TECH STOCKS: H-P, ArcSight Deal Fuels Tech-sector Gains

By Dan Gallagher

Tech stocks jumped Monday, helped by an acquisition deal from Hewlett-Packard Co. and strong gains in the chip sector.

Before the open, H-P (HPQ) confirmed plans to buy security-software maker ArcSight Inc. (ARST) for $43.50 per share, or a total enterprise value of $1.5 billion. Rumors of the deal had been reported earlier by The Wall Street Journal. ArcSight is based near H-P's Silicon Valley headquarters.

The deal represented an all-time high for ArcSight's shares, and a 54% premium over the stock's value since late August, when reports first surfaced that the company was seeking a buyer. The deal also comes just two weeks after H-P won an intense bidding war over data-storage provider 3Par Inc. (PAR) against arch-rival Dell Inc. (DELL).

The Nasdaq Composite Index (RIXF) was up 1.5% to 2,276 while the Morgan Stanley High Tech 35 Index (MSH) rose 1.6%.

Chip stocks were particularly strong, with the Philadelphia Semiconductor Index (SOX) up 3.3%. Micron Technology Inc. (MU) and Advanced Micro Devices Inc. (AMD) led the way with gains of more than 8%. Nvidia Corp. (NVDA) shares jumped more than 5% in recent trade, and SanDisk Corp. (SNDK) shares were up 5%.

Sector leader Intel (INTC) was up nearly 3% ahead of the kickoff of its annual Intel Developer's Forum in San Francisco.

Other big tech movers included Xerox Corp. (XRX), Apple (AAPL), IBM (IBM), Cisco Systems (CSCO), Google (GOOG), Amazon.com (AMZN) and Microsoft (MSFT) -- all of which were up more than 1%.