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Market's in an IBM State of Mind at Midsession

Tech investors love Grand Bleu's Net strategy, and the enthusiasm is aiding the whole market.

Half the time, when some company runs a bunch of ads on

CNBC

, it isn't just trying to sell people on its products, it's trying to sell investors on its stock.

When you see an ad for the

Pfizer

(PFE) - Get Pfizer Inc. Report

asthma drug

Zyrtec

, it's aimed as much at traders as at asthmatics. When

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

tells a

CNBC

audience that it puts the dot in .com, it's not just trolling for any systems administrators who might be watching.

The same goes for

IBM

(IBM) - Get International Business Machines (IBM) Report

, which has barraged the airwaves with a well-run ad campaign for it's e-business solutions. (And when's the last time anyone saw a TV ad for an IBM PC?) The company wants you to know that it's going to be one of the A-No.-1 beneficiaries of the shift to online commerce.

This was the message that CEO Lou Gerstner took to the annual IBM analysts meeting yesterday, and he was persuasive. All over Wall Street this morning analysts were gushing about Big Blue and raising price targets. At the meeting, Gerstner said that 25% of IBM's revenue was being generated by e-business solutions -- which Sweet Lou was happy to point out was four times the combined revenues of the top 25 Internet companies.

"About the third word out of Mr. Gerstner's mouth was 'Internet,'" wrote

Merrill Lynch

analyst Steve Milunovich in his note this morning, who went on to note that Gerstner "slyly said that IBM shouldn't be considered an Internet company

and then rattled off statistics implying IBM is undervalued relative to the

Yahoos

(YHOO)

and the

Amazons

(AMZN) - Get Amazon.com, Inc. Report

." Milunovich bought the act -- he upped his price target to 270 from 240.

"They done good," said

Gerard Klauer Mattison

PC analyst Lou Mazzucchelli, who although he does not follow IBM attended the meeting (companies that are doing well have good food at these things). Mazucchelli says that IBM's bet on where technology is heading looks like it's paying off. "The world is moving to a world of large servers and large networks, small netware and solutions and they are very well positioned to take advantage of that."

It's an IBM kind of day, and that's reflected in the

Dow Jones Industrial Average

. The Dow lately was up 108, or 1%, to 11,108, but more than half of that was due to IBM. Big Blue was up 13 11/16, or 6.2%, to 239 3/16.

It is, in general, a good day for the market. With the good April

Producer Price Index

and

retail sales

figures this morning, the Treasuries have rebounded, and that's helped quell interest rate jitters in the stock market. The

S&P 500

was up 9, or 0.7%, to 1373 while the tech-crammed

Nasdaq Composite Index

was up 24, or 0.9%, to 2630. Small-caps were doing well -- the

Russell 2000

was up 3, or 0.7%, to 452.

TheStreet.com Internet Sector

index was up 6, or 1%, to 663.

The suggestion that the bonds may have found their new range, along with the steepened of the yield curve, is drawing interest back into the bank stocks. The

Philadelphia Stock Exchange/KBW Banking Index

was up 2%.

"We like the financials," said Carl Bhathena, vice president at

Holland Capital Management

in Chicago. "Not just based on the consolidation that's been going on, but the earnings growth that seems to be there."

Market internals were good. On the

New York Stock Exchange

, advancers were outpacing decliners 1,792 to 1,091 on 459 million shares. In

Nasdaq Stock Market

action, advancers were topping decliners 2,065 to 1,559, with 618 million shares changing hands. New 52-week highs were leading new lows 85 to 17 on the Big Board and 111 to 18 on the Nasdaq.

Thursday's Midday Movers

By Heather Moore
Staff Reporter

As noted above, IBM was rallying 13 11/16, or 6.2%, to 239 3/16 -- on pace for a new high -- on continued investor enthusiasm, yesterday's positive annual meeting and a wheelbarrow load of analyst upgrades this morning.

Credit Suisse First Boston

reiterated its buy; Merrill Lynch also reiterated its buy rating and lifted its price target for the stock to 270 from 240;

SoundView Technology

upped its 12-month price target to 260;

Goldman Sachs

increased its price target to 250 from 225; Salomon Smith Barney pushed up its price target to 270 from 235; and

Bear Stearns

raised its price target to 270 from 230.

Yesterday, Big Blue's Lou Gerstner said the company remains on track for sustained revenue growth in the double digits and noted that 25% of IBM's 1998 revenue came from demand for its e-business hardware, software and services. PC makers didn't really seem to be hopping onto the IBM conga line, with

Dell

(DELL) - Get Dell Technologies Inc Class C Report

up only a fraction and

Compaq

(CPQ)

down a fraction.

TheStreet Recommends

Elsewhere in tech,

CMGI

(CMGI)

was up 8 1/8 to 248 after

Gateway

(GTW)

said it will invest $200 million in the company. Gateway was up 5/16 to 68 1/2.

In other news:

AMR

(AMR)

, parent of

American Airlines

, was down 2 5/8 to 71 11/16 after the

Justice Department

filed suit against the airline unit, alleging that American illegally tried to drive smaller airlines out of its Dallas hub.

Calpine

(CPN)

was up 7 1/16, or 15.1%, to 53 13/16 after Goldman Sachs raised it to trading buy from market outperform.

Cleveland Indians

(CLEV)

was up 6 1/4, or 62.9%, to 16 3/16 after hiring Goldman Sachs and

McDonald Investments

to explore selling the baseball team. The team is on top of the

American League's

Central Division with a 24-9 record.

ConAgra

(CAG) - Get Conagra Brands, Inc. Report

was up 1 11/16, or 6.8%, to 26 1/2 after last night saying it plans to take $810 million in restructuring charges in the next three years after cutting 7,000 jobs or 9% of its workforce. The company has dubbed the restructuring plan "Operation Overdrive."

Copper Mountain's

(CMTN:Nasdaq) 4 million-share IPO was priced above-range at $21.

Morgan Stanley Dean Witter

is the lead underwriter for the supplier of high-speed digital subscriber lines. The stock had not yet begun trading at midday.

Elsewhere in new issues,

Intelligent Life

(ILIF:Nasdaq) was trading unchanged at 13 after its 3.5 million-share IPO was priced top-range.

ING Baring Furman Selz

is serving as the lead underwriter for the online provider of independent research concerning consumer banking and credit products.

Interplay Entertainment

(IPLY)

was up 3/4, or 36.4%, to 2 13/16 after late yesterday agreeing to sell 6.25 million shares for $25 million to France's

Titus Interactive

.

La Jolla Pharmaceutical

(LJPC) - Get La Jolla Pharmaceutical Company Report

was down 1 7/8, or 57.7%, to 1 3/8 and

Abbott Laboratories

(ABT) - Get Abbott Laboratories Report

was up 1/8 to 49 7/8 after late yesterday saying clinical trials for La Jolla's lupus drug candidate, LJP 394, have been suspended. An interim analysis of the Phase II/III trial indicated that the drug wasn't as effective as expected.

Laser Center

(LZRC)

was up 2 3/4, or 6.3%, to 46 5/8 after its 4 million-share follow-on offering was priced at $43 a share late yesterday.

Matrix Pharmaceutical

(MATX) - Get Matson, Inc. Report

was up 4 7/32, or 153.4%, to 6 31/32 on last night's news it was granted fast-track review by the

Food and Drug Administration

for its IntraDose injectable gel, a cancer treatment.

Earnings/revenue movers

Gap

(GPS) - Get Gap, Inc. (GPS) Report

was down 1 1/4 to 60 15/16 after rising to 63 1/4 earlier after reporting first-quarter earnings of 34 cents a share, 2 cents higher than the 19-analyst

First Call

view and up from 22 cents a year ago.

Gemstar

(GMST)

was up 6 3/4, or 5.7%, to 125 after last night reporting fourth-quarter earnings of 46 cents a share, 2 cents higher than the five-analyst prediction and above the year-ago 37 cents.

Global Telesystems

(GTSG)

was up 6 1/2, or 10.3%, to 69 1/2 after Merrill Lynch started coverage with a near- and long-term buy. Separately, the company posted a first-quarter operating loss of $2 a share and a recurring net loss of $1.22 a share. The four-analyst outlook called for a quarter loss of 94 cents vs. a year-ago loss of 54 cents.

Amid broader Internet strength,

Lycos

(LCOS)

was up 6 5/8, or 6.2%, to 113 5/8 after forecasting its third-quarter results will be in line with the 20-analyst estimate for a loss of 3 cents a share vs. the year-ago loss of 8 cents. The company also said it signed new e-commerce agreements with a total value of $200 million during the quarter, highest for any quarter in its history.

Oracle

(ORCL) - Get Oracle Corporation Report

was down 1 5/8, or 6.4%, to 23 3/4 on word the company may issue a fourth-quarter earnings warning. The 29-analyst estimate calls for quarter earnings of 33 cents a share vs. the year-ago 27 cents.

Sotheby's Holdings

(BID) - Get Sotheby's Report

was down 3 13/16, or 8.5%, to 41 1/4 after reporting a first-quarter loss of 17 cents a share, 2 cents narrower than the four-analyst forecast but wider than the loss of 11 cents a year ago.