Today: Silicon Valley's woebegone technology sector rebounds on Wall Street, helping send indexes to record highs. Also: Yet another high-profile court battle resumed as no-poaching settlement hits doubts.
The Lead: Tech's rebound sends Wall Street to new highs
Wall Street roared to record highs Monday as Silicon Valley technology stocks -- which have been socked in the teeth recently -- bounced back in a big way after analysts said that the downfall had created some solid bargains.
The tech-heavy Nasdaq composite index gained 1.7 percent Monday and the SV150 index of Silicon Valley's largest tech companies added 1.9 percent, gains that helped push the broader Wall Street indexes to their highest closing points in history.
"It's the sectors and names that have gotten beaten up the most that are coming back the most," Reed Choate, portfolio manager for Neville, Rodie & Shaw, told the Wall Street Journal.
Silicon Valley tech stocks have suffered mightily in the past two-plus months, with the declines concentrated in shares of companies that have gone public in the past two years and specific sectors that experienced large growth in 2013, such as streaming media and cloud software. The Wall Street Journal posted an oft-cited report Sunday that suggested the declining stocks still had room to fall, though.
"We've gone from three times silly to two times silly," Mitch Rubin, chief investment officer at RiverPark Funds, told the Journal. "When the facts start to matter for these stocks, the bottom is a long way off."
Analysts and traders seemed to disagree with that sentiment, however.
"I think it's stabilizing a little bit for those stocks," Giri Cherukuri, head trader at OakBrook Investments, told Reuters. "Some would say they're still overvalued, but they've come down enough that it doesn't seem they have that much further to fall. Now people are trying to pick up bargains, and some of those stocks have been going up."
Some of the most brutalized stocks had the biggest bounces Monday, as analysts sent notes suggesting that prices were more palatable after the big swing. Twitter, which soared to more than $70 in late December and fell to new lows of less than $30 last week, added 5.9 percent Monday to close at $33.94 as analysts backed the stock.
"Twitter will never be as big as Facebook," SunTrust analyst Rob Peck wrote, but that doesn't mean its not a worthy stock, even with user growth dropping. "Based on our calculations, we believe one can justify buying the stock at these levels solely predicated on Twitter continuing to narrow the 50 percent monetization gap to Facebook, while still assuming user growth deceleration."
Oakland streaming-audio company Pandora Media, which fell more than 45 percent from its peak price, gained 6 percent to $23.98 Monday after MKM Partners analyst Rob Sanderson gave a similar read: The price moved from too expensive to justifiable.
"After proving our earlier concerns on competition and ability to scale ad monetization wrong, we began to see significant earnings power in Pandora's model, but could not justify the stock on valuation," Sanderson wrote. "The severe valuation collapse among mobile, local, social stocks has changed this and is creating a buying opportunity."
One of the newest stocks in the SV150, San Jose's Nimble Storage, jumped 11.6 percent to $22.98 after Needham analyst Richard Kugele posited that some stocks are worth overpaying for early.
"While today's market may shirk high-multiple tech names, not all were created equal, in our view," he wrote. "We think that companies like Nimble, which we believe can grow 50%+ for the next several years, warrant a premium multiple on their growth potential."
SV150 market report: Oracle-SAP legal fight is back on
Overall, only three companies in the SV150 index declined Monday, as Silicon Valley's technology stalwarts joined their younger counterparts in gains even as high-profile legal fights took center stage.
After winning an appeal to resume its legal fight with Google last week, Redwood City software giant Oracle hopes to accomplish a similar goal in San Francisco on Tuesday, when it asks a court to reinstate its $1.3 billion judgment against rival SAP. After a jury awarded Oracle the record monetary win, the trial judge ruled the award excessive and stripped it and offered Oracle less than $300 million or a chance to argue the merits again, which it will begin doing Tuesday. Oracle reached a 52-week high of $42.14 Monday and closed with a 2.2 percent gain at $41.95.
The most wide-ranging tech courtroom battle in Silicon Valley involves a handful of companies that allegedly agreed to tamp down competition for employees, but Apple, Google, Intel and Adobe agreed to settle the case last month for a reported $300 million. That settlement was called into question Monday, though, as lead plaintiff Michael Devine urged the judge in the case to throw out the agreement, writing, "There's no justice for the class in that, nor is there any real deterrent to future wrongdoing." The judge in the case -- Lucy Koh, who also presided over the Apple-Samsung patent beefs in San Jose -- already approved a similar settlement involving Intuit, Pixar and LucasFilm, however, so it is unclear if the pleas will have any effect. Apple improved by 1.2 percent to $592.83 while cutting the time it takes to offer refunds to online customers and continuing to hear reaction to a deal that isn't done or announced yet, the reported acquisition of Beats Electronics. Google gained 2.2 percent to $538.43, Adobe added 1.9 percent to $60.70, and Intuit inflected 1.6 percent higher to $76.11.
Up: Salesforce, Workday, Pandora, Twitter, Netflix, Facebook, Yelp, SolarCity, SunPower, Zynga, Nvidia, AMD, LinkedIn, SanDisk, Symantec, Google, Oracle, Yahoo, VMware, Adobe
Down: Dialogic, Rocket Fuel, NetApp
The SV150 index of Silicon Valley's largest tech companies: Up 26.18, or 1.91 percent, to 1,399.51
The tech-heavy Nasdaq composite index: Up 71.99, or 1.77 percent, to 4,143.86
The blue chip Dow Jones industrial average: Up 112.13, or 0.68 percent, to 16,695.47
And the widely watched Standard & Poor's 500 index: Up 18.17, or 0.97 percent, to 1,896.65