Apple Drops 7.8%, Closes Below 20

| Apple Stock Watch

It was another bad day on the Street again today. Sun Microsystems issued an earnings warning yesterday after the bell, the same day that Goldman Sachs cut their own earnings estimates for both Sun And EMC. Sun is warning that profits could be 1/3 of what they had forecast and blamed the Asian and European markets for slowing sales of their midrange servers (the Wall Street Journal has an excellent report). This helped set the stage for another round of losses in tech stocks as traders moved to lock in gains scored during the last two months before they eroded any further. From a Reuters report:

"Certainly Sunis earnings warning was much worse than expected and weighing heavily on technology stocks," said Tim Ghriskey, senior portfolio manager at mutual fund company Dreyfus Corp. "Thereis been a big run-up in tech stocks since April 3 and the sector was really due for a correction."

Possibly signifying a more aggressive bearish trend, volume picked up with the sell off, helping to propel the Dow below 11000 for the first time in 10 trading sessions. The Nasdaq saw just shy of 2 billion shares trade hands, with the Dowis volume clocking in at 1.1 billion.

Gateway stepped up the PC price war today by announcing that it would beat advertised prices from Dell, HP, Compaq, Sony, Toshiba, and IBM. Dell, Compaq, and Gateway have been competing on the pricing front in the face of slowing PC sales for the last two quarters. In a world of boring beige boxes running really bad operating systems from Microsoft, it would seem there isnit all that much more they can do. Dell and Gateway in particular seem to be suffering from the delusion that increased unit sales at lower prices will somehow allow them to sustain profits. From a Reuters report:

"From our perspective, thereis been a price war in the PC industry since we opened for business in 1985 ... so weire veterans of this -- in fact, we love it," Waitt, who launched what is now the No. 4 U.S. personal computer maker from a South Dakota barn, said in a statement.

History has shown again and again that someone will be an eventual loser in the price war game. The PC industry is no exception, and someone is going to exit the PC business or be bought out if this keeps up. Hear that Andrew Neff? Itis time for you to come out with yet another pronouncement to that effect. Remember, if you say something loud and long enough, reality will come around your away sooner or later. All the hardware stocks closed lower today.

Apple opened up a buck lower and steadily trended down even lower on some very strong volume. Once again, there doesnit appear to be any news driving the downward mobility except for the negative sentiment for hardware stocks in general. While no analysts have come out and said so just yet, it is often assumed that Apple will suffer lost sales as the result of any major PC price war due to the companyis specialty status. Whatever the case, AAPL traded in volume that was twice that of the last two weeksi normal, and almost twice their long term average. 13.8 million shares traded hands, and the dayis rage was 19.30 - 21.50. This marks the first time since April 4th of this year when it closed at 19.50.

Apple closed at 19.78, a loss of 1.69 (-7.87%), on very strong volume of 13,876,900 shares trading hands.

The Nasdaq closed at 2084.50, a loss of 91.04 (-4.18%), on volume of 1,991,755,000 shares trading hands.

The Dow closed at 10872.64, down 166.50 (-1.51%), on volume of 1,154,599,000 shares trading hands.

The S&P 500 closed at 1248.08, off by 19.85 (-1.57%).

Adobe closed at 40.12, a loss of 1.56 (-3.74%), on light volume of 3,372,500 shares trading hands.

Akamai closed at 10.05, a loss of 1.08 (-9.70%), on volume of 3,016,600 shares trading hands. Apple is a large shareholder of Akamai.

Earthlink was one of the recipients of this scathing condemnation of coverage of AOLis price hike and MSNis response to that hike. Earthlink announced a new Internet radio service for its subscribers. ELNK closed at 12.14, a loss of 0.77 (-5.96%), on light volume of 1,561,700 shares trading hands.

IBM closed at 112.65, a loss of 2.62 (-2.27%), on volume of 9,598,700 shares trading hands.

Macromediais closed at 22.19, a loss of 1.11 (-4.76%), on light volume of 838,900 shares trading hands.

Motorola closed at 14.10, a loss of 0.90 (-6.00%), on light volume of 7,704,100 shares trading hands.

Dell closed at 24.41, down 1.24 (-4.83%), on light volume of 27,495,800 shares trading hands.

Gateway closed at 16.74, a loss of 0.73 (-4.18%), on light volume of 2,010,200 shares trading hands.

Intel closed at 26.60, a loss of 1.25 (-4.49%), on light volume of 47,279,100 shares trading hands.

Microsoft users are the victim of a new "virus" that instructs the victim to delete a necessary file. AP has a list of the various lawsuits inherited by the Bush administration. The Microsoft antitrust case is mentioned. MSFT closed at 69.19, down 1.15 (-1.63%), on volume of 43,231,700 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 Appleis 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 Appleis financial dealings.

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