Dell Dissatisfaction Pushes PC Makers Down

The company's in-line earnings continue to plague the technology sector this afternoon.
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SAN FRANCISCO -- The fallout from Dell's (DELL) - Get Report "disappointing" first-quarter earnings report, released last night after the close, has hurt other PC makers in trading this afternoon.

Shares of

Gateway

(GTW)

dropped 2, or 3%, to 64 13/16 by midday;

Compaq

(CPQ)

was off 9/16, or 2%, at 25 11/16;

Hewlett-Packard

(HWP)

slipped 1 7/8, or 2%, to 94 1/8; and

IBM

(IBM) - Get Report

fell 3 5/8, or 1.5%, to 234 7/8.

Meanwhile, shares of Dell were down 4 5/8, or 10.5%, to 39 7/16 after gaining nearly 3 points in the last two sessions in anticipation of strong earnings.

Lycos

(LCOS)

, which pleased the Street with better-than-expected third-quarter results last night, has been the standout today among Net stocks, which, as a group, have been mixed. Shares of the company were lately up 6 15/16, or 6%, to 119 7/8.

America Online

(AOL)

was firm on the day of its big analyst meeting, gaining 1 1/16, or 1%, to 135 1/8.

Creative Computers

(MALL)

said it would distribute to its stockholders the 7 million-plus shares of

uBid

(UBID)

it owned. Creative stockholders will receive approximately 0.7 of a share of uBid common stock for each share of Creative common stock held on the record date of May 24. Creative Computers jumped 7 11/16, or 26%, to 37 3/4 on the news, while uBid edged up 1 1/4, or 3%, to 47 1/4.

Shares of

Healtheon

(HLTH)

gained 15 1/2, or 28%, to 71 3/8 after the company confirmed its merger plans with the privately held

WebMD

. The deal is structured as a 50-50 merger and should conclude in about four months, the company said in a press release. In addition, software king

Microsoft

(MSFT) - Get Report

is expected to take a major stake in the new company.

More Problems for PairGain

PairGain

(PAIR)

investors were thrown another knuckleball this week.

Chairman Charles Strauch and CFO Charles McBrayer are targets of a criminal investigation by the

U.S. Attorney

. The disclosure was made Monday in regulatory documents and picked up by

Bloomberg

and

The Los Angeles Times

this morning. PairGain stock was lately trading 1 5/16 lower at 13 1/2.

Federal officials have been investigating for some time the activities of

Capital Insight

and S. Jay Goldinger, who according to PairGain regulatory filings, lost $15.8 million of PairGain investments in 1995. PairGain has stated in previous filings that the U.S. Attorney and

Securities Exchange Commission

were investigating whether PairGain officers "engaged in any wrongdoing."

"We view criminal indictment as unlikely," wrote analyst Chris Stix with

SG Cowen

in a positive research note today. The investigation is not a serious risk, he said, although he did warn that reduced orders might pinch the company's gross profit margins. Cowen has no banking ties to PairGain.

Old news, said one institutional trader. "If I get a shot at 12, I might buy it," he said.

PairGain didn't return calls for comment on the matter.

The company was the subject of a positive

article on

TSC

on May 13. In an unrelated event, its stock spiked on April 7 due to a bogus news report that it was being acquired.

--

Kevin Petrie

Dell?

The party's over.

Some fire left.

Still the champ.

Will reinvent itself.