By Benjamin Pimentel and Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) -- Shares of Yahoo Inc. jumped
Wednesday to a multiyear high, leading 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.
The Nasdaq Composite Index (RIXF) gained 0.3% to close at 3,610.
The Philadelphia Semiconductor Index (SOX) and the Morgan Stanley
High-Tech Index (MSH) each picked up a fraction.
Yahoo (YHOO) was the biggest upside driver for the sector, with
its shares jumping 10.3% to close at $29.66. It was the highest
level for the stock since February of 2008, when the company was in
buyout discussions with Microsoft (MSFT) that eventually fizzled
and sent the stock crashing 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 her plans to invest more in technology and
video services as part of an effort to reverse 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 1.1%
to close at $12.88. 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 opposed by billionaire activist Carl Icahn and
several other large shareholders. Icahn has proposed alternative
deals that include public warrants, which Dell's board 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 were down 0.4% to close at $24.15 ahead of
the chip giant's second quarter results, due after the closing
bell. Shares of eBay (EBAY) rose 1% to close at $57.38 ahead of its
own report for the quarter.
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