Technology Stocks Outperform Blue Chips

Technology stocks, energized by another encouraging earnings report, continued their resurgence Friday, pulling broad indicators further into records territory while blue-chip stocks slumped.

The Dow Jones industrial average lost 16.26 points to close at 5,535.48, a gain of just 3.39 points for the week. The barometer of big U.S. companies rose as much as 20 points during the morning before trailing off.

Broader measures were decidedly more positive, with the technology-heavy Nasdaq composite setting its second straight record and the American Stock Exchange’s market value index notching its fourth consecutive high.

“It’s a better market than the Dow industrial average seems to be indicating. Earnings have been very good,” said Hugh Johnson, chief investment officer at First Albany Corp.

Microsoft became the latest technology bellwether to bolster the sector with an earnings report suggesting the computer industry has been healthier than widely portrayed during the first three months of the year. The company said late Thursday its third fiscal quarter earnings rose 42 percent as software royalties from PC makers hit a record level.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume totaled 419.96 million shares as of 4 p.m., slightly higher than Thursday.

Some of the stocks that moved substantially or traded heavily Friday:

NYSE

Gillette, up 2-/12 to 54-1/2.

The stock rose for the second straight day after a strong earnings report spurred three big brokerages to raise their ratings on the company. Gillette on Thursday reported a 17 percent rise in first-quarter earnings to $230 million, or 51 cents a share.

Kimberly Clark, down 1 to 68-7/8.

The consumer products company said it will sell its remaining shares in Midwest Express Airlines. Kimberly Clark had divested itself of about 70 percent of its shares in Midwest in 1995. It now plans to sell its nearly 1.3 million remaining shares in a public offering.

NASDAQ

Microsoft, up 3/4 to 109-3/4.

The company said Thursday its profit shot up 42 percent to record heights in the third quarter of its fiscal year, propelled by strong sales of its office and operating system software.

CompuServe, up from $30 offering price to 33.

H&R Block spun off a 20 percent stake of its CompuServe online service, selling 16 million shares. At $30 each, CompuServe emerged with a market value of $2.71 billion.

Planet Hollywood International, up from $18 offering price at 26-7/8.

The parent company of the Planet Hollywood restaurant chain - co-owned by Sylvester Stallone, Arnold Schwarzenegger and other stars - sold its stock to the public for the first time. The offering of almost 10.8 million shares raised about $180 million.

Zycad, down 15/16 to 5-1/16.

The computer simulation company said it expects to report a first-quarter loss of about $5 million because several customers have deferred major purchases. Zycad expects revenue of about $7 million for the period ended March 31, well shy of the $12.6 million of revenue a year earlier.