Wall Street Beat: Company shakeups stir market

Turbulence at Borland and Gateway temper good earnings news from Cisco

As earnings season wound down this week an upbeat forecast from Cisco Systems   sparked a jump in trading in IT, while news of shakeups at Borland Software and Gateway  caused concern for technology investors.

Cisco's announcement Tuesday that it sees equipment orders rising for the current quarter temporarily lifted a pall that was hanging over tech stocks. Results from earlier in the season from Amazon.com and Google, among others, showed that the cost of attracting and retaining customers online is hitting bottom lines hard.

Cisco said net income for the quarter ending Dec. 31 rose to $1.4 billion from $1.1 billion a year earlier, and that orders are expected to rise by 10 percent to 15 percent for the current quarter. Enterprise product orders were up by 20 percent in the quarter, as corporate users bought into Cisco's suite of linked networking products. The report kicked off a temporary rally in technology stocks Wednesday with Cisco shares (CSCO) leading the way, jumping $1.31 to close at $19.40.

Corporate shakeups and mergers and acquisition news, however, stirred consternation among technology watchers during the rest of the week as the IT-heavy Nasdaq Composite Index dipped again.

Borland shares (BORL) dropped $0.49 to hit $5.73 Wednesday, after the company announced that it will do a number of deals to focus on application lifecycle management. Borland will acquire Segue Software, a maker of software quality and testing products, in a $100 million deal, and look for a buyer for its Java development tools business, which includes Delphi and JBuilder.

The abrupt resignation of Gateway President and Chief Executive Officer Wayne Inouye Thursday to "pursue other interests" appeared to trouble investors, who drove down company shares (GTW) by $0.05 to $2.46. Inouye led the PC maker to several profitable quarters and grew market share at some points during his two-year stint at the company, but last week Gateway said its fourth-quarter profit dropped 76 percent to $22.4 million.

Other IT market news that captured technology investors' attention this week:

-- Motorola shares (MOT) climbed $0.69 to $21.69 Tuesday after the company announcing plans to launch M-Wallet Solution, chip-based technology that lets people purchase products by passing cell phones in front of scanners.

-- Shares of Research In Motion  (RIMM) jumped $6.08 to $73.61 Wednesday after the U.S. Patent and Trademark Office rejected an NTP  patent claim in ongoing litigation over BlackBerry technology.

Copyright © 2006 IDG Communications, Inc.