By Dan Gallagher and Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) -- Social media stocks, led by
Facebook and LinkedIn, slipped Wednesday, weighing down the tech
sector, ahead of the expected pricing of Twitter's initial public
offering.
Facebook (FB) shed 2% to close at $49.12, while LinkedIn (LNKD)
was off 1.7% to close at $220.78 to highlight downbeat trades for
social networking sector. Shares of Groupon (GRPN) were off 2.7% to
close at $10.01, while Yelp (YELP) gave up 6.4% to close at $66.61
and Zynga Inc. (ZNGA) shed 2.5% to close at $3.71 as the spotlight
turned to another social media player's upcoming trading debut.
Twitter (TWTR) was expected to set a final IPO price late
Wednesday and being trading Thursday. The Wall Street Journal
reported Wednesday that the company was likely to raise its price
range again to $25 to $28, after raising it earlier this week to
$23 to $25.
Reactions Twitter's public trading debut have been mixed, with
some analysts warning against too much hype similar to what
happened during Facebook's controversial IPO in 2012.
But on Wednesday, Topeka Capital's Victor Anthony stuck to a
bullish view of Twitter which he has given a pre-IPO rating of buy
with a $54 12-month price target. Twitter is still unprofitable,
but Anthony and other analysts have pointed to the company's growth
potential amid the rapid growth of the digital ad market.
"Consensus has underestimated social media financial
performance," Anthony told clients in a Wednesday note. "Hence, we
stand by our numbers, which are largely above official and
unofficial estimates."
The Nasdaq Composite Index (RIXF) shed 0.2% to close at 3,932,
while the Morgan Stanley High Tech 35 Index (MSH) and the
Philadelphia Semiconductor Index (SOX) were each up a fraction.
On the upside, shares of Microsoft Corp. (MSFT) jumped 4.2% to
close at $38.18 after Reuters reported late Tuesday that the
company has narrowed down its "shortlist" for CEO candidates, which
reportedly include Ford (F) chief Alan Mulally and former Nokia
(NOK) CEO Stephen Elop. Former Skype CEO Tony Bates is also
reportedly on the list of candidates. The candidates are being
considered to replace outgoing chief Steve Ballmer.
Also, Nomura analyst Rick Sherlund raised his price target on
the stock, citing the potential for a new leader and reorganization
"potentially extracting a lot more value out of the current
assets." He raised his price target to $45 from $40, still rating
the shares as a buy.
"We believe many investors are effectively being caught 'off
sides' on Microsoft, still focusing on what could go wrong with the
fundamentals, rather than what could go right with new management
and likely changes in cost structure, disposition of money losing
consumer businesses Bing and Xbox, corporate governance changes and
financial engineering potentially extracting a lot more value out
of the current assets," Sherlund wrote. "The harder issue will be
repositioning the product portfolio to address faster growth
opportunities for the enterprise cloud businesses and what it means
to deliver innovative new consumer productivity products."
Qualcomm (QCOM) shares edged higher by 1% to close at $69.74
ahead of the company's fiscal fourth-quarter report, due after the
close.
Activision Blizzard (ATVI) shares traded flat closing at $16.53.
The company reported that "Call of Duty: Ghosts" has sold more than
$1 billion into retail stores in its first 24 hours after the
launch of the latest iteration of the blockbuster first-person
shooter franchise. However, the company's statement Wednesday
morning differs from launch figures from previous year's releases;
Activision said last year's "Call of Duty: Black Ops 2" sold
through more than $500 million to end customers in its first 24
hours.
"Although it is too early to assess sell-through for Call of
Duty: Ghosts, it's launching at a time when the franchise has never
been more popular," Bobby Kotick, CEO of Activision Blizzard, said
in Wednesday's statement. Activision also reports quarterly results
after the closing bell.
Apple (AAPL) shares slipped by a fraction to close at $520.92.
The Wall Street Journal reported that the company has lined up new
contract manufacturers to increase production of its iPhones and
iPads.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires