RBC Capital Markets analyst Apjit Walia said "recent checks in the PC-food chain suggest" the pairing "may be likely." It would be consistent with recent announcements from AMD to boost its ability to produce significantly more chips over the next few years, he wrote in a research report.

ATI shares gained $1.48 to $16.63 on the Nasdaq Stock Market in early afternoon trading. AMD's stock was up 38 cents to $30.86 on the New York Stock Exchange.

Spokesmen for the companies declined to comment.

On Monday, AMD said it planned to invest $2.5 billion over the next several years to refurbish old plants and build new factory space at its site in Dresden, Germany.

Walia said speculation has raged for years that ATI or other graphics chip companies would be bought by AMD or Intel. He went on to say the move would be a mistake for Intel, which besides being the world's biggest chip maker is also the world's biggest supplier of graphics chips.

"This tie-up might make sense for AMD at this juncture but we don't think Intel should pursue tying up with graphics companies and should instead look at the communications space," Walia wrote. "We believe Intel is still not 'reading the writing on the wall' and continues to over-focus on PCs."

An AMD acquisition of ATI, based in Markham, Canada, would be a positive event for the graphics industry, Walia said.

Separately, Walia said Intel's revenue in the current quarter is on pace to fall almost 10 percent from the same period last year, which would translate to about $8.3 billion -- the midpoint of Intel's forecast of $8 billion to $8.6 billion.

The quarter ending in September is "tracking below seasonality," Walia wrote.

Santa Clara-based Intel is making "drastic" price cuts on chips including its Celeron, Pentium 4 and Pentium D products, which may give way to an "ugly" price war with Sunnyvale-based AMD.

Intel shares rose 27 cents to $18.08 on the Nasdaq Stock Market.

Shares of Catapult fell $1.60, or 12 percent, to $11.55 in morning trading on the Nasdaq Stock Market. Shares traded as low as $11.39, below the 52-week low of $11.73 set April 4.

Tuesday, after the financial markets closed, the Mountain View, Calif.-based company lowered its revenue estimate for the quarter ending June 30 to between $10.7 million and $11.7 million from its previous forecast of $12.8 million.

Telecommunications-equipment makers and service providers use Catapult's test systems to design, test and configure network elements.

Analysts were expecting third-quarter revenue of $13 million, according to Thomson Financial.

Catapult reported revenue of $14.3 million a year ago.

J.P. Morgan analyst Paul Coster said he believes the order shortfall originates in Japan. The rest of the company's international and domestic business "is meeting expectations, and management believes underlying growth drivers are solid," the analyst said in a research report.

Buoying the company is an order backlog valued at $5 million and deferred revenue of $11 million, Coster said.

J.P. Morgan makes a market in Catapult's securities. It also expects to receive or intends to seek compensation from the company in the next three months for investment-banking services. An affiliate of the investment bank has received compensation in the past 12 months for providing Catapult with non-investment banking services.

Under the new terms of the deal, KLA-Tencor will buy ADE, a supplier of metrology and inspection systems used to make semiconductor wafers, for $32.50 in cash per ADE share. Under the previous agreement, announced in February, KLA-Tencor agreed to buy ADE in a stock-for-stock transaction, valued at roughly $488 million.

Since the deal was announced, KLA-Tencor shares have been dragged through the mud amid an investigation into the company's stock option grants. KLA-Tencor is one of at least a dozen companies being reviewed for possible illegal backdating of stock option grants, whereby grants were issued with low strike prices to increase the value of the options. The stock fallen more than 20 percent since the acquisition was announced in February when the stock closed at $51.93.

The transaction is still expected to close in the third quarter.

Shares of ADE Corp., which have traded between $19.96 and $34.60 over the last year, were up $6.27, or 24 percent, at $32.22 on the Nasdaq. KLA-Tencor shares also traded up, albeit much more modestly, at $40.90, up 28 cents on the Nasdaq.

The offering will be through Mosel's wholly owned subsidiary, Giant Haven Investments Ltd., the semiconductor testing and services company said in a news release.

ChipMOS said Mosel may sell another about 1.0 million shares to cover over-allotments.

Shares of Vonage fell 70 cents, or 4 percent, to $16.30 in early trading on the New York Stock Exchange. They trade under the symbol "VG."

In earlier regulatory filings, Vonage said it had expected to sell the 31.25 million IPO shares for $16 to $18 each. At the final price, the IPO is worth $531 million, making it one of the larger launches this year.

Much of the money raised by the IPO will flow into advertising, which the Holmdel, N.J-based company has used to attract 1.6 million subscriber. It is currently the largest provider of Voice over Internet Protocol, or VoIP, service.

Vonage subscribers plug their phones into adapters that connect to their broadband Internet connections. Under one of its plans, it charges $25 a month for unlimited calling to the United States, Canada and parts of Europe.

It is a business that has attracted a lot competition.

Cable companies are signing up their customers to VoIP, providing the convenience of a single bill for video, broadband and telephone service. Computer-to-phone calling companies are competing on the low end by slashing prices -- Skype recently made calls to the United States and Canada free.

The announcement sent Ansoft shares up 84 cents, or 4.5 percent, to $19.37 in aftermarket trading on the INET electronic exchange, after closing down 42 cents, or 2.2 percent, at $18.53 on the Nasdaq.

For the quarter ended April 30, Ansoft earned $8.3 million, or 32 cents per share, compared with $4.7 million, or 18 cents per share, for the same quarter in 2005. Revenue grew to $15.7 million from $14.3 million in the year-ago period.

The recent results included an income tax benefit of $1 million, or 4 cents per share, related to the reversal of the company's remaining valuation allowance for certain federal net deferred tax assets.

Excluding the tax benefit and other items, Ansoft earned $8.5 million, or 33 cents per share, compared to an adjusted $4.9 million, or 19 cents per share, for the same quarter in 2005.

The results came in ahead of Wall Street expectations. Analysts polled by Thomson Financial had expected earnings of 23 cents per share on $24.7 million in revenue.

For the full fiscal year 2006, Ansoft earned $17.8 million, or 69 cents per share, compared to $9.4 million, or 36 cents per share the prior year. Revenue grew to $77.2 million from $67.7 million the year before.

After adjustments, Ansoft's 2006 earnings were $18.7 million, or 72 cents per share, compared to $10.4 million, or 40 cents per share, the fiscal year before.

Shares of Ansoft have ranged between $10.66 and $23.48 over the past year.

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Shares of Ansoft (ANST:Nasdaq) were among technology's winners Wednesday, climbing 13% after the software company posted better-than-expected fourth-quarter earnings. For the quarter ended April 30, the company earned $8.3 million, or 32 cents a share, on revenue of $24.7 million. Excluding items, Ansoft earned $8.5 million, or 33 cents a share. Analysts polled by Thomson First Call expected earnings of 23 cents a share and revenue of $24.7 million. A year earlier, the company recorded adjusted earnings of $4.9 million, or 19 cents a share, on revenue of $21.7 million. For fiscal 2007, Ansoft expects revenue growth of about 10% to 15%. Analysts, meanwhile, project revenue of $88.3 million, or top-line growth of about 14%. Shares were trading up $2.46 to $20.99. Shares of Vonage (VG:NYSE) fell nearly 12% on their first day of trading. The Internet phone-service provider's IPO priced about 31.2 million shares at $17 apiece, raising proceeds of about $531 million. The pricing came in at the midpoint of its proposed range of $16 to $18 a share. Shares were recently down $2.02 to $14.98. Daktronics (DAKT:Nasdaq) rose 6% after the maker of electronic scoreboards and displays reported better-than-expected fourth-quarter results. The company earned $7.1 million, or 35 cents a share, up from $3 million, or 15 cents a share, a year earlier. Revenue for the quarter ended April 29 jumped to $90.2 million from $6.13 million. Analysts expected earnings of 28 cents a share on revenue of $80.5 million. For the fiscal first quarter, Daktronics anticipates earnings of 27 cents to 36 cents a share and revenue of $87 million to $95 million. Analysts project earnings of 31 cents a share, with revenue of $86.6 million. Shares were trading at $42.74, up $2.24. Computer Sciences (CSC:NYSE) fell 2% after the information technology-outsourcing company posted better-than-expected fourth-quarter results but gave a soft guidance. The company earned $199.4 million, or $1.05 a share, in the March quarter. Excluding items, the company earned $218.9 million, or $1.16 a share, above analysts' target of $1.13. Revenue totaled $3.88 billion, compared with Wall Street's expectation of $3.86 billion. During the year-earlier quarter, Computer Sciences earned $411.8 million, or $2.13 a share, on revenue of $3.88 billion. Excluding items, year-earlier earnings were $185 million, or 96 cents a share. Computer Sciences sees adjusted first-quarter earnings in the mid-60-cent range on revenue of $3.4 billion to $3.5 billion. Analysts project earnings of 69 cents a share on revenue of $3.71 billion. Shares were trading down $1.03 to $53.66. Shares of Sonic Solutions (SNIC:Nasdaq) fell 7% after the company's fourth-quarter results topped expectations but its guidance disappointed investors. The software company posted adjusted earnings of $8.5 million, or 31 cents a share, on revenue of $40.4 million. Analysts expected earnings of 30 cents a share and revenue of $40.2 million. During the year-earlier period, the company earned $1.4 million, or 5 cents a share, on $35.6 million in revenue. Looking ahead, Sonic Solutions sees adjusted first-quarter earnings of 13 cents to 16 cents a share, before stock-option costs. Including all items, the company expects a profit of 11 cents to 14 cents a share. Sonic projects revenue of $36 million to $38 million. Analysts project earnings of 15 cents a share, including options costs, on revenue of $38 million. Shares were trading down $1.18 to $15.75. Other technology movers included Microsoft (MSFT:Nasdaq) , up 51 cents to $23.30; Intel (INTC:Nasdaq) , up 9 cents to $18.04; Sun Microsystems (SUNW:Nasdaq) , up 5 cents to $4.34; Cisco Systems (CSCO:Nasdaq) , up 14 cents to $20.51; Sirius Satellite Radio (SIRI:Nasdaq) , down 8 cents to $3.82; Applied Materials (AMAT:Nasdaq) , up 51 cents to $16.77; Apple Computer (AAPL:Nasdaq) , down 13 cents to $63.02; JDSU (JDSU:Nasdaq) , up 1 cent to $2.94; Oracle (ORCL:Nasdaq) , up 16 cents to $13.63; and Lucent Technologies (LU:NYSE) , down 2 cents to $2.53.

Assa Abloy HID Global Corp., will buy Eden Prairie-based Fargo for $25.50 per share cash, a premium of more than 50 percent over its trading price Monday.

The acquisition is a result of a long-standing relationship between the two makers of security identification products, according to a company release.

News of the deal boosted Fargo's stock price (FRGO) early Tuesday. The stock, which closed Monday at $16.23 per share, was up nearly 53 percent, to $24.80 per share in midday trading.

Fargo was founded in 1974. It has about 226 employees and 2005 net income of $10.1 million on revenues of $81.0 million.

Assa Abloy, based in Stockholm, had sales of $3.5 billion in 2005 and has 29,000 employees. Its Irvine, Calif.-based HID subsidiary was formed in 1991 as Hughes Identification Devices, a subsidiary of Hughes Aircraft. Assa Abloy bought HID in 2000.

The boards of both companies have approved the transactions and Fargo's board has recommended that its shareholders approve the merger. The deal is expected to close in the third quarter of this year.

(Adds additional comments, updates stock price, recasts, changes dateline from BOSTON)

LOS ANGELES, May 19 (Reuters) - Intel Corp. shares fell to a three-year low Friday after No. 1 personal computer maker Dell Inc. said it would begin using chips from smaller Intel rival Advanced Micro Devices Inc. , whose shares surged.

Dell said that for the first time in more than two decades, Intel will no longer be its sole provider of computer microprocessors, the brains that run computers.

It's a big coup for AMD. Until the company came out with its Athlon and Opteron processors, it had been largely regarded as a maker of cheaper, lower-performing Intel clone chips.

Intel shares traded for as little as $17.94 early in the session, their lowest level since April 2003. At midday they stood at $18.18 on Nasdaq, down 2.5 percent. AMD shares gained $2.60, or 8 percent, to $34.95 on the New York Stock Exchange.

Dell said late on Thursday that it will use AMD's Opteron microprocessors in some high-end corporate server machines. That announcement sealed a long-running on-again, off-again courtship between the two companies.

The pact, announced as Dell reported its quarterly results, only applies to a category of powerful business computers known as servers. The agreement does not end Intel's coveted status as Dell's only provider of microprocessors for desktop and laptop personal computers.

"The question on everyone's mind today will be what the relationship implies for additional AMD business at Dell," Merrill Lynch analyst Joe Osha said in a note to investors. "The most likely outcome is a tough fight between the two companies for Dell's business, especially in desktop."

Merrill Lynch expects AMD's share of the market for server microprocessors will rise to 26 percent by the end of the year, up from 16 percent a year earlier. AMD's share will continue to gain next year and could hit 30 percent, Osha said in his note.

Intel, struggling to regain market share and kick-start profit growth, is overhauling its product line this year, promising chips that use less electricity while performing faster.

Analysts have said that so long as Intel comes through on its promise, AMD's deal with Dell shouldn't be a big blow.

Before the market opened on Friday, some analysts warned that Intel's stock could fall to about $16 within a few days on fears the Dell decision will propel AMD to greater market share gains, according to Tim Ghriskey, who manages more than $1 billion for Solaris Asset Management.

"That's a very bearish scenario," he said. "It's sort of a worst case."

Solaris owns AMD shares but hasn't held Intel for about a year. Ghriskey said he was considering buying Intel after Friday morning's drop. "We're salivating at today's decline. It's quite a gap," he said before the stock market opened.

Jim Huguet, president of Great Companies LLC, said Dell's decision to go with AMD for some server chips was not a "devastating blow" for Intel.

"Intel still has a lot of business and a lot of customers," said Huguet, whose firm manages about $1 billion. "Smart people are running the company, but I'm sure they'd rather not have that happen."

AOL joined the pack this month with its own take on social networking, a loose term for services that help users expand their circles of friends by exploiting existing connections, rather than meeting randomly or by keyword matches alone.

The rapid growth of MySpace and last year's purchase of its parent company by Rupert Murdoch's News Corp. for $580 million "definitely accelerated something," said Greg Sterling, an industry analyst with Sterling Market Intelligence in Oakland, Calif.

"MySpace went from being this curiosity to a cultural phenomenon," Sterling said. "People started to think this is a really, really big opportunity."

MySpace offers a mix of features -- message boards, games, Web journals -- designed to keep its youth-oriented visitors clicking on its advertising-supported pages. The site has successfully built communities around music, becoming the go-to place for emerging bands, and it wants to replicate that success in film and comedy.

Driven largely by word of mouth, MySpace grew astronomically since its launch in January 2004 and is now second in the United States among all Web sites by total page views, behind only Yahoo Inc., according to comScore Media Metrix.

MySpace's user base more than quadrupled to nearly 80 million over the past year, with as many as 270,000 joining every day.

Yahoo even announced a home page redesign this week in part to fend off the rising threat, adding recommendations and insights about cultural trends culled from its community of 402 million users worldwide.

Others, mostly startups, are hoping to become the next-generation MySpace, offering more-robust, easier-to-use tools or specialized features for niches.

CollectiveX Inc. launched this month as a network for professionals and other pre-organized groups. Famoodle started in April as a MySpace for families. Relative newcomers Tagged Inc. and Varsity Media Group Inc.'s Varsity World are billing themselves as safe havens for teens.

Even the British Broadcasting Corp., seeing rival News Corp.'s successes, is revamping its Web site to incorporate more user-generated features.

The most notable of the newcomers is AOL's AIM Pages, which is building upon its already substantial instant-messaging base of 49 million active users worldwide. Still, MySpace's number is higher -- the active subset of registered users who logged on in March was 56 million, according to comScore.

"MySpace is doing phenomenally well," said James Bankoff, AOL's executive vice president for programming and products.

Nonetheless, Bankoff denied AOL was positioning AIM Pages as "a MySpace killer." Rather, he said, the entrance by Time Warner Inc.'s Internet unit "points to the trend of consumers wanting to express themselves in a more powerful way."

AIM users get a page customizable with any number of drag-and-drop modules for maps, Web journals and other features, including those from rivals like Yahoo's Flickr photo site. By contrast, MySpace users must deal with HTML programming code to customize.

The offering, available in a beta test mode, underscores AOL's history of playing down innovation in favor of waiting until the masses are ready. It wants to be easy, not necessarily first.

MySpace wasn't first, either. But it surpassed Friendster Inc. in monthly visitors just a half-year after formally launching.

Analysts note that if Friendster can fall, so can MySpace.

"It's like the one hot bar or restaurant everybody descends upon," Sterling said. "Then it gets cold and people leave it."

MySpace, whose press representatives said executives were unavailable for interviews, has been continually adding features, including just recently a test version of an instant-messaging program and the hit TV show "24" as free and for-pay downloads.

Potential rivals insist they are doing more.

TagWorld Inc. and Freewebs Corp. let users build entire Web sites, not just single profile pages. Both see themselves as people's hubs for music, photos and video, while many MySpace users embed in their profile pages digital items stored elsewhere.

A Microsoft Corp. spinoff company, though mum on specifics, plans to launch Wallop later this year with promises of helping people better interact more like they would in the real world.

That's also the thinking behind CollectiveX.

"CollectiveX doesn't expand or create communities," founder Clarence Wooten said. "It empowers existing communities."

So members of pre-existing groups, such as a homeowners association, could use CollectiveX to communicate and meet one another -- but only if someone they already know introduces them.

Groups are visible only to their members, and even within groups, a person's friends and colleagues are described only by title, not by name. By contrast, MySpace makes most profiles publicly viewable and users easily reachable.

Meanwhile, some startups see MySpace as the new mass media -- too big to appeal to any one demographic group well.

Adir Levy figures that once people get married, they're no longer keen on meeting new faces on MySpace, where about a quarter of the users are minors. So he developed Famoodle as a site for families to connect and expand existing relations.

"We definitely don't see us as becoming as big as MySpace, but we see ourselves as being the MySpace for the more mature crowd," said Levy, 25, who's getting married this year.

Others are targeting teens, the group that has turned MySpace into a lightning rod for warnings about the dangers posed by sexual predators on the Internet.

At Varsity World, moderators screen most writings, photos and other materials before posting. Tagged has features -- among them, a weekly celebrity lookalike contest -- likely to be seen as immature by even college students, said its founder, Greg Tseng.

"MySpace and the industry as a whole is really in the first inning," Tseng said.

MySpace's 80 million users is but a fraction of the estimated global online population of 1 billion.

Charlene Li, an analyst at Forrester Research, said users also can have multiple profiles at multiple sites -- the way they may belong to separate school, work, neighborhood and church networks in the offline world.

But not everyone will have time to keep up. In fact, only about 60 percent of MySpace's U.S. registered users visited the site in April, according to calculations of data from MySpace and Nielsen/NetRatings.

"You may have four or five e-mail addresses, but you use two of them," Sterling said. "You're going to go to one or two places. You're not going to go to four."

Marvell Technology Group's compelling valuation makes it one of the best ideas in communications semiconductors, according to research firm Cowen & Co.

"We recommend that investors use the current share weakness as an opportunity to build positions, ahead of what we expect to be a strong second half for the company," wrote analyst Jim Liang in a report Wednesday.

Liang expects Marvell shares to outperform the market by 35% over the next 12 months, driven by positive hard-disk drive seasonality and multiple product cycles.

With the stock off meaningfully from its recent high, the analyst believes the shares have discounted much of the risk, including the potential discontinuance of its MXO 160GB desktop platform following its merger with Seagate Technology, and ongoing PC market softness.

Marvell reports fiscal first-quarter results on Thursday. Liang anticipates an in-line fiscal first quarter, with guidance slightly better than current consensus expectations. He is modeling for earnings of 43 cents per share on revenue of $518 million.

Given heightened cyclical concerns about the communications semiconductors group due to some inventory build by contract manufacturers and distributors, the analyst said the group would be range bound near term.

"In this environment, our advice is to focus on product cycle stories that can power through any potential cyclical industry pause," Liang noted.

In addition to Marvell, Cowen's other "best idea" is SiRF Technology Holdings. The research firm has "outperform" ratings on both stocks.

NetEase's Board Approves Share Repurchase Program
Thursday May 18, 5:30 am ET

Under the terms of the approved program, NetEase may repurchase up to US$50 million worth of its issued and outstanding American Depositary Shares (ADSs) in open-market transactions on the Nasdaq National Market. The timing and dollar amount of repurchase transactions will be subject to Securities and Exchange Commission (SEC) Rule 10b-18 requirements. It is also expected that such repurchases will be effected pursuant to a plan in conformity with SEC Rule 10b5-1. NetEase plans to fund repurchases made under this program from available working capital.

Commenting on this announcement, William Ding, Chief Executive Officer and Director of NetEase said, "This repurchase program capitalizes on NetEase's financial and operational strength to increase shareholder value. The initiation of the repurchase program by the board of directors reflects our belief in the strength of our people, products and market. We believe that the purchase of our ADSs is an efficient use of the company's cash."

About NetEase

NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. Our online communities and personalized premium services have established a large and stable user base for the NetEase websites, which are operated by our affiliate. For the month of March 2006, the NetEase websites had more than 719 million average daily page views, making us one of the most popular destinations in China and on the World Wide Web. In particular, NetEase provides online game services to Internet users through the licensing or in-house development of massively multi-player online role-playing games, including Westward Journey Online II and Fantasy Westward Journey.

NetEase also offers online advertising on its websites, which enables advertisers to reach our substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified ads services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the Web, which are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.

Other community services which the NetEase websites offer include instant messaging, online personal ads, matchmaking, alumni clubs, personal home pages and community forums. NetEase is also the largest provider of free e-mail services in China. Furthermore, the NetEase websites provide more than 17 channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.

Forward-looking Statements

This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward- looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the share repurchase program will not increase shareholder value; the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its leading position in that market, which could occur if, for example, its new online games do not become as popular as management anticipates; the risk that recent changes in Chinese government regulation of the online game market, or any additional regulatory changes in the future, may limit future growth of NetEase's revenue or cause revenue to decline; and other risks outlined in NetEase's filings with the Securities and Exchange Commission. NetEase does not undertake any obligation to update this forward- looking information, except as required under applicable law.

The suit, filed Thursday in U.S. District Court for the Western District of Washington in Seattle, seeks unspecified damages and an injunction barring Microsoft from using the Symantec technology, according to a copy of the filing.

"We are accusing them of misusing certain intellectual property that they had access to...and (saying) that they misused our intellectual property in operating system products," Michael Schallop, the director of legal affairs at the security company, said in an interview. It is the first time Microsoft and Symantec have been pitted against each other in court, he said.

The complaint involves Symantec's Volume Manager product, acquired as part of the company's takeover of Veritas Software. Volume Manager allows operating systems to store and manipulate large amounts of data.

Microsoft licensed a "light" version of Volume Manager from Veritas in 1996 and used it in Windows 2000, Schallop said. The Redmond, Wash., company then used it to develop functionality for Windows Server 2003, which competes with Veritas' Storage Foundation for Windows, Schallop said.

"The breaches of the agreement and IP violations began after Windows 2000...They were not allowed to use that intellectual property to develop products that compete against Veritas," Schallop said. "They have used our intellectual property in terms of trade secrets and source code to develop competing products."

Additionally, Schallop said, Veritas discovered about two years ago that Microsoft had filed patent requests based on Veritas' trade secrets. "They claimed they had invented something that they had not," he said.

Symantec and Microsoft have tried to resolve the dispute, but were unable to. "We recently agreed to disagree and let the courts help us resolve the dispute," Schallop said. "We think that we will prevail through trial."

A Microsoft representative confirmed the dispute and the attempts to reach an agreement outside of the courts. The argument stems from a "very narrow disagreement" over the terms of a 1996 contract with Veritas, the representative said in a statement.

"These claims are particularly puzzling because Microsoft actually purchased all intellectual property rights for this technology from Veritas in 2004," the representative said. "We believe the facts will show that Microsoft's actions were proper and are fully consistent with the contract between Veritas and Microsoft."

Big movers in the stock market

NYSE

Barr Pharmaceuticals Inc., down $4.47 at $49.17

The pharmaceutical firm said the Patent and Trademark Office rejected its application to renew a patent for its Seasonale birth-control pill.

UnitedHealth Group Inc., up $1.29 at $45.66

The health insurer recouped some losses from a day earlier after revealing a deficiency in its accounting of stock options and saying past results may have to be restated.

NASDAQ

Threshold Pharmaceuticals Inc., down $10.78 at $3.22

The drugmaker's stock plunged to an all-time low after regulators halted a trial of its prostate treatment because some patients suffered complications.

51job Inc., up $2 at $27.35

The Chinese career services company said its profit nearly tripled last quarter on gains in recruitment advertising.

Safety Insurance Group Inc., up $2.38 at $49.91

The insurance provider is being added to Standard & Poor's SmallCap 600 index on May 15.

U.S. Wants to Extend Microsoft Oversight

The news sent Dell shares falling nearly 6 percent to a 52-week low.

The Round Rock, Texas-based company said it expects to earn 33 cents per share on revenue of about $14.2 billion, compared with analysts' average estimate of 38 cents per share on revenue of $14.52 billion.

Dell, which sells computers directly to consumers and is the world's largest PC maker, previously forecast a profit ranging from 36 cents to 38 cents per share, including stock-option costs of 3 cents, on revenue of $14.2 billion to $14.6 billion.

Dell said the shortfall from the previous guidance stems primarily from pricing decisions in the second half of the quarter that the company expects will accelerate revenue growth in the future.

During the quarter, Dell aggressively discounted some of its products as it lost ground to rivals.

In a statement, Dell CEO Kevin Rollins said the company had been "making investments in our support infrastructure and product quality" and slashing prices.

Company officials declined to comment further. Dell will report first-quarter earnings on May 18.

Stamford, Conn.-based market researcher Gartner Inc. said Dell saw its share of industry computer shipments decline to 16.5 percent in the first quarter of 2006 from 16.9 percent a year ago. Though Dell shipped 10.2 percent more PCs than it did in last year's first quarter, Gartner said the growth rate was Dell's slowest since the third quarter of 2001.

"We're experiencing a slow down in the growth of the PC market, and prices are coming down," said Samir Bhavnani, a PC industry analyst with market researcher Current Analysis. "And PC makers, with Dell especially as the biggest one, are paying for pricing decisions they made months ago."

Dell shares fell 5.8 percent, or $1.53, to $24.90 on news of the revised guidance in late-session trading. Earlier, the stock rose 75 cents, or almost 3 percent, to close at $26.43 on the Nasdaq Stock Market. Dell shares are down nearly 12 percent so far this year, and hit a new 52-week low Monday after the bell.

In LONDON story "UPDATE 2-World stocks storm past tech bubble high", please read in paragraph 6 ... It contains 2,618 stocks in 49 developed and emerging countries ... instead of ... As of the end of March it contained 1,798 stocks in 23 primarily developed countries.

In paragraph 7 please read ... Venezuela with just 0.01 percent ... instead of ... New Zealand with just 0.08 percent.

In paragraph 9 please read ... have been in emerging markets ... instead of ... are in emerging markets and are not part of the MSCI World Index.

In paragraph 10 please read ... The all-country world index .... instead of ... The world index.

(Corrects to show that emerging market stocks are in the index, and to clarify that it is referred to as the all-country world index).

A corrected story follows.

(Adds fresh comments, background)

By Jeremy Gaunt, European Investment Correspondent

LONDON, May 8 (Reuters) - World stocks stormed past highs reached during the 2000 tech bubble on Monday, with the MSCI World Index <.MSCIWD> hitting a record 349.06.

The index's previous high was on March 27, 2000, when it reached 349.04 before roughly halving in value in a global equity crash. Equities have been rallying worldwide since early 2003 on the back of low interest rates and booming economies in countries such as the United States, China and India.

Companies have also benefited from restrained labour-cost increases as inflation has remained generally in check.

"The underpinning is good," said Jim Goff, director of research for Janus Capital. "Valuations do not seem very (costly). Earnings are growing quite dramatically."

The MSCI index, which dropped back slightly after hitting the record, is widely watched as a gauge of global stocks. It contains 2,618 stocks in 49 developed and emerging countries.

U.S. equities constitute almost half of the weighting of the index, with Japan, Britain, France, Canada and Germany following. The smallest weighting is Venezuela with just 0.01 percent.

Despite their strength in the index, U.S. stocks have tended to lag others in the post-2003 rebound, and major indexes such as the S&P 500 <.SPX> and Dow Jones Industrial Average <.DJI> remain below their tech-bubble highs.

Many of the star equity performers over the past few years, meanwhile, have been in emerging markets. MSCI's main emerging market index <.MSCIEF> has more than doubled since 2003.

BUBBLE?

The all-country world index has gained more than 12.5 percent so far this year while its emerging market stablemate is up nearly 25 percent.

Such rises, along with gains in other major indexes, have raised some concerns that equities are heading for another fall -- especially as interest rates are generally rising worldwide.

The world-driving U.S. economy is expected to slow down this year, and the pace of gains in equities is seen by some as unsustainable over the full year.

But many investors nonetheless expect stocks to continue rising and to outperform bonds.

Michael O'Sullivan, a strategist with State Street Global Markets, drew a distinction between the current rally and the one that led to the tech bubble bursting.

"We are at a strong point in terms of ... earnings ... unlike in the tech bubble when you used to have imaginary earnings," he said.

"The kind of sectors doing well are financials and oils which are big market caps, unlike tech which was relatively smaller."

NEW DELHI (Reuters) - NIIT Technologies Ltd. has bought UK-based Room Solutions Ltd. for about $25 million to increase its client base in the insurance sector, a top company official said on Monday.

Arvind Thakur, chief executive of the Indian mid-sized software services exporter, said Room Solutions would become a wholly-owned unit by the end of 2007.

NIIT Tech's stock reached a new high of 241.95 rupees after the announcement, up 7.36 percent from its close on Friday.

"We were missing the UK piece in the insurance segment," Thakur told reporters. London-based Room provides technology solutions to the insurance market.

Room posted a turnover of $25 million in 2005, nearly equal to the value of NIIT's purchase price.

The deal comes a fortnight after another Indian company, Bangalore-based telecoms software firm Subex Systems Ltd., said it would buy UK-based Azure Solutions Ltd. for more than $140 million to expand its global presence.

Subex said the merged entity would be the world's largest vendor of fraud-prevention software for the telecoms industry, serving 23 of the world's 40 largest (telecoms) operators.

NEW DELHI (Reuters) - NIIT Technologies Ltd. has bought UK-based Room Solutions Ltd. for about $25 million to increase its client base in the insurance sector, a top company official said on Monday.

Arvind Thakur, chief executive of the Indian mid-sized software services exporter, said Room Solutions would become a wholly-owned unit by the end of 2007.

NIIT Tech's stock reached a new high of 241.95 rupees after the announcement, up 7.36 percent from its close on Friday.

"We were missing the UK piece in the insurance segment," Thakur told reporters. London-based Room provides technology solutions to the insurance market.

Room posted a turnover of $25 million in 2005, nearly equal to the value of NIIT's purchase price.

The deal comes a fortnight after another Indian company, Bangalore-based telecoms software firm Subex Systems Ltd., said it would buy UK-based Azure Solutions Ltd. for more than $140 million to expand its global presence.

Subex said the merged entity would be the world's largest vendor of fraud-prevention software for the telecoms industry, serving 23 of the world's 40 largest (telecoms) operators.