Tech Names on Tap
The broad indexes ended higher as investors headed into earnings season for technology stocks. Shares of Dell (DELL) rose over 2% to close at $13.13, after David Faber of CNBC reported that Microsoft (MSFT) was considering investing up to $3 billion, as part of a private-equity deal to take Dell private. Microsoft's shares were down slightly to close at $27.17.
KBW analyst Shaw Wu said in a note that a take-out of Dell in the range of $13 to $14 a share is "possible," but that "a materially higher price is less likely," because "attractive returns could prove difficult." The analyst -- who has a "Neutral" rating on Dell -- also said that "as we have seen in the recent past, LBOs like Freescale and First Data that look like winners end up not living up to promises as acquirers underestimate the secular pressures a company in decline faces."
When discussing the advantages and disadvantages of Dell going private, Wu said "going private takes the company out of the quarter-to-quarter grind of being a publicly traded company. But on the negative, not having publicly traded stock could make it more difficult to make larger, transformative acquisitions as the company will likely spend the majority of its cash flow servicing debt interest."
Shares of Apple (AAPL) rose 1% to close at $504.77, heading into the company's fiscal first-quarter earnings announcement, scheduled for Wednesday, after the market close. The consensus among analysts polled by Thomson Reuters is for Apple to post earnings of $15.50 a share, on revenue of $59.553 billion, increasing from $11.00 a share, on revenue of $41.806 billion, a year earlier.UBS analyst Steven Milunovich continues to rate Apple a "Buy," but on Monday lowered his price target for the shares by $50 to $650, while cutting his fiscal 2013 EPS estimate to $44.68 from $47.00, because survey work by Consumer Intelligence Research Partners indicates that "(1) demand for storage has declined from about 30GB with the 4S to 20GB for the iPhone 5 with fewer customers opting for the 64GB model, and (2) demand for older models has increased from 33% in the 4S cycle to 50% so far for the 5."
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