Sector Watch: Natural Gas Stocks Rising, Chips Fall Back

With merger fever taking over, natural gas was the sector to be in this morning, and the American Stock Exchange Natural Gas Index was gaining 4.3%.

Barrett Resources(BRR Quote) was bounding 32% higher to $60.21 after a $2.2 billion bid from Royal Dutch/Shell Group was rejected. Royal Dutch said it expects a fight for control of Barrett, which has a "poison pill" defense that wards off hostile bids by triggering a massive issue of shares. Barrett earlier hit a new 52-week high of $61.25.

Royal Dutch/Shell -- a joint venture between Royal Dutch Petroleum(RD Quote) and Shell Transport & Trading(SC Quote) -- said it will pursue the deal using Delaware law, which allows a process called "action by written consent." The process lets a bidder who has gained a majority stake to take control of its target's board. Royal Dutch was up 0.5% and Shell Transport was 1.4%.

Royal Dutch/Shell Group is also a partner with Apache(APA Quote), and they together announced yesterday they expect to close on a $2.1 billion acquisition of the energy unit of New Zealand-based Fletcher Challenge by the end of March. The news was helping to lift Apache 3%.

Merrill Lynch yesterday raised EOG Resources(EOG Quote) to intermediate-term buy from a previous rating of accumulate. The stock was 2.9% higher.

The Philadelphia Stock Exchange Semiconductor Index, which has been a highflier in the past couple days, was today the victim of some profit-taking and bad news. It was lately down 2.1%.

Broadcom(BRCM Quote) was the latest chipmaker to warn about upcoming earnings. It joins a parade of semiconductor companies that have pre-announced bad news ahead of the first-quarter earnings season. TheStreet.com wrote a separate story on Broadcom's news.

Last night after the closing bell, Intel(INTC Quote) Chairman Andrew Grove said in a conference call hosted by Lehman Brothers' Dan Niles that he doesn't expect demand for chips to rebound quickly.

Grove didn't provide any new earnings guidance for upcoming quarters, but he pointed out that PC demand is likely to remain weak, and that problems in the United States could extend to Asia and Europe. "All major end markets are having problems, including PCs, wireless and networking," Lehman wrote in its morning comment summarizing the call. Lehman lowered Intel's earnings estimates for the first quarter to 19 cents a share from 21 cents a share, and dropped fiscal 2001 estimates to 90 cents from a dollar.

The news was also bringing the Philadelphia Stock Exchange Computer Box Maker Index down 0.5%.