By Dan Gallagher and Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) -- A sharp sell-off in the chip
sector -- led by Intel Corp. -- kept most tech stocks in the red
late Friday afternoon, though Research In Motion Ltd. held on to a
strong gain following a brokerage upgrade.
The Nasdaq Composite Index (RIXF) was down 0.2% to 3,128 by late
afternoon while the Morgan Stanley High-Tech Index (MSH) was down
0.4%.
Intel (INTC) slumped more than 6.6% to $21.17. The chip giant
reported a sharp drop in fourth-quarter earnings the previous
afternoon, and issued a forecast that was slightly below already
downbeat estimates. The main culprit is the slowing PC market --
though several analysts also expressed worry about the company's
plans to increase its capital expenditures in the coming year.
"This deterioration in Intel's core business is likely to leave
revenue relatively stagnant for the foreseeable future, while Intel
is forced to spend heavily in capex (up $2b in 2013) and opex if it
is to have any reasonable chance to reaccelerate growth in the out
years," wrote Cody Acree of Williams Financial, who rates the stock
as a hold.
Main Intel rival Advanced Micro Devices (AMD) fell more than 10%
to $2.46. The Philadelphia Semiconductor Index (SOX) was down
0.7%.
Research In Motion (RIMM) got a boost of 6.4% to $15.87 after
Jefferies & Co. upgraded the stock to a buy rating. In a note
to clients, analyst Peter Misek cited optimism around the launch of
the new BlackBerry 10 operating system expected next month. He also
believes the company will be able to extend its corporate e-mail
technology onto rival platforms.
"In the future we think RIM will add BYOD [bring your own
device] sandboxing and BlackBerry Messenger on Android and iOS," he
wrote. "So investors can win in the following ways: RIM creates a
successful software business on top of Android/ iOS; expectations
that are too low and a very high short interest, which could start
a squeeze."
Netflix (NFLX) rose 1.4% to $99 after Janney Capital upgraded
the online movie firm to a buy rating. Analyst Tony Wible cited
several factors heading into the company's fourth-quarter report
next week.
"Expectations for sub growth have come down, and sell side
sentiment is generally pessimistic, setting the stage for upside
driven by new subs, content cost control (for existing content),
and a potential price increase," he wrote.
Amazon.com (AMZN) shares rose by a fraction to $271 after the
stock was upgraded to an outperform, or buy, rating at Pacific
Crest. In a note to clients, analyst Chad Bartley called the
company "the biggest beneficiary of the shift of retail online,
which is being accelerated by mobile commerce, where the company is
a leader." He set a $346 price target on the stock -- about 28%
above its current level.
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