Pulse: Mixed Bag for Tech on a Day the Comp Sighs With Relief

Tech stocks managed to eke out small gains in what will have to pass as a positive day for the battered sector. Investors were bargain hunting in some issues, but still kept pressure on others.

The Nasdaq ended the day up 44.38, or 1.2%, at 3893.89, holding onto earlier gains and forcing shorts to cover into the close. TheStreet.com Internet Sector index finished up 5.95, or 0.8%, at 799.25.

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 5.95 +0.8% 799.25 TSC E-Commerce 0.04 -0.1% 46.11 TSC E-Finance 1 1/32 +2.1% 49 13/32 Nasdaq 44.38 +1.2% 3893.89

Weakness in Intel (INTC Quote) held the tech sector back. Intel was cut to market perform from strong buy at Banc of America Securities over demand concerns. It ended down $3.69, or 5.7%, at $61.25.

Among the day's winners, Knight Trading Group (NITE Quote) closed up $6.63, or 22.5%, at $36.06. With all of the recent mergers in the financial sector, there was speculation that the market maker could be the next one targeted for a buyout.

Online brokerages benefited from the news as well. E*Trade (EGRP Quote) closed up 81 cents, or 4.4%, at $19.31, while Ameritrade (AMTD Quote) climbed $1.38, or 7%, at $20.63

Also showing gains were a couple of market favorites that have slipped of late. Check Point Software (CHKP Quote), which went from $158.50 on Sept. 5 to $135.50 on Sept. 11, closed up $11.13, or 8%, at $151.88. And Juniper Networks (JNPR Quote) closed up $8.88, or 4.7%, at $198.63.

Profit-takers helped take the stock from $228 on Sept. 5 to $181.75 on Monday. Short-covering may have helped shares of Vignette (VIGN Quote), which closed up $3.06, or 9.2%, at $36.44, while BEA Systems (BEAS Quote), which was featured prominently in last week's Barron's, closed up $4.44, or 7.3%, at $65.56.

On the downside, Ventro (VNTR Quote) closed off $1.63, or 9.7%, at $15.13 after VerticalNet (VERT Quote) said it was not considering buying the e-business company.

Among traditional Internet plays, America Online (AOL Quote) closed up 19 cents, or 0.3%, at $56.19. The Wall Street Journal reported that the Federal Communications Commission may force AOL to open its instant-messaging service to rivals as a condition for its approval of AOL's merger with Time Warner (TWX Quote).

And Inktomi (INKT Quote) ended down $2.25, or 2.0%, at $108.75 after the company said that it had signed a deal with FastForward Networks, which provides software for distributing streaming media over the Internet. The deal was valued at $1.3 billion.

2:41 p.m.: Tech Mixed in Afternoon Action

A mixed market has produced its share of winners and losers as investors attempt to sort out whether the market has been beaten up enough.

In recent trading, the Nasdaq was up 35 to 3884. It had traded within a range of 3794.29 and 3881.12. TheStreet.com Internet Sector index was up 5 to 798.

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 5.05 +0.63% 798.35 TSC E-Commerce 0.27 -0.61% 45.87 TSC E-Finance 0.75 +1.55% 49.13 Nasdaq 35.20 +0.91% 3884.7

Yesterday, we noted how our own Jim Cramer was getting cautious on tech. Apparently, some of his "fans" saw his comments that he was turning negative on tech as a sign that a bottom was in place, using Big Jim as a contrarian indicator. Here is his response.

"To those who regard my capitulation as a 'market bottom,' may I suggest that you didn't make too much money betting against me the last time I said to take it off the table. But be my guest."

Love the man's gumption.

Highlights among new economy stocks included Knight Trading Group (NITE Quote), up 18.3% amid talk that it could be the next financial institution targeted for a buyout. Online brokerages were benefiting from the news as well. E*Trade (EGRP Quote) was up 3%, while Ameritrade (AMTD Quote) (AMTD Quote) was up 5.2%.

Investors in Copper Mountain Networks (CMTN Quote) were simultaneously scratching their heads and pulling their hair out. The stock was down another 6.5% today. It has lost around 65% of its value since trading above 125 on July 17 on concerns over competition, causing it to fall out of favor with momentum investors. The company actually presented at a Dain Rauscher Wessels' technology conference, but apparently did not say enough to appease investors.

Nevertheless, Dain Rauscher, which has done underwriting for Copper Mountain, maintained a strong buy rating and a whopping $150 price target on the stock.

Finally, VerticalNet (VERT Quote) was down 5.6%. The electronic commerce operator was ripped in a research note from Wedbush Morgan Securities. In a note from Sept. 11 titled "VerticalNet: Is pollutiononline really worth $60 million or is that solid waste," analyst George Santana takes issue with the stock's valuation. He notes that the stock's share price suggests that each of its 57 Web sites (pollutiononline being one of them) is worth an average of $60 million, while traffic to its communities was "very light."

"Given the sites' light traffic and the minimal amount of eCommerce on the sites, we are hard pressed to justify the current high valuations per Web site," he wrote.

11:07 a.m. EDT: Tech Reverses Course into Positive Territory

Bargain hunters were attempting to keep the technology sector afloat this morning, though price action was similar to yesterday's session when the market was unable to maintain gains into the close.

In recent trading, the Nasdaq was up 20.6 to 3870.1 after trading as low as 3794.

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 6.97 +0.88% 800.27 TSC E-Commerce 0.40 +0.87% 46.55 TSC E-Finance 1.59 +3.29% 49.97 Nasdaq 20.6 +0.54% 3870.1

TheStreet.com Internet Sector index was up 6.97 to 800.27. The market remains in the midst of earnings warning season, which has created some angst of late.

Inktomi (INKT Quote) was up 38 cents, or 0.3%, to $111.31 on news that it had purchased FastForward Networks, a private company that provides software for distributing live broadcasting over the Internet for $1.3 million. Terms of the deal call for Inktomi to issue approximately 11.9 million shares of stock for FastForward Networks. According to a press release on the deal, all of the FastForward employees will join Inktomi.

America Online (AOL Quote) was off 1.06, or 1.9%, to $54.94. The Wall Street Journal was reporting that the Federal Communications Commission may force AOL to open its instant-messaging service to rivals as a condition for its approval of AOL's merger with Time Warner (TWX Quote). The story also indicates that Time Warner may be forced to open its high-speed cable lines to competitors beyond the extent it already was doing.

AOL also said it had launched a service through its Netscape division that will help small businesses get online. It will compete with similar services offered by both Yahoo! (YHOO Quote) and Microsoft (MSFT Quote).

PurchasePro (PPRO Quote) was getting little mileage out of news that it had formed an alliance with Computer Associates (CA Quote). It was off 94 cents, or 1.5%, to $61.81, while Computer Associates was off 69 cents, or 2.4%, to $28.50.

The alliance will include technology integration, joint channel development and co-marketing efforts. PurchasePro is a provider of business-to-business e-commerce, while Computer Associates is an e-business solutions provider.

Shares of Ventro(VNTR Quote) were off $1.19, or 7.1%, to $15.56. Losses came on news that VerticalNet (VERT Quote) said it was not considering buying the beleaguered company.

In a release last night, VerticalNet said that as a general rule, it doesn't comment on rumors, but that it wanted to nip this one in the bud. So, it did. Speculation over the two companies pairing up started last week after Ventro ducked out of some high-profile public appearances.

The announcement didn't stop the slide in VerticalNet's shares, though. It continued downward for the fourth straight day, off $1.69, or 3.8%, to $44.81.