Early Wednesday Activity
Stocks moved higher in early Wednesday trading, responding to favorable news from Apple chip maker Motorola. However, the markets fell into negative territory before the noon hour. Economic data points to an uneven recovery and the markets have yet to find a strong sector of the economy to provide leadership for investors and support for an up side rally .
On Tuesday the markets tumbled in afternoon trading. Apple closed Monday perilously close to the $20.00 per share marker, losing $1.02 to close at $20.46 on above-average volume. Soon after midday Apple was hit hard by a warning issued by Credit Suisse First Boston (CSFB) analyst Kevin McCarthy said that PC sales, in particular consumer sales, would be soft in the current quarter. he cited Apple and gateway as having the greatest exposure to softness in the consumer market. Gateway slid just under the $5.00 per share threshold, off $.02 at $4.99. Gateway has continued to struggle and trades at the very low end of its 52-week range of $4.24 - $16.80. Gatewayis current market value is about $1.6 billion. Considering that Gateway has about $1 billion in cash, the market values all of Gatewayis other assets, including its brand name, at just over $600 million.
Wednesday Afternoon Activity
In afternoon trading the markets moved back into positive territory with Motorola moving up $1.25 to finish at $15.66.The Dow Jones Industrial Average closed up 100.45 at 9,617.71. The S&P 500 ended at 1,020.26, up 6.66. The NASDAQ Composite Index closed up 21.94 at 1,519.12. AAPL fell below the $20 per share marker in intra-day trading to finish with a loss of $.37 at $20.09.
With the education-selling season in full swing, Apple has announced the return of John Couch who headed the Apple unit that developed the Lisa, the very expensive predecessor to the original Macintosh. At one time Mr. Couch served as Appleis vice-president of software.
On Monday we reported on Appleis new "Real People" advertising campaign. Developed to attract Windows converts and bolster the confidence of people who are most inclined to switch to the Mac but have yet to make the decision, Gartner, Inc. analyst Charles Smulders has some very positive comments about the new campaign. Questions persist as to whether or not Apple will meet its goal of 265,000 LCD iMac shipments this quarter. Please join the discussion about Apple and its finances in the Apple Finance Board forum and take part in our first AFB forum poll.
Dell Computer, much maligned over the past several months as the "anti-technology" PC company, continues to hold its generous market cap of over $67 billion. In an AP story filed on Tuesday, Dell CFO Jim Schneider was reported to have forecast that Dell will continue to increase sales and grow market share in the current difficult business climate. Dell is one of the only PC companies expecting to increase sales and market share prior to renewed growth in IT spending. According to Mr. Schneider, Dell is preparing an assault on the printer market, desiring to increase its margins on printers sold to customers.
Almost single-handedly last week the worldis number two software maker sparked a broad market rally after reiterating its earnings forecast for the quarter. Oracle is currently embroiled in a government scandal involving a contract with the State of California, fending off rivals such as IBM and lesser-known database makers while trying to ride out a soft market for IT sales. The markets watch Oracleis public reports on contract commitments closely as a bellwether for the IT market. Evidenced by a press release this morning, Oracle is continuing to look across the Pacific for revenue growth. Oracle has a leading position in the Japanese market while pushing hard to fend off IBMis assault at home. Although trading at just over $8 per share (a mere fraction of its all-time high of almost $80 per share set back in early 2000, the company maintains a respectable market cap of about $55 billion.
In May we took a look at Silicon Graphicis recent performance and its balance sheet. There has been an upswing in demand for SGIis high performance imaging computers from defense industry and government clients. The billions of dollars requested by President Bush and authorized by the Congress for enhanced defense and homeland security initiatives are finding their way to the tech sector and a small fraction of those dollars are winding their way to SGIis bottom line. SGIis market cap is currently about $500 million and the stock trading off its recent 52-week high of $4.85 at about $2.50 per share.
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