Tech Sector Stumbles in Afternoon Slump; Investors Not Friendly to Facebook Latest Purchase

By Staff,

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Technology stocks were lower with shares of technology companies in the S&P 500 retreating about 0.9% near the close.

In company news, Facebook ( FB ) stock fell Wednesday after the social networking company late yesterday announced a deal to acquire an immersive virtual reality technology company for $2 billion in cash and stock.

The deal calls on FB to pay $400 million in cash for privately held Oculus VR, which developed a virtual reality headset for immersive gaming. FB also will issue around 23.1 million shares of its stock worth about 1.6 billion, based on the stock's average closing price of $69.35 over the past 20 trading days.

The agreement also provides for an addition $300 million earn-out in cash and stock for Oculus as it achieves certain milestones.

Wall Street response to the deal was somewhat muted, with Credit Suisse the only analyst shop to weigh in on the purchase, Wednesday reiterating its Neutral rating for the stock.

FB shares last traded at $61.14, down 5.8%. the stock has a 52-week range of $22.67 to $72.59 a share.

In other sector news,

(+) YOKU, Tencent reportedly will pay over $300 mln to purchase a 20% stake in the Chinese Internet television company, according to an article in Marbridge consulting, citing a source close to YOKU.

(-) XGTI, Registers to sell up to $11.5 million of its common stock in an underwritten public offering. Net proceeds will be used for general corporate purposes.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing Commodities
Referenced Stocks: FB

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