Today: LinkedIn and Google (GOOG) hit record prices, helping push the Standard & Poor's 500 index to a new five-year high. Also: Apple (AAPL) moves higher on plan to push cash back to shareholders, and Dell faces issues with leveraged buyout plan.
Google and LinkedIn hit new all-time highs as indexes move higher
Two Mountain View tech heavyweights broke their personal records for stock price Friday, as Google hit new highs for the second consecutive Friday and LinkedIn rode record-breaking earnings results to its highest price of all time. The success of those and other Silicon Valley stocks helped push the Standard & Poor's 500 to yet another five-year high.
Google established a new intraday record price for the second straight day, reaching as high as $786.67, and closed nearly $10 higher than its previous all-time high closing price, at $785.37.
The search giant's 1.5 percent gain followed its placement on Morgan Stanley's "Best Ideas" list, with analyst Scott Devitt writing in the note announcing that fact that "the next Google is Google."
Devitt wrote that YouTube "may be Google's most underappreciated asset," estimating that increased advertising on the video site could bring in an extra $20 billion a year for the company. While also noting good news that came out of Google most recent earnings report, Devitt concluded that Google stock will continue to gain in price "as investors gain confidence that social networks are less of a threat than feared, mobile is more incremental than cannibalistic, and as the Motorola Mobility integration progresses smoothly."
Google's chairman and former CEO, Eric Schmidt, will profit from the rising stock price, as an SEC filing Friday afternoon showed he was planning on selling up to 3.2 million of his Google shares in the next year.
LinkedIn's percentage gain put Google's to shame, as the professional-networking service spiked more than 20 percent higher after it destroyed expectations for fourth-quarter earnings with a report after the bell Thursday. Shares broke $150 for the first time in Friday trading, reaching an all-time intraday high of $151.89 before closing with a 21.3 percent gain at $150.48.
Analysts rushed to push their price targets higher after LinkedIn beat their earnings projections for the seventh consecutive quarter, with prominent banks like Bank of America, Citigroup and JPMorgan increasing their estimates for the best price at which to sell the stock. Even with the scad of increases, however, the average analyst price target still only moved as high as LinkedIn's actual stock price, at $150, according to MarketWatch.
LinkedIn's skyrocketing price increases its already high price-to-earnings ratio, which "remains challenging to justify," Needham analyst Kerry Rice told MarketWatch. Evercore Partners analyst Ken Sena challenged that view in a note, however, writing that "despite the earnings multiple, we view valuation as defensible given its explosive growth within huge addressable markets, major competitive barriers, and attractive gross margin leverage."
Even beleaguered San Francisco online-gaming company Zynga joined the party Friday, gaining 11 percent to close at $3.43, its highest closing price since July. While the company has been helped by a surprise profit revealed in its earnings report, Friday's bounce may be more attributable to New Jersey seemingly nearing the legalization of online gambling, an area in which Zynga has expressed interest.
Positive vibes on Wall Street were not universal for Silicon Valley, as SunPower (SPWRA) dived 5.6 percent on Friday after analysts expressed displeasure with the San Jose solar company's forecast in its Thursday earnings report. Other solar companies also fell, as did electric car maker Tesla, which declined 0.6 percent ahead of its earnings report scheduled for Monday.
Wall Street gained overall, with the S&P hitting yet another five-year high with a 0.6 percent increase and the Dow Jones industrial average topping 14,000 again in intraday movement, though it closed just shy of that mark after a gain of 0.4 percent. The tech-heavy Nasdaq eclipsed both of those marks with gains of 0.9 percent and the SV150 index of Silicon Valley's largest tech companies rode 1.2 percent higher.
Apple gains as analysts discuss possibility of cash payout
The Dow's trailing gain could be attributed to its exclusion of Apple, as the Cupertino tech giant helped push all the other indexes higher with a 1.4 percent gain a day after talks of cash returns to stockholders pushed it to a large, late gain.
Analysts rushed to release notes Friday morning to detail what Apple could do to return some of its $137 billion cash hoard to investors, along with the problems that could come with doing so.
Many noted that nearly $100 billion of Apple's cash is stashed overseas, and bringing it back to the states would incur repatriation taxes of 35 percent. Merrill Lynch analyst Scott Craig offered a solution to that problem, noting "Apple could also take on debt to accommodate a more aggressive capital deployment strategy without incurring tax penalty to repatriate offshore cash."
Apple will hold its annual shareholders meeting on Feb. 27, when a vote will be held that sparked the lawsuit that started all this talk on Thursday. In the meantime, the stock is bouncing back toward the $500 level, closing Friday at $474.98, its highest closing price since last month's earnings report.
Dell's largest outside shareholder against leveraged buyout
One of this week's biggest tech stories took a turn Friday, as Dell's largest individual stockholder said in a letter to the company that it would vote against the leveraged buyout that founder and CEO Michael Dell has put together.
Southeastern Asset Management, which owns 8.4 percent of the company, said Friday that it believes Dell is worth $24 a share, much higher than the price proposed by Michael Dell and his partners, $13.65 a share.
"We retain and intend to avail ourselves of all options at our disposal to oppose the proposed transaction," the company's letter read.
A majority of shares not owned by Michael Dell must vote in favor of the deal in order for it to be approved. With Southeastern's share, 11 percent of the shares in the company have said that they will vote against the offer.
Silicon Valley tech stocks
Up: LinkedIn, Zynga, Jive, Electronic Arts (ERTS), Adobe (ADBE), Hewlett-Packard (HPQ), Yelp, Applied Materials, Palo Alto Networks, Symantec, Google, Apple, Gilead, Oracle (ORCL), Intel (INTC), Yahoo (YHOO), eBay
The tech-heavy Nasdaq composite index: Up 28.74, or 0.91 percent, to 3,193.87
The blue chip Dow Jones industrial average: Up 48.92, or 0.35 percent, to 13,992.97
And the widely watched Standard & Poor's 500 index: Up 8.54, or 0.57 percent, to 1,517.93
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.