The Dow Jones Industrial Average (^DJI 0.69%) closed up 207 points, or 1.24%, last week, powering to new highs. A favorable jobs report appears to have been a key driver of continued optimism in the markets, along with the bold move from the European Central Bank of cutting a key interest rate below zero to stimulate lending and economic growth. Microsoft (MSFT 1.65%) slightly outpaced the Dow, while chipmaker Broadcom (NASDAQ: BRCM) soared and social-game developer Zynga (ZNGA) plummeted.
Microsoft's new CEO, Satya Nadella. Source: Microsoft.
Microsoft wasn't the best performer in the Dow this week, but it edged out the broader index with a weekly gain of 1.30%. Last week, the software giant saw a bit of good news when mobile device giant Apple disclosed at its annual World Wide Developers Conference that its integrated spotlight search will ditch Google's search for Microsoft's Bing. Separately, Microsoft announced that it will be working closely with OEM partners to bring prices Microsoft Windows 8.1-powered devices into the $100-$300 range and that some Windows Phone models will be sold for under $200. Gaining developer support and consumer mind-share is critical, and Microsoft's moves to drive prices lower should be a long-term positive for the Windows ecosystem.
Leading chipmaker Broadcom announced on Monday that it will exit the cellular baseband space. This was a money-losing operation for the company, costing the firm about $700 million in GAAP operating expenses all while generating very little in the way of sales. Investors and analysts had been looking for the company to pull the plug on this operation for quite some time, and when the company realized that it simply couldn't gain the traction necessary to continue these operations, it decided to do just that. Of these savings, the company plans to allocate $50 million to its core infrastructure and broadband businesses, both of which had been running lean as a result of the large baseband investment. Shares were up 19.2% for the week.
Finally, social-game maker Zynga plunged this week, closing down 13.6%. This drop was triggered by comments from CEO Don Mattrick at a recent conference that cautioned investors to expect a seasonally weak summer along with continued margin pressure as a result of continued investments in the company's core products. That said, the company has been fairly successful at both trimming its headcount and stabilizing key audience metrics, so it's not all doom and gloom for this once high-flying company.
