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AAPL Up As Market Sustains Early Tech Sector Gains

Apple Stock Watch - AAPL Up As Market Sustains Early Tech Sector Gains

by , 7:00 PM EDT, May 13th, 2002

The market moved significantly higher in early Monday trading as investors anticipate that the tech sector has put the worst news behind it. Traders are hopeful the reports from technology firms that announce earnings this week, including reports from HP and Dell Computer, will provide the market with real evidence of renewed growth in the battered sector.

Despite last Wednesday's large gains, the major market indexes finished on Friday at levels below last Monday's open. Concerns about the spotty nature of economic growth and the pace at which reported growth is working its way to corporate bottom lines continues to keep many investors on the sidelines.

The market sustained its early Monday gains into afternoon trading. The positive market tone was buoyed by the news of the Sears acquisition of Lands' End in an all cash, $1.9 billion deal. At the closing bell the Dow Jones Industrial Average stood at 10,109.66, up 169.74. The S&P 500 Index was at 1,073.50, up $18.51 . The NASDAQ Composite Index finished up a powerful 3.23 percent (51.69 points) at 1,652.54. AAPL closed Monday at $23.92, up $.62. AAPL moved higher in sympathy with the broader market.

Mac In Schools

Apple Computer had a commanding presence at last week's CUE (Computer Using Educators) Spring 2002 Conference in Anaheim, CA. Representatives from Apple's education sales office in Austin, TX and local California offices were busy on the exhibit floor and making scheduled presentations to educators and school administrators in workshop-style sessions held during the three-day conference.

The Apple exhibit was set-up similar to the Apple retail stores and featured Macintosh products and education-related solutions on well-lit round stands. The eMac drew large crowds of educators to the Apple exhibit. Apple's PowerSchool Student Information System captured the interest of several school administrators. Gateway was present at the conference but HP and Dell were noticeable no-shows.

An informal sampling of attendees indicated that Apple has strong support from educators. Apple's big battle in education is not to win mindshare among teachers, but to make sales to the administrators and district buyers who determine what technology is used in the classroom.

There are large amounts of dollars flowing to schools to wire campuses and create the digital classrooms of tomorrow. One thing that is problematic for educators is development of curriculum standards to gauge the effectiveness of technology spending and the manner in which technology should best be brought into the classroom. Apple's "iApps" (iMovie, iPhoto and iTunes) do provide teachers with the resources to help students create a tangible product such as a digital movie or photo collection as part of a curriculum program. Apple products can also be used to bring technology-based curriculum aids into virtually all academic disciplines.

Apple's education product strategy and the company's ability to capture a significant portion of the technology dollars flowing to schools is being tested during this year's education-buying season. This quarter's results will help determine whether or not Apple's education strategy has made the grade.

Hewlett Packard

On Tuesday HP will detail for analysts and investors its sales targets and product strategies following the completion of the HP-Compaq merger. HP executives are expected to provide information on the anticipated changes in revenues and earnings due to previously announced product cancellations. HP is now battling to reduce revenue loss due to the business combination while striving to hit targets for sizeable spending cuts as redundant operations and expense centers are eliminated. Wednesday's Apple Stock Watch report will cover the HP announcements.

IBM

Speculation abounds that IBM is about to layoff between 2.5 and 3 percent of the company's worldwide workforce, with job cuts totaling up to 9,500 positions. In the first calendar quarter of 2002, Big Blue sustained its sharpest decline in quarterly earnings since emerging from a painful corporate restructuring in 1993.

IBM has rebounded from a new 52-week low last Tuesday but its shares continue to struggle as analysts and investors look for decisive action from management to boost earnings in the face of sales and earnings declines. The Armonk, NY based company is a technology industry bellwether and a heavily weighted component of the Dew Jones Industrial Average. IBM's fifty point drop from its high in January to last week's new low erased more than $80 billion in shareholder value and has kept a cap on Dow's upward performance.

Pixar

The shares of Pixar jumped late last week after the company announced a 90 percent increase in quarterly net earnings. The net earnings per share came in at $.30 for the quarter, much higher than the market consensus estimate of $.23 per share. The increase in earnings was fueled by the box office success of Monsters, Inc., the second highest grossing animated film in history, bested only by Disney's The Lion King. Monsters, Inc. has grossed more than $500 million at the box office due to unexpected appeal in the international market.

According to Pixar, the average revenue generated by the last three Pixar films has far surpassed the average revenue of the last three films from both Disney and DreamWorks. Disney is Pixar's marketing and distribution partner.

Pixar and Disney have three films remaining under their revised five-film deal. Neither Steve Jobs nor officials at Disney will comment on discussions, if any, to extend the deal past the scheduled release of the fifth film directed by Pixar's Academy Award winning director, John Lasseter. The fifth and final film under the revised deal is scheduled for release in 2005.

In an interesting report, Bryan Chaffin looks at Pixar's use of Apple technology to provide the animation company with workflow solutions.

In Monday trading:

Apple (AAPL) closed at $23.92, up $.62.

Hewlett Packard (HPQ) was up $.72 at $19.98 when the closing bell rang.

IBM (IBM) finished the day at $82.19, up $2.51..

Pixar (PIXR) ended Monday trading at $42.39, up $.45.

Check out the new and vastly improved Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings!

For full quotes on all the companies mentioned in this article, we have assembled a set of stock quotes at Yahoo! for your reference. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

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