Manugistics Jumps on SAP Takeover Talk

Plus, Yahoo! slides lower along with chip-equipment makers.
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SAN FRANCISCO -- Shares of supply-chain software maker

Manugistics

(MANU) - Get Report

raced higher in heavy volume today on rumors of a takeover bid by German enterprise software developer

SAP

(SAP) - Get Report

.

"There's talk coming out of Europe that SAP is ready to buy Manugistics," said a buy-side analyst who asked not to be named.

AMR Research

said earlier this week in a report that it suspected Manugistics was very close to announcing a deal.

One Wall Street analyst whose firm has underwritten for SAP says he heard last week that SAP was still in the run for Manugistics. "We heard SAP offered $15

per share, and it was turned down because of price.

SAP probably came back with a new offer. It would be a smart acquisition for SAP, so I wouldn't be surprised," he said.

Morgan Stanley Dean Witter

, which was behind the SAP ADR offering, issued a terse no comment. This was taken by some traders as further proof that Morgan Stanley was helping to close the deal. Morgan Stanley says it has a policy of not commenting on rumors.

Officials at both SAP and Manugistics said they did not comment on rumors.

Manugistics shares closed up 4 1/16 at 16 5/8, a 32% increase, while SAP fell 13/16 to 32.

Yahoo! Takes a Licking, but Keeps On Ticking

If you logged on to

Yahoo! Finance this morning, you were probably shocked to find that shares of Internet bellwether

Yahoo!

(YHOO)

were off some 60%. But fear not, it seems that some programmer has already accounted for Yahoo!'s 2-for-1stock split -- even though the split doesn't actually go into effect until Feb 5. OOPS.

Yahoo! ended the day down 24 9/16, or 6.7%, at 344 1/16, but it could have been a lot uglier. On Wednesday evening

Deutsche Morgan Grenfell

analyst Alan Braverman downgraded Yahoo!,

Excite

(XCIT)

and

Lycos

(LCOS)

to accumulate from buy. But Braverman's downgrading was discounted by some players.

Analysts said it would take more than a downgrade, unless it was from someone like

Morgan Stanley Dean Witter's

Mary Meeker, to deflate investor enthusiasm in companies like Yahoo! and other "blue-chip" Internet companies.

Lise Buyer, an Internet analyst with

Credit Suisse First Boston

, says to be prepared for more volatility in the near term.

"Regardless of the group, when there is a short-term spike, they ease afterward," she said. "We're seeing some of that today, and we'll see it during the next month."

Like many of her colleagues, Buyer remains positive on the Internet-stock fundamentals, particularly for the long term, but cautions that current prices are only good for day traders and speculators.

"This may not be the best time to mortgage the farm and put

that money to work in these stocks," she said.

More Report Cards

Shares in some semiconductor-equipment makers headed south, as

Van Kasper

analyst Gerald Fleming downgraded both

Novellus Systems

(NVLS)

and

KLA-Tencor

(KLAC) - Get Report

to neutral from buy, and

Asyst Technologies

(ASYT)

to a buy from strong buy. Why? Blame high prices and anticipated lower demand for chip equipment. Novellus Systems closed down 2 1/16 at 66 1/16, Asyst was off 1 7/16 at 23 15/16 and KLA-Tencor fell 3/16 to 54 11/16.

Fleming noted that

Intel

(INTC) - Get Report

,

Advanced Micro Devices

(AMD) - Get Report

and

Motorola

(MOT)

all planed to reduce capital-equipment purchases. In his report, Fleming said the semiconductor industry "is entering a technology spending cycle as opposed to a capacity-driven upturn, and its total capital expenditures may not exceed the 1997 peak until 2002."

Fleming added that "a lot of the bullishness that we're going to be off to the races in 1999 is premature."