By Benjamin Pimentel

The tech sector battled back into the black, boosted by gains in shares of Cisco Systems and chip companies.

But the sector was still being weighed down as shares of Dell Inc. fell on news that the PC giant was buying Perot Systems.

Dell (DELL) was down about 4% 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,'" said Gary Beach, publisher emeritus of CIO Magazine, which is geared toward 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 up a fraction.

After sinking in the opening minutes of trading, the Nasdaq Composite Index (RIXF) battled back and was up a fraction at 2,139. The Morgan Stanley High Tech 35 Index (MSH) was up 0.2%, while the Philadelphia Semiconductor Index (SOX) gained 0.4%.

Shares of Applied Materials (AMAT) were down 2.9% after the semiconductor capital equipment company was downgraded to average from buy, citing a recent change in top management.

Analyst Ben Pang cited last week's announcement that Randhir Thakur will take over the company's silicon systems group, which is focused on its core chip tools business.

"Applied did not comment on the reasons for the change, but we think it is due to poor market share for semi-equipment," Pang wrote. "We think this could cause revenues to rebound slower than expected because semi capital spending is the key growth avenue over the next several quarters."

Also in the red were Apple Inc. (AAPL), Yahoo Inc. (YHOO) and eBay Inc. (EBAY).

Among the gainers were Google Inc. (GOOG), Cisco Systems (CSCO), Intel Corp. (INTC) and Advanced Micro Devices (AMD).

On the video-game front, Activision Blizzard (ATVI) was up 3.8% at $12.24 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."