By Benjamin Pimentel and Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) -- Shares of Yahoo Inc. jumped
Wednesday morning to a fresh multiyear high, leading mild gains for
the tech sector that were offset by a notable drop at Dell Inc. one
day ahead of the PC maker's shareholder vote on a privatization
deal.
In early trades, the Nasdaq Composite Index (RIXF) was up 0.3%
to 3,611. The Philadelphia Semiconductor Index (SOX) rose 0.3%
while the Morgan Stanley High-Tech Index (MSH) picked up a
fraction.
Yahoo (YHOO) was the biggest upside driver for the sector, with
its shares jumping more than 6% to $28.61 in early trades. It was
the highest level for the stock since May of 2008, when the company
was still in buyout discussions with Microsoft (MSFT) that
eventually fizzled and sent the stock down below the $20 mark,
where it remained until earlier this year.
Wednesday's gains came despite a second-quarter earnings report
that showed continued weakness in Yahoo's core display advertising
business. Yahoo lowered its forecast for the full year, and CEO
Marissa Mayer outlined to investors her plans to invest more in
technology and video services as part of an effort to address the
slowdown in display ads.
Analysts were largely tepid on the core business results, but
stayed mostly positive on the stock due to Yahoo's investment in
the Chinese e-commerce giant Alibaba, which is expected to go
public later this year and provide Yahoo with a sizable gain from
its investment.
"In summary, the upside from Alibaba's margins added $3 per
share to our sum-of-parts valuation, more than offsetting the $1
per share lost at the core," wrote Jordan Rohan of Stifel Nicolaus
in a note, in which he raised his price target on the stock to $33
from $31.
Losing ground on Wednesday was Dell (DELL) , which was down 1.7%
to $12.81 at last check. The company is hosting a shareholder
meeting on Thursday morning to vote on a privatization bid from
founder and CEO Michael Dell worth $13.65 per share.
The deal is being opposed vocally by billionaire activist Carl
Icahn and several other large shareholders. Icahn has proposed
alternative deals that include public warrants, which the board of
Dell has opposed.
Also, Bloomberg report on Wednesday morning cited an unnamed
source as saying Michael Dell and private-equity partner Silver
Lake will not be raising their $13.65-per-share offer.
Intel (INTC) shares edged lower ahead of the chip giant's second
quarter results, due after the closing bell. Shares of eBay (EBAY)
rose about 0.5% ahead of its own report for the quarter.
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