By Benjamin Pimentel
The tech sector turned positive Tuesday as shares of Starent
Networks soared on news of a merger deal with Cisco Systems.
The Nasdaq Composite Index (RIXF) recovered from earlier losses
to rise 0.3% to 2,145. The Morgan Stanley High Tech 35 Index (MSH)
and the Philadelphia Semiconductor Index (SOX) were each up about
0.4%.
The big news of the morning was Cisco Systems' (CSCO)
announcement that it was buying Starent Networks (STAR) for $2.9
billion, making it the networking gear maker's second major
purchase in three weeks.
Cisco was up about 1%, while Starent, which makes mobile
infrastructure equipment, soared more than 15%.
Meanwhile, Intel Corp. (INTC), which is on deck to report
third-quarter financials after the market closes, was up 1.3%, even
as the debate on where the chip industry is headed continued.
"We believe that increasing concerns regarding double ordering
and cancellations will trump generally better results and guidance
this earnings period," Jefferies & Company analyst Adam
Benjamin said in a note.
Bank of America analyst Sumit Dhanda offered a different take,
saying in a note, "While the inclination of late seems to be to
view any outsized beats with a dose of strong skepticism, and as a
precursor to troubles ahead (double ordering that sets the stage
for cancellations, for instance), we think concerns here are
overdone."
More data expected this week as the tech earning season kicks
off should help clarify some of these concerns. Intel's arch-rival,
Advanced Micro Devices (AMD), reports on Thursday. The chip maker's
shares were up about 0.8%.
Meanwhile, other tech giants also declined, including Dell Inc.
(DELL) and Hewlett-Packard (HPQ).
Other tech players were in positive territory, including eBay
Inc. (EBAY) and Amazon.com (AMZN).