By Benjamin Pimentel

The tech sector traded sideways as shares of Dell Inc. fell on news that the PC giant was buying Perot Systems Corp.

Dell (DELL) was down about 4% after announcing the $3.9 billion deal in an apparent bid to match rival Hewlett-Packard Co.'s (HPQ) reach in the corporate 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 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 fractionally.

After sinking in the opening minutes of trading, the Nasdaq Composite Index (RIXF) traded flat. At last check, the index was up fractionally at 2,135. The Morgan Stanley High Tech 35 Index (MSH) and the Philadelphia Semiconductor Index (SOX) were each down 0.3%.

Shares of Applied Materials Inc. (AMAT) were down 3.4% 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 Advanced Micro Devices Inc. (AMD), Cisco Systems Inc. (CSCO) and Google Inc. (GOOG)

On the video-game front, Activision Blizzard Inc. (ATVI) was up 3.9% 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 Inc. (TTWO) fell 5% after the company was downgraded by Wedbush Morgan to a neutral rating.

In a note, analyst Michael Pachter said the company's share price "fully reflects an increasingly positive outlook and the lack of other company specific catalysts."