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STOCKS TO WATCH: Cisco, CMGI, Digital Island, Novellus and Red Hat

Expect the following technology stocks to be among Monday's most actively traded issues: Cisco Systems, CMGI, Digital Island, Novellus Systems and Red Hat.

  • Cisco Systems (Nasdaq: CSCO)

    Cisco Systems Inc. (Nasdaq: CSCO) agreed on Monday to buy the optical networking systems business of Italy's Pirelli SpA for $2.15 billion in stock.

    The acquisition, by the biggest maker of equipment that powers the Internet, rounds out Cisco's options for sending phone, Internet and video traffic over fast optical networks.

    Cisco, San Jose, Calif., also plans to invest $100 million in cash into Milan-based Pirelli's optical component and submarine optical transmission systems business, which lays undersea optical cables, this person said.

    The acquisition, expected to close within 45 to 60 days, is Cisco's first move into the market for dense wave division multiplexing, or DWDM, technology,

  • CMGI Inc. (Nasdaq: CMGI)

    The Internet investment firm will be on the move Monday after announcing plans to offer shares of its AltaVista search-engine property in an initial public offering.

    AltaVista, which began life under the banner of Digital Equipment and, along with Digital, was later acquired by Compaq (NYSE: CPQ), launched a $120 million ad campaign in late October, suggesting that an IPO might be in the offing.

    CMGI shares closed off 9 3/4 to 211 13/16 Friday but rallied up more than $8 a share in after-hours trading.

  • Digital Island Inc. (Nasdaq: ISLD)

    Keep an eye on Digital Island Monday after the network service provider announcing that its chairman, Ron Higgins, is moving on. Ruann Ernst was named as his successor.

    Digital Island shares closed up 7 3/8 to 140 5/8 Friday.

    All six analysts following the stock maintain either a "buy" or "strong buy" recommendation.

    Last quarter, it lost 62 cents a share. Analysts are expecting a loss of 69 cents a share this quarter.

  • Novellus Systems Inc. (Nasdaq: NVLS)

    The semiconductor-equipment maker's shares should rise Monday after announcing that it will top analysts' estimates in its fourth quarter and set a 3-for-1 stock split. Company officials also said it expects to exceed $500 million in sales in the first half of 2000.

    First Call consensus pegged Novellus for a profit of 65 cents a share in the quarter.

    After-tax margins in the first half of 2000 are expected to exceed the company's goal of 15 percent, Smith said in a statement. The stock split will be payable Jan. 15 to shareholders of record Dec. 30.

    Its shares closed up 8 31/64 to 85 11/64 Friday.

    Red Hat (Nasdaq: RHAT)

    The Linux services and software company said Monday it will split its stock 2-for-1.

    Shares of Red Hat have been on a tear recently and the latest news should boost shares again.

    Reuters contributed to this report.