Today: While the major U.S. indexes soared to record-breaking heights in the first quarter, the SV150 index declined slightly thanks to Apple's (AAPL) decline, but Netflix (NFLX), SunPower (SPWRA) and other previously denigrated companies helped keep the losses from expanding. Also: Facebook's phone event, "guesstimates."
Apple decline pulls SV150 to slight loss in first quarter of 2013
The first quarter of 2013 saw two of the three major U.S. indexes reach all-time highs as stocks rode waves of strong economic data and decent earnings reports higher, but Silicon Valley stocks lagged far behind. The SV150 index of the region's largest public technology companies lost 0.6 percent in the first three months of the year -- which officially came to an end Thursday for Wall Street, with traders taking Good Friday off -- as the biggest company in the index, Apple, took a dive while Netflix and SunPower rose from the depths.
While Apple was not the worst-performing stock in the SV150 during the first quarter -- that "honor" belonged to San Jose-based Verifone Systems, which dropped 30.3 percent overall as a weak forecast led investors to find the exit -- the company's U.S.-leading market cap can cause its movement to have an outsize effect on the index. Apple's 17 percent decline in the period placed it 11th among the worst performers in the SV150, a number that would have looked much worse at the beginning of March, when Apple hit its 52-week low of $419; it closed Thursday at $442.66, dropping 2 percent and 2.1 percent on the last two trading days of the quarter.
Apple's major issue has been doubts about its growth prospects, after record-breaking profits and sales in the past two years. Analysts -- and the company itself -- predict that the Cupertino behemoth will see a decline in revenues year-over-year for the first time since 2003 in the completing quarter. Apple's diminishing dominance in the mobile field that it basically created with the introduction of the iPhone and iPad has been a major reason for the doubts, leading analysts to jump off the tech giant's bandwagon in droves.
"When handset makers fall out of favor, they fall faster/further than expected," Jefferies analyst Peter Misek wrote in summing up the falling view of Apple among analysts. Misek has been typical among Apple analysts -- his Apple price target reached $900 in August, just before Apple hit its all-time high of $705.07 on Sept. 21, but he dropped it from $500 to $420 earlier this month.
While other analysts have joined Misek in dropping targets and ratings of Apple, they still overall expect a rebound -- the average price target of 54 analysts tracked by MarketWatch is $592.18, almost exactly $150 higher than its current price.
Just behind Apple on the worst performers list is Palo Alto's VMware, with the virtualization company diving 16.2 percent in the quarter after its financial forecast was poorly received by analysts, sending the stock to a 52-week low. The company attempted to rectify the damage earlier this month, announcing a spinoff in conjunction with parent company EMC and promising strong future results, but a full rebound did not happen right away.
Other weak performances in the quarter included Santa Clara's Netgear, which declined 15 percent; Sunnyvale networking company Juniper, which fell 5.7 percent amid doubts about its ability to compete with Cisco (CSCO); and Oracle (ORCL) which fell late in the quarter after a poor earnings report, ending with a 2.1 percent overall decline for the three-month period.
SunPower and Netflix double their share prices, lead big-name gainers
Netflix suffered through a tough 18-month period in 2011 and 2012, but 2013 has been a comeback year for the Los Gatos video-on-demand company. Joining it atop the list of strong first-quarter performances is SunPower, which suffered from severe doubts about the solar sector but managed to convince some of those doubters with a deal that involved Warren Buffett.
The top SV150 performer in the first quarter was Meru Networks, which sold a new offering of stock in February after a successful 2010 IPO and gained an overall bump of 154.7 percent for the quarter, though that still left it with a small share price and market cap: $6.75 and $122.6 million, respectively.
SunPower and Netflix were the next two on the list, with both more than doubling their share price in the last three months. SunPower moved 105.3 percent higher for the second spot on the list, as solar companies began to rise from the ashes on Wall Street.
The San Jose company, the second largest U.S. manufacturer of solar panels behind Arizona's First Solar, started 2013 off with a bang, announcing on Jan. 3 that a subsidiary of famed billionaire Buffett's Berkshire Hathaway would purchase two of the company's solar projects for about $2 billion. That move -- as well as the successful late-2012 IPO of San Mateo installer SolarCity -- helped convince investors that solar could be back on the rise after a glut of Chinese panels and Solyndra's bankruptcy had nearly destroyed the U.S. sector, and SunPower's stock shot up 48 percent.
While solar stocks retreated somewhat from that boost, and SunPower's earnings didn't help the stock price, the trend shot back higher again in February, though reasons weren't entirely clear. Eventually, however, news out of China showed that investors betting on U.S. solar stocks in February may have been ahead of the curve, as the manufacturers that helped doom Solyndra and damage U.S. counterparts announced serious financial struggles in March. Analyst price targets have yet to match up with SunPower's rise, however. Shares closed Thursday at $11.60, and the average price target of 17 analysts tracked by MarketWatch pegs SunPower at $9.92.
Netflix competitors are not as fully formed as the video-on-demand company, giving it less competition than SunPower, but investors have been uneven on the company since CEO Reed Hastings' ill-informed moves in 2011 that nearly doomed the company with customers. That history led investors to question a large raise for Hastings at the end of 2012, even in the wake of its important deal with Disney.
Hastings had the loudest laugh, however, after the company announced a profitable final three months of 2012, when even the company expected to lose money, which gave Netflix its best single-day gains of all time on Wall Street.
While many doubted the long-term viability of those gains, they have actually increased as the company released a highly anticipated drama in "House of Cards," which is expected to help boost subscriber roles, and built buzz for future releases of "Arrested Development" and a series from the Wachowski siblings, creators of the "Matrix" franchise.
The quarter was so strong for Netflix that even a development that could have been seen as negative turned into a positive -- the coming death of postal service on Saturdays actually led to yet another stock boost for the company -- and a Congress that has done its best to freak Wall Street out with budget fights helped Netflix by approving a law that allowed it to have more social features.
By the end of the quarter, Netflix stock was nearing $200 and analysts like Pacific Crest's Andy Hargreaves were trumpeting its positive qualities. Still, the average analyst price target is far below Netflix's current price of $189.28: the average Netflix price target of 33 analysts tracked by MarketWatch is $138.17.
Other notable stocks among the first quarter's top performers in the SV150 included Hewlett-Packard (HPQ), which helped push the Dow Jones to its record with a gain of 67.3 percent, the sith best in the index; Pandora Media and LinkedIn, which both recorded gains of more than 50%, with LinkedIn hitting all-time highs; Zynga, which gained 41.8 percent amid high hopes for legalized Internet gambling; and Gilead Sciences (GILD), which hit all-time highs while climbing 33.2 percent. Google (GOOG) also hit all-time highs in the quarter and ended with an 11.9 percent boost, while Yahoo (YHOO) reached its highest prices since 2008 and gained 18.2 percent
Facebook plans another event, this one tied to Android
When Wall Street returns to action on Monday, observers will find out what investors think the potential of a Facebook smartphone would be, as an event Facebook will hold next week is rumored to be the unveiling of such a device.
Facebook sent out invites late Thursday afternoon to yet another product announcement at its Menlo Park headquarters, the third such event in 2013 following the debuts of "Graph Search" and changes to News Feed.
The invite told recipients to "come see our new home on Android," leading some to speculate that it will be a Facebook-themed phone, or at least some kind of functionality beyond Facebook's already popular mobile application.
Facebook did not get a long-term boost from its debuts, losing 3.9 percent overall in the first quarter.
Silicon Valley tech stocks
Markets closed for Good Friday.
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.