Bulls Regain Control in Stock Markets As Apple Disappoints

Shareholders apparently didnit like Appleis lowered sales forecast. Sales for the Christmas season could decline 30% off last yearis holiday quarter. AAPL closed lower by 1 3/16 to 18 15/16.

Investors may not care for the slowing growth at Apple, but itis going to be difficult for Wall Street to punish the stock price much more. Fred Anderson, Appleis CFO, reported that Apple has $4 billion in cash and $800 million in investments, which means the companyis cash and investments, with the debt subtracted, is worth $12.50 per share alone. Thus, the market is valuing the rest of Appleis franchise — all the companyis patents, software and hardware products and future potential at about a measly $6.30 a share.

Meanwhile, the broader market experienced a serious rally off the beaten down lows of recent days. Theyire calling it an important confirmation of yesterdayis reversal on the floor of the NYSE. Traders with short interest were forced to cover in many of the technology stocks and sidelined money began it return to the market.

Microsoftis excellent earnings surely help the stock markets turn it around today. Redmond reported earnings of $0.46 per share and profits of $2.58 billion, 18% higher than a year earlier. The higher than expected earnings really surprised most analysts and help set the optimistic tone for todayis rally. MSFT soared 10 1/8 or almost 20% to close at 61 7/8.

Also, contributing to todayis rally, Sun Microsystems (SUNW) announced yesterday its revenues soared 60% to $5.05 billion and that net income is up 85% from last year at this time. Shares of Sun rallied 7 3/8 to 117 11/16.

Appleis stock shed 1 3/16, or -5.90%, to close at 18 15/16 on huge volume of 26.8 million shares trading.

Macworld Online reported that Apple, "has created two European sales teams to focus on expanding the companyis retail and education market-share."

The Nasdaq steadily rallied by 247 points (7.79%) to close at 3418 on volume of 2.29 billion shares for one of its best gains ever. It was strong day for most tech stocks but the biggest gainers were in the Nasdaq 100. Semiconductor stocks rallied 9.82% and Internet stocks of all varieties soared, many off near 52-week lows.

The Dow rallied 145 points (1.46%) to close at 10120 on volume of 1.2 million.

The S&P 500 climbed 46.64 points (3.48%) to close at 1388.77

In Apple related businesses: Akamai climbed 12 3/8 to 52 13/16. The Internet content streaming company reported less than the expected loss of -$0.68 per share for the September quarter, losing $55.7 million, or -$0.60 cents a share, on sales of $27.2 million. Last quarter, Akamai lost $43.4 million, or $0.50 a share, on sales of $18.1 million.

A number of brokerages initiated coverage on Akamai following the earnings announcement. for instance, Credit Suisse First Boston Technology Group initiated coverage today of Akamai with a Strong Buy rating, and twelve-month price target of $100 per share. EPS estimates for FY00 and FY01 are $2.09 and $2.38, respectively.

Macromedia beat estimates with $0.26 per share on revenues of $15 million. The company said the strong sales of its Flash and Dreamweaver software are driving rapid growth. Macromedia expects earnings to grow 90 to 100% next year with revenue growth of 55 to 58%. Shares of MACR climbed 6 dollars to 75.

Adobe rallied 8 1/8 to 137 3/16. Earthlink climbed 1/8 to 6 5/8. IBM gained 1 3/16 to 96 5/8.

Appleis competitors: Dell gained 2 9/16 to 28 13/16. Compaq soared back 2.75 to 27.95. Intel jumped 3 3/4 to 41 15/16. Hewlett Packard gained 5 1/2 to 91 1/16. Gateway was higher by 4.70 to 54.75.

In economic news: The US trade deficit shrank in August to the lowest level in six months on surging exports while oil prices declined.

The Wall Street Journal commented, "Exports grew sharply in August, rising 3.6% to $93.02 billion, their strongest performance since June. Leading the way were broad-based gains in exports of capital goods and cars and car parts. Export sales of capital goods, led by computer products, climbed by $1.2 billion, while auto-sector exports reached $669 million."

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 Apple Stock Watch Special Report.

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