Apple and Cisco rise, but chips weigh on techs

SAN FRANCISCO (MarketWatch) — Shares of Apple Inc. and Cisco Systems Inc. rose on Monday, but semiconductor stocks weighed down the tech sector.

Apple (US:AAPL) shares rose 1.7% to close at $595.03 after the technology powerhouse said downloads of its new Mountain Lion operating system topped 3 million in four days, the most successful operating system launch in its history. Read more on Mountain Lion's popularity.

The patent infringement legal battle between Apple and Samsung also goes before a U.S. federal court in San Jose on Monday. Apple has accused Samsung of violating patents related to technologies used in the iPhone and the iPad.

Shares of Cisco (US:CSCO) gained 1.2% to close at $15.87, one of the top gainers on the Dow Jones Industrial Average (US:DJIA), which was down 3 points at 13,076.



“I think both are seeing relief rallies today,” Sterne Agee analyst Shaw Wu said in emailed comments. “Both stocks were under pressure last week, Apple with earnings and Cisco with the VMware acquisition of Nicira ... At the end of the day, they are still two of the better companies in technology.”

Cisco lost 4.1% last week after analysts speculated that VMware’s acquisition of Nicira could pose a threat to the networking giant. Apple fell 3.2% last week after the company missed Wall Street’s earnings estimates for its fiscal third quarter.

The VMware acquisition, followed by Monday’s announcement from Oracle Corp. (US:ORCL) that it has agreed to buy Xsigo Systems, a network virtualization technology company, heightened the focus on the so-called “software-defined networking” and the impact on other software players like Citrix Systems.(US:CTXS)

Shares of Citrix (US:CTXS) slumped 5.9% to close at $73.25, while VMware (US:VMW) slipped 3.5% to close at $92.37.

Mizuho Securities analyst Gabriel Lowy said in a note, “We believe investors are overreacting to the hype and acquisition flurry around software defined networking, most recently with Oracle’s acquisition of Xsigo. The weakness in shares of both VMware and Citrix is an overreaction in our view, presenting a buying opportunity in both, particularly Citrix.”

Meanwhile, the chip sector was in the red, with the Philadelphia Semiconductor Index(US:SOX) down 1%.

Wedbush analyst Betsy Van Hees cited investor worries related to the third-quarter forecasts from the sector.

“We think Q2 earnings for the most part have been in-line with some notable beats, but Q3 guidance has been well below seasonal,” she said in emailed comments.

“I think investors may be taking some profits today given the big move in the last two weeks of the Philadelphia Index vs. the S&P as concerns over Europe and the strength of the broader market may be moving off the back burner and back to forefront of investors minds,” she added.

Highlighting the decline was SanDisk Corp. (US:SNDK), shares of which lost 3%, closing at $41.17

This article comes from:http://articles.marketwatch.com/2012-07-30/markets/32932699_1_agee-analyst-shaw-wu-cisco-systems-apple