Today: Netflix (NFLX) discusses a new season of "Arrested Development" as Hulu is ripped off the market, and investors push the stock to highs unseen since the "Qwikster" debacle. Also: Wall Street indexes reach new record highs, joined by Yelp and Tesla.
The Lead: New highs for Netflix stock, company 'interested' in more 'Arrested Development'
Netflix stock hit its highest level in almost two years Friday, as the Los Gatos video-on-demand company negotiated for another season of cult comedy favorite "Arrested Development" and rival service Hulu was yanked off the acquisition market by its owners.
Netflix shares moved as high as $257.43 Friday before closing with a 5.4 percent gain at $257.26, the highest intraday and closing prices for the stock since early August 2011. That time period came between the two biggest gaffes of CEO Reid Hoffman's reign over the company he co-founded -- a sudden, severe price increase for customer who wanted DVD delivery and streaming service from the company in July, and a later-aborted attempt to spin off the DVD-delivery service off as a separate company called "Qwikster" in September.
That string of errors, along with Netflix's resulting loss of subscribers and negative publicity, led to a severe downturn in the stock, but successful production of original programming and landmark deals with other production houses have helped brighten the view of investors toward the company in the past year. The Kevin Spacey-helmed "House of Cards" is receiving Emmy buzz; Netflix's most recent new series, "Orange is the New Black," by "Weeds" creator Jenji Kohan, premiered Thursday; and the streaming service received a lot of social buzz from producing a new season of canceled Fox comedy "Arrested Development."
Friday's bounce arrived after "Arrested Development" producer Brian Grazer told Bloomberg News on Thursday afternoon that he is in talks with Netflix on another season of the series, saying "They are interested in doing that." While Netflix spokesman Joris Evers would not comment on the negotiations Friday, he did tell Bloomberg, "We have said before that we'd be interested in doing another season of 'Arrested Development' if it is logistically possible."
Netflix stock took a hit just after the debut of the fourth season of "Arrested Development," with some observers blaming mixed reviews of the new episodes; however, investors are likely more concerned with subscriber growth from the program's debut, which occurred in the second quarter. After struggling to meet its goals for new subscribers in 2012, when Netflix was the 25th largest Silicon Valley tech company with $3.6 billion in revenues, the company showed off better subscriber growth in the first quarter of 2013, when "House of Cards" debuted. The company plans to release earnings for the second quarter, when "Arrested Development" debuted, on July 22 with an innovative video conference discussion to follow.
Barclays analyst Anthony DiClemente likes Netflix's chances of surprising analysts in its earnings release, as he boosted his price target on the stock from $220 to $250 Friday, predicting strong subscriber growth and mobile adoption for the company.
Netflix's rivals have been battling it for original content, most notably Amazon, but concerns that a deep-pocketed rival might purchase streaming website Hulu to go against Netflix were extinguished Friday. For the second time, the company's owners took Hulu off the market after soliciting bids, but this time the owners -- traditional TV powerhouses Fox, Disney and NBC -- announced they would recapitalize with a $750 million investment.
While $750 million may seem like a lot to you and me, Netflix spends nearly three times that much on content procurement and production, AllThingsD pointed out, so plans by its owners to truly rival Netflix are unlikely to come to fruition.
SV150 market report: Dow, S&P again close at record highs, as do Yelp and Tesla
Netflix wasn't the only entity showing off new highs Friday on Wall Street, as a late push set more records for the main Wall Street indexes. Silicon Valley stocks also gained, as Yelp and Tesla again established record high prices.
Yelp reached new all-time highs earlier this week after announcing that it would begin offering the ability to order food for delivery directly from its platform, and shares roared even higher Friday. Stock in the San Francisco consumer-reviews site reached an intraday high of $40.59 before closing with a 5.2 percent leap at $39.40, after Needham analyst Kerry Rice initiated coverage of the company with a "Buy" rating and $45 price target. Rice wrote that Yelp "is taking strides in becoming a necessary advertising medium for local businesses worldwide."
Tesla established a record closing high for the second consecutive day, following CEO Elon Musk's revelation that the Palo Alto company had begun manufacturing more than 400 Model S sedans a week at its Fremont production facility. Tesla -- which gained 3.4 percent to $129.90 -- closed at a new all-time high in four out of the week's five trading sessions, and has now gained more than 283 percent on the year.
After a strong day Thursday, companies that rely on personal computers for revenues slowed down Friday: Hewlett-Packard (HPQ), which lost its crown as the world's largest PC manufacturer this week, dropped 0.7 percent to $26.19; chip giant Intel (INTC) resumed its recent slide with a 0.4 percent drop to $23.90, while smaller rival Advanced Micro Designs declined 2.9 percent to $4.32; and Microsoft stayed relatively flat, losing 2 cents to $35.67, after announcing its large reorganization. Apple (AAPL) dropped 0.2 percent to $426.51 amid rumors of efforts to build its own chips, and Oracle (ORCL) declined 1.9 percent to $31.25.
Down: AMD, Oracle, Zynga, VMware, SolarCity, HP, Intel, Apple
The SV150 index of Silicon Valley's largest tech companies: Up 4.14, or 0.32 percent, to 1,297.52
The tech-heavy Nasdaq composite index: Up 21.78, or 0.61 percent, to 3,600.08
The blue chip Dow Jones industrial average: Up 3.38, or 0.02 percent, to 15,464.30
And the widely watched Standard & Poor's 500 index: Up 5.17, or 0.31 percent, to 1,680.19
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.