AAPL Dips After eMac Gains

Apple opened significantly lower on Wednesday as the announcement of the education-only eMac finished working its way through the market. In Monday and Tuesday trading AAPL had risen more than five percent from Fridayis close on news of the new computer. In afternoon trading today AAPL regained much of the morningis loss but was unable to move above $24.00 per share by the closing bell.

Analysts and investors continue to voice concern about Appleis ability to gain significant market share. While Apple continues to gain new users and Windows converts, the companyis market share is still below 1996 levels. Apple watchers see the opening of new stores as a positive step in the companyis plan to win new users and increase consumer exposure to the Mac. Further, there has been much discussion in the press and on Mac-related Web sites as to whether or not Apple should make the new, all-in-one G4 eMac available to consumers in an effort to gain more share.

Apple (AAPL) closed Wednesday at $23.98, down $.29.

The Broader Markets

On Tuesday the broader markets reversed their recent trend and the Dow Jones Industrial Average, S&P 500 Index and the NASDAQ Composite Index all closed higher. In early Wednesday trading the major market indexes reflected investor concerns about sluggishness in corporate revenues and earnings growth, but by the afternoon the Dow moved decidedly into positive territory. The Dow ended the day at 10,059.63, up 113.41 but the NASDAQ Composite Index dropped 10.70 to close at 1,677.53. The tech heavy NASDAQ continues to struggle despite widespread reports of economic growth in the broader economy.

Cyclical stocks continue to outperform most other stocks as investors look to the safety of historical performance patterns of companies and industries that traditionally do well when the economy emerges from a recession. Consumer confidence remains relatively high and raw materials prices, with the exception of volatile oil prices, remain steady. Most experts believe the Federal Reserve Board is apt to resist any near-term interest rate actions until strong evidence of continued economic growth compels the Board to consider a small increase in rates. Softness in the construction industry and sluggish growth in manufacturing has raised concerns of a double-dip recession. However, positive comments about the economy from the Treasury Secretary during Senate testimony helped to lift the Dow above the 10,000 points marker.

Apple News

Mondayis announcement of the education-only only G4 eMac with a 17" CRT display overshadowed the companyis announcement of a new PowerBook sporting a speed-bumped G4 processor, enhanced LCD display and compatibility via a DVI-ADC adapter to Appleis line of flat-panel Studio and Cinema Displays. The newest Titanium PowerBook increases the productis appeal to designers and mobile professionals who want the convenience of a laptop and the ability to use Appleis award-winning flat panel displays. Apple is currently offering a $150 savings on the purchase of a PowerBook and flat-panel display, in part to offset the price of the now-needed DVI to ADC adapter.

Appleis decision to release the new PowerBook in an effort to re-ignite interest in its pro-level portable may help the company in a quarter that will have heavy pressure on margins because of the aggressively priced eMac and the popularity of lower-margin iBooks in schools.

In other news, Apple has filed suit against Sorenson Media, alleging the Utah-based company had breached an exclusive licensing agreement with Apple by providing Macromedia with compression technology similar to the one Apple licenses from Sorenson for use in QuickTime.

HP-Compaq

On Tuesday a Delaware court set-aside the lawsuit of Walter Hewlett, former HP director and heir of the company co-founder, challenging the shareholder approved merger of HP and Compaq. The decision was a major victory for HP CEO Carly Fiorina. In the ruling the judge upheld the validity of the shareholder vote and extinguished concerns that HPis management had engaged in any wrongdoing in its efforts to sway large shareholders to support the merger in the razor-thin victory over the well-organized opponents of the merger led by Mr. Hewlett. Soon after the court decision, Walter Hewlett stopped any remaining actions to thwart the HP - Compaq combination and conceded management had won the contentious proxy fight.

Apple (AAPL) ended Wednesday trading at $23.98, down $.29.

Adobe Systems (ADBE) moved up $.16 on Wednesday to close at $40.12 after jumping more than $2.50 on Tuesday.

Compaq (CPQ) finished the day at $10.65, up $.50.

Dell (DELL) was at $26.48, up $.14 when the closing bell rang. CEO Michael Dell stated that he sees the HP-Compaq merger as an opportunity for his Texas-based company to increase its market share and extend its PC sales leadership.

Hewlett-Packard (HWP) closed Wednesday at $16.86, down $.24.

Check out the new and vastly improved Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Appleis 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 Appleis stock activity, visit our updated Apple Stock Watch Special Report.

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