Today: Apple (AAPL) stock hits $700 for the first time, and analysts don't see shares holding there for very long. Also: Yahoo (YHOO) sale of a chunk of Alibaba is finished, and most of the money will go back to shareholders; Wall Street is mixed.
Apple shares hit $700 for first time, and analysts see more gains
Apple's record-breaking 2012 on Wall Street continued Tuesday, as the stock pushed past $700 for the first time and again set all-time intraday and closing highs in the run-up to Friday's launch of the iPhone 5.
After ending Monday just short of the $700 mark, Apple eclipsed the mark in late trading, then opened slightly short of the mark again Tuesday. Soon, however, it would officially climb higher than the vaunted level for the first time, about 7 a.m. Pacific time, and stayed higher for the rest of the session before closing at $701.91.
Along the way, Apple climbed as high as $702.33, making Tuesday the fourth consecutive session that Apple has established record intraday and closing prices; with every stock-price record that falls, Apple establishes a new record for highest market capitalization
"It's quite a milestone when you consider that in 1997 Apple was a billion dollars in the red and now it's the most valuable company in America," Creative Strategies analyst Tim Bajarin told the Mercury News on Tuesday. "The new share price clearly underscores investors' belief in Apple's current leadership. And while Steve Jobs may be gone, they accept the fact that he has fully prepared this team to take over and they're willing to back them."
The current string of broken records stems from Apple's introduction of the iPhone 5 last week, which led to record-breaking pre-orders for the latest iteration of its popular smartphone. The iPhone 5 will be the fastest, biggest and lightest iPhone to hit the market, and consumers seem hyped despite analysts' so-so reviews of the new product.
"(Record pre-orders happened) despite somewhat lukewarm reviews and some claiming it had 'lack of a wow factor,'" Sterne Agee analyst Shaw Wu wrote in a note. "We continue to believe many underestimate iPhone 5 in that it is a significant update and will drive a powerful product cycle."
Wu is one of many analysts who believe that Apple will continue to add to its stack of stock records in the future. He increased his price target -- the price at which an analyst believes an investor should sell shares for maximum return -- to $840 Tuesday, along with his estimate of iPhones Apple will sell this quarter. Along with iPhone sales, Wu believes Apple will introduce the long-rumored iPad Mini soon, pushing the stock even higher.
"From a supply-chain perspective, (the iPad Mini) it is ready to go," Wu told VentureBeat, based on discussions with Apple component suppliers in Asia. "Apple has to balance the harm that rumors do to sales against spacing out the launch after iPhone 5."
Wu is not alone. The average price target of 51 analysts tracked by MarketWatch is $781.50, with 46 of the 51 analysts rating the stock as a "Buy" or "Overweight"; the other 5 rate it a "Hold," with none suggesting investors should sell the stock at its current price. Some analysts are extremely bullish, predicting Apple shares will surpass $1,000, with a high price target of $1,110.
Can Apple stock soar that high? Bajarin correctly answered "Who knows?" but didn't put it out of the realm of possibility.
"There's no indication Apple is slowing down. The iPhone 5 is going to be a monster hit. And as long as Apple keeps its customers happy and continues to build its base of users, I think some of these higher targets are within reach."
Apple shares increased $2.13, or 0.3 percent, in regular trading Tuesday.
Yahoo's Alibaba deal done, shareholders to receive most of proceeds
The prolonged deal between Yahoo and Chinese Web giant Alibaba was finally completed Tuesday, with the companies confirming that the Sunnyvale company will sell a majority of its holdings back to the company for $7.6 billion, with most of that cash returned to shareholders.
Yahoo bought 40 percent of Yahoo in 2005 for $1 billion, and kept almost a quarter of that stake in the deal, allowing it to make a huge profit but still hold on to a substantial investment for when the Chinese company goes public. After paying taxes, Yahoo will bring in about $4.3 billion, with about $3 billion being used to buy back shares from investors and the rest going into the corporate coffers.
"This yields a substantial return for investors while retaining a meaningful amount of capital within the company to invest in future growth," Yahoo CEO Marissa Mayer said in Tuesday's news release on the sale, while also calling the deal "a significant milestone for both Alibaba and Yahoo."
The deal was negotiated before Mayer came on board at the company, and in its most recent earnings report, Yahoo said she was reconsidering pushing the proceeds back to investors. In the end, though, she decided rewarding shareholders for sticking with Yahoo through tough times was a good usage of the majority of the money.
"Marissa Mayer made her first really good decision as CEO by returning over $3 billion to shareholders," Kevin Stadtler, principal of Stadtler Capital Management, which holds Yahoo shares, told Bloomberg News. "Investors now have certainty of the use of proceeds."
Yahoo shares, which could see a bounce from the buyback plan reducing supply, increased 1.4 percent to $15.90 Tuesday.
Mixed day for Wall Street and tech stocks; AMD falls hard
While Apple and Yahoo moved higher, the rest of the market had a blah day, as none of the three major U.S. indexes moved much more than 0.1 percent on the day, with only the Dow Jones industrial average increasing.
Tech stocks were mixed as well, with the Nasdaq barely budging and the SV150 index of Silicon Valley's largest tech companies gaining 0.1 percent. Sunnyvale chipmaker Advanced Micro Devices plummeted 9.7 percent after announcing the departure of its chief financial officer, even though analysts were mixed on the possible results of the move. Google (GOOG), meanwhile, popped 1.2 percent higher as its hardware-manufacturing arm, Motorola Mobility, announced its first Intel (INTC)-powered smartphone; Intel gained 0.3 percent on the day.
Mountain View software firm Intuit (INTU) fell 1.3 percent after CEO Brad Smith released sales targets and admitted that the company "didn't bring its 'A-game'" this year. Palo Alto's Jive Software shot up 5.6 percent after Wells Fargo analysts said that its recent struggles on Wall Street had "created an attractive entry point."
Silicon Valley tech stocks
Up: Jive, Palo Alto Networks, Facebook, Gilead, Yahoo, Google, Nvidia, SunPower
The tech-heavy Nasdaq composite index: Down 0.87, or 0.03 percent, to 3,177.8
The blue chip Dow Jones industrial average: Up 11.54, or 0.09 percent, to 13,564.64
And the widely watched Standard & Poor's 500 index: Down 1.87, or 0.13 percent, to 1,459.32
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.