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Facebook rebounds, but Intel slips on rating

SAN FRANCISCO (MarketWatch) -- Shares of Facebook Inc. rallied late Thursday to close with a gain, but Intel Corp.'s stock slipped on an underweight rating from Morgan Stanley and F5 Networks Inc. tumbled as investors reacted to an executive's departure.

The tech sector slipped into the red as the Nasdaq Composite Index (COMP) ended the month with a 7% loss.

The Nasdaq fell a fraction to close at 2,827. The Philadelphia Semiconductor Index (SOX) lost 1%.

Facebook (FB) recovered from early losses to close at $29.60, up 5%.

But Intel (INTC) shares slipped 1% to close at $25.84 after Morgan Stanley initiated coverage of the stock with an underweight rating, citing slower growth and potential margin erosion. Intel was one of the worst performers on the Dow Jones Industrial Average (DJIA) . The Dow fell 26 points.

"Intel has done a great job in the last two years of significantly outgrowing the PC market by structurally increasing pricing," analyst Joseph Moore wrote. "While we don't expect a negative reversion to pricing, we think the key trends that drove the increases -- transition to core architecture, better marketing allowing better price discrimination, structural changes vs. AMD -- have played out."

Moore argued that "continued and secular deceleration in PC replacement rates, 10-15% increases in fixed costs given the high capital spending" could mean that "some margin erosion is inevitable."

Shares of F5 Networks (FFIV) sank 4% to close at $103.48. The networking company on Wednesday said that Mark Anderson, head of worldwide sales, had resigned.

Some analysts portrayed the selloff as an overreaction to the news. "While the departures are a loss to F5, we feel the company is highly structured with a deep management team and we don't anticipate a material disruption in operations," JMP Securities analyst Erik Suppiger wrote.

After posting gains early in the session, shares of Leap Wireless International Inc. (LEAP) closed flat at $5.77. The company said its Cricket Wireless subsidiary would begin offering pre-paid plans for Apple Inc.'s (AAPL) iPhone. Shares of Apple were down a fraction, closing at $577.73.

Another bright spot for tech were shares of social gaming firm Zynga Inc. (ZNGA) , which rose 7% to close at $6.26 after Baird Equity Research upgraded the stock to outperform from neutral, saying "headwinds appear largely priced in."