Apple Stock Watch - Apple, Apple, Apple Everywhere With AAPL Up Another 12.8%

by , 7:00 PM EDT, April 19th, 2001

Reading the mainstream financial news was like reading The Apple Stock Watch archives here at The Mac Observer. Apple here, Apple there, Apple everywhere. That suits us just fine, of course (check out all the financial links at Mac OS News Around the Web). It's about gosh darned time that Apple gets the attention it deserves.

But what's this? The analysts at SG Cowen don't get Apple. The brokerage firm issued a downgrade on Apple because the PC market is a rough one. According to a C|Net report:

"Despite the heart-warming showing in (the second quarter)," he wrote, "we think it gets somewhat tougher from here, and we have no reason to be particularly optimistic regarding the overall consumer PC buying climate."

This is in direct contrast to Lehman Brothers analyst Dan Niles who understands that Apple is a bit different. Mr. Niles issued an upgrade on Apple with the following (from the same C|Net report):

Lehman Brothers analyst Dan Niles upgraded the stock to "buy" from "neutral," based on "truly differentiated new products, low inventories and compelling valuation that should help future quarters."

Kevin McCarthy, form Credit Suisse First Boston had the most interesting analogy we have come across yet. Mr. McCarthy likened Apple to a Hollywood movie studio. Again, from the C|Net Report:

Credit Suisse First Boston analyst Kevin McCarthy compared Apple to "a small independent film company, in terms of predicting market acceptance" of future products.

"A blockbuster product could increase unit volumes 50 percent," he wrote in a research note, "while another Cube could put Apple's credibility on life support approaching the important consumer selling season. Given Apple's niche focus and lack of predictability, we believe the stock is currently overvalued."

That is such a great comparison in our opinion, though we beg to differ about Apple being overvalued. Apple's P/E ratio is the highest that it has been in a while, however, having reached 39.23 at market close for today. One hole in Apple's current offerings is the low end. The Mac Observer reported this morning that Apple's product mix shows weakness in the consumer area, especially the Cube and the iBook. From our own report:

In a detailed second-quarter summary data sheet released by Apple, the numbers clearly show that if it were not for the new PowerBook G4 released in January and strong demand for Power Mac G4 tower systems, Apple wouldn't have posted a profit based on sales of consumer-level Macs alone. iMac, iBook and Cube combined, unit sales were off 3%, 45%, and 59% respectively from the previous quarter. G4 tower and PowerBook sales combined were up a whopping 45% and 173% respectively.

So what's brought all this about? A shift ion market psychology. With yesterday's cut in Fed interest rates, coupled with good results from Intel, IBM, and Apple has finally moved investor sentiment towards hoping for the best rather than looking for the worst. Momentum has clearly shifted towards the positive again, though a major disappointment could shift it right back into Bear mode.

Enter Gateway.

Apple competitor, Gateway, turned in a big fat nasty loss of US$503 million. Mac fans everywhere will likely cackle with delight, but the truth is that Gateway's loss stemmed directly from the costs of layoffs and store closures relating to returning CEO Ted Waitt's restructuring plan. Not counting those costs and a US$24 million accounting charge, the company would have reported a profit of 17 cents per share. According to Upside Today:

"We're making solid progress against our revitalization plans," he said in a written statement. "In order to get our business in fighting form for the second half of 2001, we're moving with speed and aggressiveness to make the appropriate operational improvements to our business now."

The jury still seems to be out on just how bad this is, but the stock definitely moved down in after hours trading. However, software heavyweight Microsoft turned in better than expected results today. Microsoft beat lowered estimates handily, and the company's stock took off in after hours trading. eBay also kicked in with higher than expected revenues *and* profits. Congrats to them. Their gross margins were a staggering 80%+. Not even Microsoft can boast that.

There is little doubt that Microsoft's results will outweigh Gateway's in the minds of investors, and that we will see continued momentum in the tech sector. The Dow and the Nasdaq both closed in the black today, with the Nasdaq nearing the 2200 mark again, more than 600 points off the low set in March. Volume for both indexes was very strong.

Apple traded more than 14 million shares in the first 70 minutes of trading today. Apple's normal volume is in the 8 million shares range for the entire trading day. The stock opened up a point higher, dropped on the downgrade from SG Cowen, and then begin rising again after Dan Niles' comments. AAPL closed on the day's highs with the day's trading range was 23.6 - 25.75.

Apple closed at 25.72, a solid gain of 2.93 (+12.86%), on quadruple the normal volume with 33,458,200 shares trading hands.

The Nasdaq closed at 2182.14, up 102.70 (+4.94%), on volume of 1,907,979,000 shares trading hands.

The Dow closed at 10693.71, up 77.88 (+0.73%), on volume of 1,463,758,000 shares trading hands.

The S&P 500 closed at 1253.70, a gain of 15.54 (+1.26%).

Akamai Received a flurry of notes, comments, and downgrades today. The stock rocketed up an astonishing 39% on triple the normal volume. AKAM closed at 12.6, up 3.56 (+39.38%), on heavy volume of 7,012,400 shares trading hands. Apple is a large shareholder of Akamai.

Adobe closed at 48.05, up another 2.11 (+4.59%), on volume of 6,201,400 shares trading hands.

IBM benefitted from their earnings report from yesterday. IBM closed at 114.47, up 7.97 (+7.48%), on heavy volume of 25,794,300 shares trading hands.

Motorola closed at 16.09, up 0.89 (+5.86%), on strong volume of 19,922,800 shares trading hands.

Earthlink regained some of yesterday's losses to close at 11.18, up 0.18 (+1.64%), on light volume of 932,600 shares trading hands.

Gateway turned in a US$503 million loss, a staggering amount that was due only to layoffs and store closures. The company would have posted a loss of 17 cents per share otherwise. The company's stock traded lower in after hours trading. GTW closed at 18.02, up 0.72 (+4.16%), on volume of 3,761,500 shares trading hands.

Dell saw gains as the company tagged along on Apple's coattails. DELL closed at 30.49, up 2.02 (+7.10%), on volume of 44,445,200 shares trading hands.

Intel closed at 32.49, up 1.21 (+3.87%), on heavy volume of 85,918,000 shares trading hands.

Microsoft traded higher today, and continued that trend after the bell due to their earnings report. MSFT closed at 68.04, up 2.61 (+3.99%), on heavy volume of 78,934,096 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.