Big Blue Lifts Market, Apple Drops On Earnings Report

On Thursday the market moved higher on a better than expected earnings reports from IBM. Big Blue helped propel the blue chip index almost 3 percent higher on the day. The grand daddy of tech companies had seen its shares plummet more than 50 percent this year and the companyis positive earnings report and fourth quarter outlook pushed the companyi stock up more than 11 percent on the day.

At the close the Dow Jones Industrial Average stood at 8,275.04, up 239.01. The S&P 500 Index finished at 879.20, up 19.18. The NASDAQ Composite Index rose 39.87 to close at 1,272.29.

Apple

On Thursday, talk about Apple Computeris fourth fiscal quarter results were much ado about nothing. The company reported a US$.13 cent per share loss due to write-downs on its investments in Akamai and Earthlink. Exclusive of the extraordinary charges; Apple earned US$.02 per share, in line with Wall Street expectations. Most of the headlines around the Web focused on the reported loss without adding any context on the nature of those losses. Analysts, however, understand the issues involved, and Standard & Pooris issued a statement saying that it didnit expect any of Appleis ratings to be affected by the earnings report.

Although revenue for the quarter was essentially flat from the year-ago period, Apple experienced a fourteen percent drop in unit shipments from the fourth fiscal quarter of 2001. In Thursday trading Apple dropped US$.45 to finish the day at US$14.11 on robust volume of more than eight million shares.

OS X For Teachers

In an unexpected announcement, Apple has decided to offer OS X free of charge to K-12 teachers. Schools are beset with their own budget problems, and Appleis gesture may be a way to push migration to OS X in the education space without requiring schools or teachers to purchase introductory copies. School budgets are often fixed long before the academic year begins, and Apple is smartly choosing to help schools and teachers in the transition to OS X by providing free copies of OS X, 10.2 during the current school year. Teachers now have a no-cost way to evaluate the benefits of the new operating long before next yearis budget decisions are made.

No Apple Pie In The Bean Town

In what may be seen as a rather provocative announcement, Apple has stated that it will not participate in the 2004 MACWORLD Boston Expo and will scale back its presence at the 2003 New York show. Please read the updated TMO story linked above for more information.

Trouble Ahead For Apple?

IDC reported today that Dell Computer has seized the top spot (again) for global PC shipments. Dell lost the sales crown to HP following the completion of the HP-Compaq merger. Rival survey firm, the Gartner Group, also places Dell in the number one spot in global PCs sales.

Both firms report that the PC market grew in the third calendar quarter and Appleis results for the quarter may indicate that the Cupertino-based company is struggling to match the PC industryis return to tepid sales increases. Appleis fourth calendar quarter guidance from management offers little hope that Apple will return to a pattern of sustainable quarterly unit growth anytime soon. Despite Appleis murky outlook, as mentioned above, S&P has stated that Appleis rating will remain unchanged due to the companyis large cash position.

Gateway

On Thursday Gateway reported a third-quarter loss of US$50 million on revenues of about US$1.12 billion. Apple shipped slightly more units in the quarter than Gateway. However, Gateway outsells Apple in the US market. Gateway abandoned its overseas operations not long ago in order to focus its efforts on the more lucrative US market.

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