Tech Stocks Rally on More Than Just Bonds

There's also good news pulling the sector up this morning.

Author:: David Shabelman
Publish date:: Mar 5, 1999 11:03 AM EST

SAN FRANCISCO -- Yes, tech stocks are riding the coattails of the bond market's recovery following today's employment report. But news from a number of companies is contributing to the rally.

Intel

(INTC) - Get Report

, which fell Thursday on fears of an unfavorable announcement after the close, was strong early on today after the

announcement turned out to be the purchase of

Level One Communications

(LEVL) - Get Report

Intel was lately up 2 5/8 to 116 as traders cover

short positions. Level One was up 19, or 70%, to 46 1/8, just below the roughly 49 per share Intel agreed to pay for the company.

Shares of Level One competitor

Broadcom

(BRCM)

were trading near unchanged at 50 1/8 recently, recovering from a low of 46 1/4 made early on. In a report released this morning,

Credit Suisse First Boston

noted that it expects "no immediate impact to business stemming from Intel's acquisition of Level One. Broadcom's advantages are strong customer relationships, design wins and leading time to market." It is unclear what the longer-term impact will be, the company says, as Intel does provide Level One with greater resources. Note that Intel also has a small stake in Broadcom.

Yahoo!

(YHOO)

was riding a wave of favorable comments higher following a meeting with analysts on Thursday.

Hambrecht & Quist

upped its rating on Yahoo! to buy from hold, while both

Donaldson Lufkin & Jenrette

and CS First Boston reiterated their buys on the company.

CS First Boston analyst Lise Buyer reiterated a buy rating on the company, saying, "We continue to believe Yahoo! is among the best-positioned companies in the Internet area. We believe the stock should be a core holding in growth funds with appetites for risk. We recommend investors use current volatility of Internet stocks to opportunistically build/add to positions."

DLJ analyst Jamie Kiggen slapped a 6- to 12-month price target of 250 on Yahoo! and wrote that the company "should outperform almost every Internet stock over the coming year."

Yahoo was lately up 6 13/16, or 4%, to 158 5/16.

Continuing the strength they exhibited after their

pact on Thursday,

Dell

(DELL) - Get Report

and

IBM

(IBM) - Get Report

were both firmer in early trading. Dell was up 1 11/16, or 2%, at 83 9/16, while IBM was up 5, or 3%, at 176.

Internet stocks were strong across the board, with

eBay

(EBAY) - Get Report