Publish date:

Techs Hold Ground Despite Compaq Warning, Intel Earnings Revision

Shares of Compaq were down slightly early on, while Dell and Gateway edged higher.

SAN FRANCISCO -- Negative news from Compaq (CPQ) and Intel (INTC) - Get Intel Corporation (INTC) Report couldn't drag the technology sector down in early trading today.

An earnings warning from Compaq was having only a marginal impact on its fellow PC makers, as it remains unclear whether Compaq's woes result from its own mismanagement or from industry-wide problems. Compaq said it will lose up to 15 cents a share for the second quarter, something that

U.S. Bancorp Piper Jaffray

analyst Ashok Kumar

warned about last week. The

First Call

consensus estimate looked for the company to earn 20 cents a share in the quarter.

The company said the "operational issues that affected Compaq in the first quarter continue to influence

its business this quarter," and that it was hurt by overall "pricing pressures in the PC segment."

In early trading, Compaq was down 1, or 4.5%, at 21 1/4 after reaching a session low of 20.

Dell

(DELL) - Get Dell Technologies Inc Class C Report

edged up 3/16 to 36, and

Gateway

(GTW)

gained 1/16 to 65 1/2.

TheStreet Recommends

Intel's latest worries can be placed squarely on

Credit Suisse First Boston

, which today lowered its 1999 earnings estimate on the chipmaker to $2.25 from $2.32. Shares of the company were down 1 1/2, or 2%, at 58 3/16. In a research note released earlier today, analyst Charlie Glavin said that lower average selling prices for processors and lower unit shipments should leave second-quarter earnings around 53 cents a share, slightly below the First Call estimate of 54 cents.

"While cost reductions and a higher gross margin percentage had mostly outweighed this effect earlier, we believe this trend and its impact will persist" into the fourth quarter," Glavin wrote. Glavin also lowered his estimate for 2000 to $2.55 from $2.65, but maintained his 12-month price target of 75 on the stock, saying the second half of 1999 "looks to be materially better" than the first half, "with a promising 2000 (in terms of end markets, NT2000 and product road map) attracting investors after this seemingly long, dry summer."

Tech stocks opened weaker on the negative news, but have stabilized of late, with some focus on

Federal Reserve

Chairman

Alan Greenspan's

testimony in Washington. Internet stocks also stabilized after opening lower.

TheStreet.com Internet Sector

index was up 9.99, or 2%, at 558.63.

eToys

(ETYS)

was trading higher after

Merrill Lynch

began coverage of the stock with a near-term accumulate rating and a long-term buy rating, along with a 12- to 18-month price target of 50. Merrill was an underwriter for the company's IPO. The stock was up 3 5/16, or 9%, at 40 13/16.