a share, on sales of $129.2 million.

First Call consensus expected the chipmaker to earn 47 cents a share in the quarter.

Its shares closed up 3 15/16 to 71 1/4 ahead of the earnings report.

"Microchip's business fundamentals continued to be excellent in the December quarter," said CEO Steve Sanghi in a prepared release. "In addition to generating record sales and earnings dollars, the company achieved new records for gross margin performance, operating expense efficiency and operating profit percentage."

The $129.2 million in sales represents a 29 percent improvement compared to the year-ago quarter when it made $17.8 million, or 34 cents a share, on sales of $100 million.

Microsoft's always among the leaders in volume, but it will be interesting to see how the market reacts to Thursday's surprise announcement that Bill Gates will step down as CEO of Microsoft and give the reins to President Steve Ballmer.

Speaking at a media conference in Redmond, Wash., Gates said he will continue to act as chairman of the software giant. He will also assume the role of "Chief software architect."

Gates said his "commitment to working full-time" for the company remains "100 percent" but that it was time for the management structure to evolve.

Calling the move, "a very exciting evolution for me," Gates cited his 25 years as CEO of the company he co-founded in January 1975 as a reason for him to take what he called, "the next step."

Ballmer said Microsoft (Nasdaq: MSFT will continue major product and services initiatives now underway. "I'm just very appreciative for the opportunity," he said.

Its shares closed up 2 to 107 13/16.

MIPS hurdled analysts' estimates in its second quarter Thursday, pocketing $6.6 million, or 17 cents a share, on sales of $21.5 million.

First Call consensus expected it to earn 15 cents a share in the quarter.

The $21.5 million represents a 43 percent gain from the year-ago quarter when it earned $4.1 million, or 11 cents a share, on sales of $15 million.

Its shares closed up 2 1/8 to 51 1/4 ahead of the earnings report.