By Benjamin Pimentel
The tech sector edged lower early Monday as shares of Dell Inc.
fell on news that the PC giant was buying Perot Systems.
Dell (DELL) lost about 3.6% in early trading after announcing
the $3.9 billion deal in an apparent bid to match rival
Hewlett-Packard's (HPQ) reach in the corporate tech market by
boosting its information technology services portfolio.
"The three most important words for buyers and sellers of
technology products are 'services, services, services,'" Gary
Beach, publisher emeritus of CIO Magazine, which is geared to chief
information officers.
"Dell's deal for Perot is a counterpunch to H-P's acquisition of
EDS," he added, referring to H-P's purchase of the IT services
giant. "In the tech world, only the 'strategic' will survive. Dell
needed a ramped up services offering to remain strategic with
global CIOs."
Shares of Perot Systems (PER) soared more than 65%. H-P was down
about 0.7%.
Overall, the tech sector was off to a weak start as the Nasdaq
Composite Index (RIXF) fell 0.5% 2,121 in opening minutes of the
session. The Morgan Stanley High Tech 35 Index (MSH) was down 0.7%,
while the Philadelphia Semiconductor Index (SOX) lost 0.4%.
Also in the red were Apple Inc. (AAPL), Yahoo Inc. (YHOO) and
Advanced Micro Devices Inc. (AMD).
Among the gainers were Google Inc. (GOOG), SanDisk Corp. (SNDK)
and Novellus Systems (NVLS).
On the video game front, Activision Blizzard (ATVI) was up
nearly 3% at $12.12 after the game publisher announced it was
delaying the release of a racing game called "Blur" into 2010. The
company said strong demand for "Modern Warfare 2" will allow it to
maintain its outlook for the current year.
Shares of Take-Two Interactive Software (TTWO) fell nearly 5%
after the company was downgraded by Wedbush Morgan to a neutral
rating.
In a note to clients, analyst Michael Pachter said the company's
share price "fully reflects an increasingly positive outlook and
the lack of other company specific catalysts."