Today: Intel, Hewlett-Packard and Applied Materials reach 52-week highs after the world's largest chipmaker revealed that PC sales have been picking up. Also: OpenTable agrees to $2.6 billion acquisition by Priceline, but could bigger bids be on the way?
The Lead: PC stocks soar after Intel increases sales forecast
A series of 52-week highs struck Silicon Valley companies deeply invested in the personal computer industry Friday, after Intel revealed that sales of personal computers to businesses have been more brisk than expected.
The Santa Clara chipmaker revised its forecast for sales in the current quarter Thursday afternoon, explaining that strong enterprise sales of PCs had added about $700 million more than expected to its quarterly revenue total. The news was welcome for the PC industry, which has been drubbed by investors and analysts as sales suffered thanks to the growing popularity of mobile computing devices such as smartphones and tablets.
Those same analysts and investors welcomed the news Intel shared, as evidenced by new 52-week highs for the world's largest chipmaker and chip-equipment provider, and the biggest PC manufacturer in the U.S. Intel stock gained 6.8 percent to $29.87 and hit an intraday high of more than $30; Applied Materials sold for as much as $22.42 before closing with a 2.9 percent gain at $22.37; and Hewlett-Packard rose as high as $35.20 and closed with a 5.3 percent gain at $35.16.
"After 2.5 years of decline, we think corporate PC shipments are improving as companies refresh an aging installed base," Jefferies analyst Mark Lipacis wrote in a note that raised his price target on the stock from $35 to $40. "Consumer demand is also improving as Intel introduces tablet-like form factors targeting the sub-$500 market."
Much of the credit for the gains were placed at the feet of Microsoft, which ended support for its Windows XP operating system earlier this year, forcing businesses that still relied on machines running XP to upgrade or face security concerns; the Washington tech giant came up just short of its 52-week high Friday, closing with a 1.6 percent gain at $41.23.
"We continue to believe the outperformance in enterprise PC is being driven by the end-of-life XP refresh cycle," FBR analyst Christopher Rolland wrote, later adding that the large number of companies still running XP could mean the current uptick in purchases "has legs for some time to come."
"Overall, while earlier headwinds in PC have been discouraging, we believe that Moore's law is considerably more durable than any one form factor and presents as good a business plan as any in the technology industry." Rolland added in the most optimistic review of Intel's business of the day.
Not all analysts were sold on PC stocks after Intel's revelation, however, with some analysts budging their price targets up but keeping them lower than Intel's going rate due to expectations that the enterprise PC refresh run will not last long.
"The pace of Windows XP upgrades appears much faster than our expectations, but still unsustainable in our view," Nomura Equity Research analyst Romit Shah wrote while raising his price target from $25 to $27.
"While the company will likely continue to benefit from a commercial PC upgrade cycle over the next couple of quarters," Raymond James analysts wrote, "we believe this is likely a short-term dynamic."
SV150 market report: OpenTable agrees to $2.6 billion acquisition
PC stocks' gains helped push Wall Street to overall gains on Friday, along with excitement about a big Silicon Valley merger as OpenTable agreed to an acquisition that some believe could spark a bidding war for the San Francisco company.
Priceline agreed to acquire OpenTable for $103 a share, about 46 percent higher than the 16-year-old restaurant-reservations site's closing price on Thursday. Investors seemed to believe that the final price to buy OpenTable could be higher, as indicated by the company's stock surpassing the price Priceline agreed to pay early in the session and staying higher than $103 the rest of the session, closing with a 48.4 percent gain at $104.48. CNN Money put forth that large Silicon Valley companies could challenge Priceline for the company, with Google and Facebook most prominently mentioned. Companies engaged in similar businesses to OpenTable also experienced strong gains Friday, including fellow San Francisco company Yelp, which soared to its highest prices in two months and closed with a 13.8 percent gain at $74.92.
LinkedIn gained 2.9 percent to $169.30 despite learning that it must defend against a lawsuit against the company's practice of gaining access to users' email address books and corresponding with their contacts, thanks to a ruling from Silicon Valley's most prominent judge, Lucy Koh. Netflix added 1.3 percent to $427.71 as the Federal Communications Commission announced it would investigate inconsistent streaming speeds, an issue that has led to fights between Netflix and Internet service providers; the Los Gatos company also showed off a new logo and redesigned website. After losing two executives Thursday in an ongoing reorganization, Twitter gained 0.3 percent to $36.90 Friday while broadening its use of Bing translation services. After a report from IAB and PriceWaterhouseCooper showed Internet advertising sales jumped 19 percent in the first quarter, which the report deemed "historic," Silicon valley's ad-sales leaders gained slightly: Google added 0.2 percent to $560.35, Facebook moved 0.3 percent higher to $64.50, and Yahoo gained 0.4 percent to $36.94. Apple declined more than 1 percent for the second consecutive session, dropping 1.1 percent to $91.28 despite a price target boost from Raymond James that predicted record highs for the Cupertino company.
Up: Yelp, Intel, HP, SolarCity, Splunk, LinkedIn, Workday, Applied Materials, SunPower, Salesforce, Pandora, Symantec, Tesla, Electronic Arts, Netflix, VMware, eBay
Down: Apple, Advanced Micro Devices, Juniper, SanDisk
The SV150 index of Silicon Valley's largest tech companies: Up 10.41, or 0.71 percent, to 1,484.62
The tech-heavy Nasdaq composite index: Up 13.02, or 0.3 percent, to 4,310.65
The blue chip Dow Jones industrial average: Up 41.55, or 0.25 percent, to 16,775.74
And the widely watched Standard & Poor's 500 index: Up 6.05, or 0.31 percent, to 1,936.16