CBS-CNet Deal Boosts Tech Funds

The average technology fund we track, excluding the funds that short the sector, climbed 3.85% this week as the media consolidation of Internet stocks continues.

The biggest news in this area is the CBS(CBS Quote) purchase of CNET Networks(CNET Quote) for about $1.8 billion. The ProFunds Internet UltraSector(INPIX Quote) was prepositioned to benefit from the 48.18% skyrocketing of CNET shares.

The B2B Internet HOLDRs Trust(BHH Quote), which does not replace companies in its portfolio once they are no longer traded, is down to just two holdings.

However, since the fund is 85.2% Ariba(ARBA Quote) and 14.8% Internet Capital Group(ICGE Quote), and those shares rose 14.40% and 4.47% in the five trading days ending Thursday, May 15, this fund tops our best-performing list.

The second-place fund, Internet Infrastructure HOLDRs(IIH Quote), is down to just eight holdings. At 59.1% of assets, VeriSign (VRSN Quote) dominates the short list of holdings. VeriSign shares gained 11.02% as the company announced the milestone of one million active secure sockets layer certificates that provide security to the Web sites of most of the Fortune 500 and the 40 largest banks worldwide.

The fund's third-largest holding, RealNetworks (RNWK Quote), had an even better week, rising 15.9% on news of an impending spinoff of its games division and higher forecasted sales.

Rated E-, the generally poor-performing ProFunds Mobile Telecommunications UltraSector(WCPIX Quote) bounced back by 11.66% for the period under review. Its holding of Leap Wireless(LEAP Quote) jumped 19.82% on smaller losses than the prior year and the addition of 230,000 new customers this quarter. Up a 17.04%, some Telephone & Data Systems(TDS Quote) shareholders were shocked to learn that the company had rejected a buyout bid estimated at $97 a share, well above Thursday's close of $47.81. Clearly, insiders believe the company is worth more.

Best-Performing Technology Funds for the Week Ending Thursday May 15
Fund	Ticker	Rating	Fund Type	1 Week Total Return
B2B Internet HOLDRs Trust	BHH	E-	ETF	13.01%
Internet Infrastructure HOLDRs Trust	IIH	C+	ETF	11.83%
ProFunds Mobile Telecom UltraSector ProFund	WCPIX	E-	Open-End	11.66%
Ultra Semiconductor ProShares	USD	E-	ETF	11.65%
ProFunds Internet UltraSector ProFund	INPIX	D	Open-End	9.72%
ProFunds Semiconductor UltraSector ProFund	SMPIX	E-	Open-End	8.87%
Ultra Technology ProShares	ROM	E-	ETF	7.26%
Munder Internet Fund	MNNAX	D-	Open-End	6.27%
Ultra Telecommunications ProShares	LTL	U	ETF	6.25%
First Trust Dow Jones Internet Index Fund	FDN	E+	ETF	6.19%
Powershares Dynamic Networking Portfolio	PXQ	E-	ETF	5.57%
Source: Bloomberg & TheStreet.com Ratings

On the downside, taking the worst of the beating this week are the two funds shorting their respective Dow Jones indices with 200% leverage. The UltraShort Semiconductor ProShares(SSG Quote) lost 11.11%, while the UltraShort Technology ProShares(REW Quote) gave up 6.71%.

Of the semiconductor index members, the best performer was RF Micro Devices(RFMD Quote), which predicted a return to profitability next quarter.

The technology index member gaining the most this week was Electronic Data Systems(EDS Quote), up 27.98% upon agreeing to be bought by Hewlett-Packard(HPQ Quote) for nearly $14 billion.

Worst-Performing Technology Funds for the Week Ending Thursday May 15
Fund	Ticker	Rating	Fund Type	1 Week Total Return
UltraShort Semiconductors ProShares	SSG	A	ETF	-11.11%
UltraShort Technology ProShares	REW	C	ETF	-6.71%
Kinetics Internet Emerging Growth Fund	WWWEX	D-	Open-End	-0.22%
Kinetics Internet Fund	WWWFX	B-	Open-End	0.31%
Fidelity Select Telecommunications Portfolio	FSTCX	D-	Open-End	0.85%
Fidelity Advisor Telecommunications Fund	FTUAX	D	Open-End	0.85%
Forward Emerald Opportunities Fund	HSYTX	U	Open-End	1.44%
Powershares Dynamic Media Portfolio	PBS	E+	ETF	1.78%
Franklin Dynatech Fund	FKDNX	C	Open-End	1.78%
Hartford Global Communications Fund/The	HGCAX	A	Open-End	1.87%
Source: Bloomberg & TheStreet.com Ratings

Both the Dow Jones Industrial Average and the S&P 500 Index have now gained back almost exactly 50% of their declines from their October 2007 highs, breaking through their downtrend resistance lines. Market strength over the next few weeks is crucial to determining if we are going to test the highs or the lows.

The tech-heavy Nasdaq 100 Index consolidated its advance at the 50% level earlier this month. In a bullish sign, this index moved up to the next Fibonacci retracement level of 61.8% this week.

For an explanation of our ratings, click here.

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