Markets mixed in afternoon trading
AT&T's surprise bid for cable company MediaOne drags the Dow lower in the afternoon, while climbing technology and cable stocks boost the Nasdaq into positive territory.
After opening on a weaker note, the tech-heavy Nasdaq Composite Index rose in the afternoon, up 32.71 points to 2,594. The Dow Jones Industrial Average fell 12.31 to 10,714.
Ma Bell, a component of the Dow Jones average, continued to drop in afternoon trading. The long distance giant saw its shares fall 7.2 percent, down 4.12 to 52.62, while shares of MediaOne soared 10.7 percent, rising 7.5 to 77.
As previously reported, AT&T made a $62 billion bid for MediaOne, hoping to disrupt last month's merger agreement between the cable company and Comcast. Comcast's original bid for MediaOne in March was close to $60 billion. But the company's stock has fallen since that time, decreasing the value of its offer.
The news powered gains in the cable sector . Shares of Comcast rose .25 to 66.43, and Cox Communications gained 2.31 to 74.81. Earlier today, Cox said it agreed to buy Virginia-based Media General cable systems for $1.4 billion in cash. Meanwhile, other telecom stocks were mixed. MCI WorldCom fell 2.06 to 90.37, Bell Atlantic rose 1.37 to 59.25, and Sprint rose 2.25 to 106.68.
Shares of VeriSign slid 12 percent after the maker of encryption software received a downgrade from Morgan Stanley. Analyst Mary Meeker cut her rating on the company's stock to "neutral" from "outperform" due to a recent run-up in price, according to Reuters. Yesterday, VeriSign posted a narrower-than-expected first-quarter loss of 8 cents a share, vs. a loss of 27 cents a share in the year-ago period. Analysts surveyed by First Call expected a loss of 10 cents a share. VeriSign dropped 17.68 to 129 in the afternoon.
Computer maker Gateway traded weaker, down .43 to 69.5, despite reporting strong results for its first quarter. Gateway said its first-quarter earnings beat Street estimates; the company reported earnings of 62 cents per share, or $99.6 million for the quarter, compared with 48 cents per share for the same period last year. Wall Street analysts polled by First Call predicted earnings of 60 cents per share. Net income increased 31 percent, from $75.9 million last year.
Other PC hardware stocks mostly were trading higher in the afternoon, led by computer giant IBM. IBM traded stronger, up 4.53 percent, gaining 8.81 to 203.31, Apple rose 1.87 to 38.25, and Dell rose 1.06 to 42.93. After a shaky opening, shares of Hewlett-Packard jumped 1.12 to 77.75 in the afternoon, while Compaq remained in the red, down .56 to 23.12.
Online broker E*Trade today announced its second 2-for-1 stock split for this year. The company's shares surged by 7.5 percent on the news, climbing 7.25 to 103.25. Its fellow online broker Ameritrade also rose, gaining 4.87 to 125.5.
In the Internet sector, stocks were mixed in afternoon trading. Internet directory Yahoo traded stronger, up 3.12 to 187.12, and Excite jumped 16.06 points, or 11.4 percent, to 156.68. Infoseek fell 2.43 to 57.75, and America Online lost 2.93 to 145.75.