Apple Stock Watch - Markets Soar, Apple Closes Up 11.7% & Blows Away Estimates

by , 7:00 PM EDT, April 18th, 2001

As one investor told us today in private "God bless Alan Greenspan." No doubt there were similar tributes offered to Mr. Greenspan from relieved investors around the world. The short sellers would be the exception to that, as they got caught with their pants down around their ankles, knee deep in a big pile of poop. The reason for all these feelings was an out of the blue surprise cut in interest rates from the Fed. Alan Greenspan & Co. lowered interest rates by 50 basis points (a half point). This was utterly unexpected as most analysts were expecting the Fed to not lower rates again until its May 15th scheduled meeting. In fact, we reported that just yesterday, showing just how wrong analyst and journalists can be. It is our opinion that yesterday's data showing inflation was in check was part of the catalyst for the cut, but Chairman Greenspan specifically cited "risks towards conditions that could lend themselves to economic weakness."

This happened at 10:55 AM EST and the within a few seconds, literally, the Dow had shot up more than 3%, while the Dow jumped more than 7%. Today's Fed rate cut came on the heels of better than expected results from Intel after yesterday's closing bell, and the markets just ate it up. Investors had been looking for news to force the Fed's hand in lowering rates, so much so that stocks would sometimes trade down when good economic data was released. Today's rate cut combined with some earnings announcements from tech companies that meet or beat expectations (which we got from IBM and Apple), could be enough to finally get investors excited about good data going forward. From an AP report:

The Fed's action sparked a frantic buying frenzy that pushed major market gauges to their highest levels in more than a month. Wall Street, depressed by the market's dive to two-year lows less than three weeks ago, had hoped for more rate cuts to lift sagging corporate profits by lowering borrowing costs and promoting consumer spending.

"It was a big, big, sigh of relief," said Stanley Nabi, managing director of Credit Suisse Asset Management. "Investors -- professional, as well as individual -- were hoping for this kind of news ... and when it came, they responded very, very positively."

Today's volume was remarkably strong with a staggering 3 billion shares traded on the Nasdaq, officially the 2nd highest volume day ever. The official record was set before recent rules changes changed the way transactions were tabulated. The Dow traded more than 1.9 billion shares.

So, how about that Apple?!?!? The company posted earnings that simply blew away all expectations. Apple announced their results after the bell (see our live coverage for the 20 minute press conference), and they were fantabulous. The company earned a profit of US$43 million, US$40 million after non-recurring revenue. That's 11 cents per share to you and me, or 11 times higher than the penny a share that was the consensus estimate. Our preliminary examination of the numbers show outstanding PowerMac G4 numbers, and stellar PowerBook G4 numbers. Mac OS X generated US$19 million in sales in less than a week. iMac and iBook sales were less than outstanding.

The Street has thus far reacted to Apple's announcement with rousing enthusiasm. The stock traded up 3 points almost immediately after the announcement, making their one day gains total some 30%. Truly outstanding. Of course, those after hours gains are not "official," but indications are that Apple will experience some added buoyancy once trading opens tomorrow. Here's a sample of some of the great headlines about Apple from mainstream press: Apple handily beats the Street - Upside Today, Apple Turns Profitable, Tops Estimates - SmartMoney.com, How Do You Like Them Apples? - The Motley Fool, Apple Returns To Profitability - AP, Apple's back in the black - CBS Marketwatch. There were a few more, but you probably get the idea. Apple's stock continues to trade higher in after hours markets (26.13 at Island).

As for today's action, Apple opened up a point and a quarter higher, and took off with other tech stocks after the rate cut. Volume was more than double the normal volume, and the day's range was 21.08 - 24.08.

(Please note that today's volume numbers may be a bit off as the numbers were still coming in when we prepared them.)

Apple closed at 22.79, up 2.39 (+11.72%), on heavy volume of 19,895,700 shares trading hands.

The Nasdaq closed at 2079.44, higher by 156.22 (+8.12%), on volume of 3,082,351,000 shares trading hands.

The Dow closed at 10615.83, up 399.10 (+3.91%), on volume of 1,907,979,000 shares trading hands.

The S&P 500 closed at 1238.16, up 46.35 (+3.89%).

Akamai announced their results today, and the company's revenue increased, while their loss narrowed over last year. Akamai was expected to lose 55 cents a share, but posted a 53 cent loss. The company has released a press release. AKAM closed at 9.04, up 0.49 (+5.73%), on heavy volume of 4,311,400 shares trading hands. Apple is a large shareholder of Akamai.

Adobe closed at 45.94, up 4.79 (+11.64%), on strong volume of 8,842,500 shares trading hands.

IBM closed at 106.50, up 6.80 (+6.82%), on strong volume of 18,632,300 shares trading hands.

Motorola closed at 15.20, up 1.20 (+8.57%), on heavy volume of 28,176,600 shares trading hands.

Earthlink was our only loser today. ELNK closed at 11, a loss of 0.43 (-3.76%), on strong volume of 3,664,000 shares trading hands.

Gateway reports tomorrow. GTW closed at 17.30, up 1.84 (+11.90%), on volume of 4,801,700shares trading hands.

Dell closed at 28.47, up 2.12 (+8.05%), on strong volume of 58,889,000 shares trading hands.

Intel closed at 31.25, up 5.21 (+20.01%), on stupid-silly volume of 148,035,200 shares trading hands.

Microsoft closed at 65.43, up 3.95 (+6.42%), on heavy volume of 77,214,800 shares trading hands.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Apple's financial dealings.

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