[4:00 PM] Apple Stock Watch: Don't Call It A Come Back, Apple Heads Back Up
by Wes George
Apple's stock has been in need of a little help recently. So, when Analyst Gillian Munson representing Morgan Stanley Dean Witter said in a written report:
Apple is currently trading at a (price/earnings ratio) below the S&P 500 for C2000 numbers. We think that if interest rates worry investors about high P/E stocks, Apple will start to look more interesting.
That's all it took, Apple soared 11% today.
Apple advanced 9 9/16 dollars to close at 96 3/4. The volume was about twice the average with 8.8 million shares of AAPL trading hands.
Morgan Stanley came to the rescue this morning by declaring the 26% sell-off in AAPL from the high in December a firesale. "We are finally jumping in and raising our Apple rating from "neutral" to "outperform" based on the recent drop in the company's valuation in the face of what we think are positive fundamentals", Munson wrote. "We like Apple's C2000 story and have been looking for a place to get into the stock given what we think is a good product pipeline, strong financials including an excellent balance sheet, and corporate enthusiasm and momentum."
Munson expects the company to post earnings of 88 cents a share on revenue of $2 billion for the 1st fiscal quarter of 2000, which ended January 1st. Earnings will be announced next Wednesday after the bell. The mean estimate of 22 analysts surveyed by First Call/Thomson Financial is for earnings of 89 cents a share.
Munson cautioned investors that Apple's stock gets ahead of itself sometimes so expect some volatility as we move into the spring.
The Nasdaq gained 106 points (2.78%) to close at 3956 on a volume of 1.4 billion shares. Biotech and Internet stocks made a come back today. Computer hardware stocks weren't too shabby either.
The Dow gained 31 points (0.27%) to close at 11582, on a billion plus shares traded. Oil services, communication chip, international phone and bank stocks were strong today. Apparel stocks, already near 52-week lows got hammered today after Tommy Hilfiger (TOM) missed their earnings.
The S&P 500 gained 17.41 points (1.22%) to close at 1449.66.
The bellwether 30-year US. Treasury bond climbed 23/32 on the tepid economic data released this morning to close at 93 5/32 dollars. The yield backed off to 6.65% from 6.71% on Wednesday, the highest level in more than 2 1/2 years.
In Apple related businesses, Adobe gained 3 5/16 to close at 65 5/8. Symantec gained 1 5/16 to close at 54 11/16. Akamai lost 21 3/16 to close at 232 13/16, while ARM Holdings gained 6 dollars to close at 176.
It was reported that the installed base of Macromedia's Flash application has risen nearly 23 percentage points in the past year and now ranks as the No. 2 plug-in among Netscape users. Macromedia gained 13/16 to end at 75 1/8.
Pixar, Steve Job's other obsession, announced that the studio's third animated feature film, Toy Story 2, released in partnership with Walt Disney Pictures, has become the second highest grossing animated picture of all time in domestic release. Toy Story 2 passed the $217 million milestone this past Sunday, less than seven weeks after its release on November 24. Pixar climbed 2 5/16 to end at 35 3/4.
Apple's Power PC partners: IBM and Motorola are joining forces to accelerate the technology that will help automakers bring a variety of wireless and Web-based services to automobiles. Announcing their strategic relationship today, the two companies will work together to provide the end-to-end resources that will help automakers offer next generation products and services to their customers. Motorola gained 4 11/16 to close at 138 1/2. IBM lost 13/16 to close at 118 11/16.
Apple's competitors: Dell gained 1 3/16 to end at 43. Gateway gained 3/4 to close at 59 1/4. Hewlett Packard gained 5/16 to close at 112 11/16. Intel rose another to close at 9x. Intel is reported earnings of $0.69 after the trading session closed, that's much better than the $0.63 estimates. Intel stock is trading up 7 dollars in after hours trading at $98.
Bill Gates stepped down as CEO of Microsoft this afternoon, he will retain the role as chairman and chief software architect. Steve Ballmer was appointed the new president and chief executive officer. Meanwhile the first Win2000 virus was recently discovered. Shares of Microsoft traded up 2 dollars to close at 107 13/16.
Compaq sagged a fraction to close at 29 9/16. Michael Capellas, president and chief executive of Compaq, said on Wednesday he expected the share of Compaq computers sold directly to customers to rise to 40% year's end from a current 25%.
In other market news: Retail sales for December roared in at 1.2%, the fastest pace in 4 months. The producer price index increased 3.0% for the largest monthly increase in 3 years. But when you strip out the oil and food prices, the core PPI rate was a tame 0.1%.
Wall Street interprets these numbers to mean that consumer spending continues to be the main drive train of the economic engine. It is widely assumed the Federal Reserve will try to moderate this demand by raising interest rates in February.
Tonight, Federal Reserve Chairman Alan Greenspan, will deliver a speech on Thursday about the effects of technology on the economy.
On Friday morning, consumer prices (CPI) are released along with new consumer sentiment data.
For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. We also have many of these same quotes reported live (20 minute delay) on our home page. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.
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