Shares of IBM were up 9 5/16, or 5.6%, at 176 1/16, while Dell was up 2 11/16, or 3.3%, at 83 5/8. The deal calls for Dell to buy storage, microelectronics, networking and display technology from IBM for integration into Dell computer systems. The agreement also calls for broad patent cross-licensing between the two companies and collaboration on the development of future product technology.
But it could be much ado about nothing.
analyst Ashok Kumar said IBM stands to get more out of the deal than Dell, but he was not impressed.
"If Dell is just selling the hardware and IBM is servicing it, it's a nonevent," he said. "It's more of a win from IBM's perspective because they have a relationship with a best-of-breed hardware vendor."
Kumar said the "achilles heel" for Dell is beefing up its service organization, where margins are fatter.
Also contributing to the rally was a rebound in
The New York Times
of Germany is in preliminary talks with 3Com regarding paying $1.2 billion for the 3Com unit that sells networking equipment to phone companies.
3Com was trading 11/16 higher at 25 1/4, but was 2 points off its session high of 27 1/4.