Apple Stays Under 15 As Gateway Announces It Will Miss Estimates

T he markets took a bath today as beleaguered United Airlines sent shock waves across the board. United Airlines came up empty when it went to the US government looking US$1.8 billion in loan guarantees it says it needs to avoid declaring bankruptcy. The company is currently losing US$7 million a day, and has a debt service that would be the envy of many a third world country. The company has the opportunity to reapply for the loan guarantees if it makes changes to its submitted business model, so all is not lost. Bankruptcy, however, is looking closer today than it was yesterday, and that helped spook Wall Street. UALis stock lost almost 70% of its value today, and trading was halted. The stock closed at 1.00, down 2.12 (-67.95%).

At the same time, beleaguered computer maker Gateway issued comments through CEO Ted Waitt, who told a conference that his company is likely to miss estimates for the December quarter. Those estimates were for a loss of from 10 to 13 cents per share, so missing is not such a good sign. From a CBS Marketwatch report:

Walter Winnitzki, a PC analyst with First Albany Securities, said Gatewayis announcement concerned him for several reasons.

"Based on what we know about the holiday selling season so far, it appears Gatewayis problems may be company-specific and indicate share loss," Winnitzki said. "The aggressive pricing pressures in the PC market are just beginning to heat up."

Recent third-quarter figures from research firm IDC placed Gateway in third place for U.S. PC shipments behind Dell Computer and Hewlett-Packard. According to IDC, Gateway shipped 729,000 PCs for a 6 percent market share. During the same period in 2001, Gateway shipped 817,000 PCs and held 7.2 percent of the U.S. market.

Gateway closed at 3.42, a loss of 0.70 (-16.99%). Other technology stocks, already battered by the negative news from United Airlines, were further hit by Gatewayis news. Analysts are mixed on whether Gatewayis issues are company or market specific, but an after-closing revenue target boost from Intel is likely to have a positive effect on tech stocks on the morrow.

Intel announced that it expects sales of from US$6.8-US$7 billion during the quarter, and that its gross margins will be in the 50-51% range. Intel closed at 18.96, down 0.78 (-3.95%), on strong volume. The companyis stock recovered some of those losses in after-hours trading.

The Numbers

At the close of trading, the Dow Jones Industrial Average stood at 8,623.28, a loss of 114.57 (-1.31%). The S&P 500 closed lower at 906.55, down 11.03 (-1.20%). The NASDAQ Composite Index closed at 1,410.75, off by 19.60 (-1.37%). Apple closed at 14.63, a loss of 0.34 (-2.27%), on moderate volume of 4,313,481.

Apple

It was discovered today that the company had pulled out of Macworld Tokyo 2003, which led to the cancellation of the entire show. It remains to be seen how this will effect Appleis business going forward as the company looks at how it spends its marketing money. Though the decision was made weeks ago, neither Apple nor IDG World Expos had announced the decision as of yet. This news hits as Apple also announced that it had received more than 365,000 visitors to its 50 US retail Apple Stores during the Thanksgiving week. That news hasnit phased Wall Street so far.

Yesterday, Apple introduced IP over FireWire, a networking protocol that brings new possibilities to networking and peripheral attachment to Mac users.