SAN FRANCISCO -- 3Com's (COMS) soft revenue-growth outlook put tech stocks on the defensive Wednesday. The Nasdaq Composite Index beat a modest early retreat amid a swirl of mergers-and-acquisitions intrigue in the personal computer sector.
3Com was sharply lower after warning that revenue in the first and third quarters of 2000 wouldn't exceed year-ago levels. The stock was down 3 7/8, or 12%, at 27 5/8. 3Com Tuesday posted fiscal fourth-quarter earnings of 24 cents a share, 1 cent above the 25-analyst
estimate and ahead of the year-ago 18 cents. The company also approved a 15 million-share repurchase plan.
Following the report, a number of research houses cut earnings expectations:
downgraded the stock to hold from strong buy, slashing fiscal 2000 earnings estimates to $1.15 a share from $1.38. Analyst David Takata wrote that "the cautious management guidance is not new, but now appears to have an increased sense of urgency."
Meanwhile, deal rumors that swirled
Tuesday among PC makers
was rumored to be negotiating to purchase Compaq's Internet assets.
The Wall Street Journal
reported that CMGI could buy
and other Compaq Internet assets for $2 billion to $3 billion and that a deal could be announced as early as tomorrow. In early trading, Compaq was down 3/8, or 1.6%, at 23 7/16 and CMGI was down 1 15/16, or 2%, at 93.
Gateway, which is reportedly in talks to buy Internet service provider
, was down 1, or 1.5%, at 63 3/4 in early trade. Earthlink is building on Tuesday's 20% rise, adding 6 5/8, or 11%, to 63 7/8.
Also on the merger front,
Metromedia Fiber Network
agreed to acquire
for roughly $1.6 billion in stock. Under terms of the deal, AboveNet common stock shareholders will receive 1.175 Metromedia Class A common shares for each AboveNet common share. Metromedia was off 5 1/2, or 13%, at 37, while AboveNet was up 3 11/16, or 10%, at 40 7/16.
agreed to acquire
for $280 million in stock. Newbridge Networks was off 1 7/16, or 5%, at 29 5/16 in early trading. Stanford Telecommunications was up 2 1/2, or 9%, at 29.
was getting a boost on news that it will replace
after Thursday's close.
is acquiring Ascend. Network Appliance was up 3 5/16, or 7%, at 48 1/8. Ascend was up 1 11/16, or 2%, at 104 1/4. Lucent was up 5/8, or 1%, at 63 5/16.
On the IPO front, web software company
debuts today. Morgan Stanley Dean Witter priced Ariba's 5 million-share IPO above-range at $23. Ariba's software is used to automate purchasing of operating resources such as office supplies and computer products.
, a developer of advanced digital subscriber line integrated circuits, was priced at $15.