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High Tech: Low Volume

Apple Stock Watch - High Tech: Low Volume

by , 6:00 PM EST, April 3rd, 2002

Today's activity on Wall Street was marked by lower and narrow trading ranges for most of the blue chips with little more than anemic attempts to move stocks from negative to positive territory. The market is waiting on the release of first calendar quarter results from bell-weather companies and guidance from executives for clear signs that the economic recovery will begin to be evidenced in second quarter sales and earnings. Concerns about continued violence in the Middle East has kept many traders on the sidelines.

The Dow Jones Industrial Average closed at 10,198.29, off about 1.1% on the day. The Nasdaq Composite dropped to 1,784.35 and the Nasdaq 100 Index fell to 1,394.21. Both Nasdaq indicators mirrored the Dow's 1.1% decline.

The tech market continues to suffer from low investor interest and concerns that recovery in the technology sectors will lag the recovery taking place in other areas of the economy.

AAPL closed at $23.75, down $.23 in below average trading of about 3.83 million shares. AAPL has been trading in a narrow range between $23.00 and $25.00 per share for several weeks. Analysts are concerned about the impact of higher component prices and the challenges Apple has faced ramping up production to meet consumer demand for the new iMac. Uncertainty concerning these issues has stymied investor enthusiasm in the stock. Issues particular to Apple aside, the tech sector has witnessed either slow declines or lateral movements in most of the major tech stocks during the last few weeks of trading.

The second calendar quarter that began this week (Apple's third fiscal quarter) marks the beginning of the education-buying season. In January Apple forecast that the 2002 education season would be soft due to budget plans developed under the cloud of an economic recession. The addition of PowerSchool to Apple's education products and services adds a new dimension this year's educational sales efforts. Apple acquired PowerSchool one year ago and over the past twelve months has integrated the company into its operations.

For readers who may not be familiar with PowerSchool, it's a student information system that provides students and parents with 24/7 Web-based access to student grades, homework assignments and teacher comments. Last month the governor of North Dakota announced a major initiative to deploy PowerSchool at schools through the state. To date, more than 3,000 schools and districts in the US have deployed a PowerSchool system. You can join our discussions of Apple and education, PowerSchool and the 2002 education buying season in the Mac Observer's Apple Finance Board forum.

Adobe Systems closed at $38.67, off $.03 on the day. The graphic design software maker has enjoyed a 6-month upward move from its 52-week low of $22.20 set back in late September. Last week Adobe received an upgrade from neutral to buy from Prudential Securities. The Prudential analyst noted pent-up demand from Macintosh users for OS X compliant versions of Illustrator and Photoshop as the reason for the move.

Corel Corp. continues to struggle with its reorganization and its efforts to successfully market its graphics products to compete with offerings from Adobe. Corel is releasing carbon version of its graphics products for the Macintosh market. Last week Corel reported a loss slightly lower than analyst's expected, but the company has yet to deliver a plan for growth in sales and earnings that excites investors. Corel ended Wednesday at $1.47, up $.04 on the day.

Dell Computer has announced an analyst meeting for tomorrow. Following the close of trading, Dell issued an advisory indicating that unit shipments for the quarter will be down 2% sequentially, not the 3% to 5% drop forecast in February. Dell reiterated its earnings forecast of $16 per share. As the world's number one PC maker, Dell has not been immune from market forces such as increases in component costs and a drop in sales as recession weary consumers hesitate to buy new PCs. Dell continues to trade at a handsome premium to its competitors (including Apple) but finished today's trading down $.38 at $26.19, before the advisory was released.

Gateway, the beleaguered PC mini-major, finished the day at $6.01, down $.29 on one-half of average trading volume. Gateway is currently trading at the very low end of its 52-week range. To the concern of analysts, the San Diego-based PC maker has chosen to undercut market leader Dell on price in order to regain sales momentum. Please join our Gateway discussion in the Apple Finance Board forum.

Hewlett-Packard, now faced with a law suit from dissident director Walter Hewlett following management's apparent victory in the proxy fight to win approval of the Compaq merger, stood at $17.37 at the end of the trading day on Wall Street. The executives of Hewlett-Packard and Compaq have advised their employees that the operational combination of the two companies will take place weeks after the formal merger date. HP share's continues to languish as the management of both companies work through the merger implementation process. The stock has underformed the broader market since the merger with Compaq was first announced.

IBM ended the day at $99.96, down $.99. Since its 52-week high of $126.39 set back in January, Big Blue's share price has steadily declined as analysts trim their revenue and earnings forecasts for the second half of the year for high tech giants such as IBM. The much-touted economic recovery may come to big technology firms later than other sectors of the economy.

Microsoft, which has dropped precipitously from a trading price of about $70.00 per share in mid-January, finished the day at $57.27, down $.97. The hearings in the penalty phase of the landmark Microsoft anti-trust case continue before Judge Kollar-Kotelly. Indications are that the international rollout of the Xbox has been a disappointment to-date. On Tuesday Goldman Sachs reduced its sales and earnings estimate for the software giant.

Pixar Animation has been rising sharply the past two weeks. On Tuesday the company announced RenderMan Release 11. The new release of the award winning animation and effects software reportedly reduces setup time and improves performance in rendering certain effects. The release of the Monsters, Inc. for PlayStation 2 and a forthcoming release of a Monsters, Inc. game for Nintendo's GameCube have helped ignite new interest in the stock. Pixar was down $.06 at $37.58.

Please join us for the discussion Apple-related news in our forums. I'll be back later this week with a new edition of the Apple Stock Watch.

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