Downgrades Rake Tech Stocks Over Coals, But AAPL Beats Trend

Stocks continued to move decisively lower as investors worry that the Fed may have tightened too much, choking-off earnings projections for next year. Analysts rushed to downgrade tech stocks in the computer, networking, and Internet sectors. Appleis stock already crushed back more than 70% from earlier this year beat the downtrend on news that Apple is building a bricks and mortar retail outlet due to open in April.

Market Fears: Oil prices, especially heating oil prices, are climbing. The chaos in Florida is a vague source of uncertainty. Interest rates are too high. Instability in the Middle East reminds investors the world is still a dangerous place. A Fortune.com article points out some serious endemic flaws in the venture capital community. And finally, plausible sounding scenarios for a full blown recession are beginning to appear in the media.

Oracle lost Gary Bloom, a 14-year Oracle veteran who ran the companyis core database and Internet businesses. Last summer, Ray Lane, Oracleis president stepped down. Mr. Bloomis resignation sparked a series downgrades and price target cuts on Oracle by some financial analysts, which helped sour the tech stocks first thing in the morning. Oracle lost 4 1/16 to close at 24 3/4.

Appleis stock climbed 7/16 or 2.36%, to close at 18 15/16 on volume of 6.9 million shares.

Last week news broke that Apple is going to open a 6,500 sq. ft. retail outlet in Palo Alto California, probably as a prototype for a chain of Apple Stores across the country. But the market, perhaps distracted by the events in Florida, waited till today to react.

Wit Soundview analyst, Mark Specker, downgraded Appleis stock from "strong buy" to "buy" and extended the same favor to Dell, while downgrading Gateway from "buy" to "hold".

Mr. Specker told Reuters after calling around to dozens of retail PC stores he believes consumer demand is weak. "Most of those who are closest to the consumer right now said (PC sales) were running at least 10 percent below their expectations,ii he said. "That caused us to pull our ratings on Dell and Apple. For Gateway, the demand climate around them is weak, but then there are also some balance-sheet concerns.ii

Mr. Specker didnit downgrade Compaq because the Houston-based PC giant seems to be siphoning high-end enterprise sales away from Dell. Wit Soundview also downgraded Intel from "strong buy" to "buy".

The Nasdaq shed 151 points (-5.01%) to close on the dayis low at 2875 (a new 52-week low) on volume of 1.6 billion shares. 4% of the Nasdaq 100 also hit 52-week lows. Biotechs were down 10%.

The Dow dived 167 points (-1.58%) to close at 10462 on volume of 948 million shares. HMO stocks turned south today in a technically significant downturn after recently setting record new highs.

AT&T (T) scored an 8-year low today down 11/16 to close at 19 3/8.

The S&P 500 lost 25.10 points (-1.84%) to close at 1342.62.

In Apple related businesses: Akamai lost 3 11/16 to 37 9/16. Adobe lost 6 3/4 to 76 dollars.

Time Warner (TWX) and EarthLink (ELNK) announced a deal granting EarthLink access to Time Warneris cable systems in order to offer its broadband Internet service to 20 million homes in the U.S.. EarthLinkis service via Time Warneris cables should be available by second half of 2001. Earthlink climbed 1 13/64 or 16.85% to 8 11/16.

Louis Gerstner, IBMis chairman, sold 700,000 shares or 9% of his IBM investment for $59.6 million at $99.50 per share last week. IBM jumped 1 5/16 to 103 1/4.

Intel couldnit find traction today in spite of releasing what the chipmaker claims is the worldis fastest microprocessor. CBSMarketwatch reported that Intelis new Pentium 4 is based on a new core architecture specifically designed for multimedia applications and targets consumers looking for 3-D and multimedia features. Intel sank 3/8 to 41 1/8.

Hewlett Packardis board of directors approved a further $2 billion to be used in the companyis stock repurchasing plan. HP has about 1.98 billion common shares outstanding. H fell 1 1/16 to 34 9/16.

Gateway claimed there is no reason to worry about the companyis balance sheet as Wit Soundviewis Mark Specker warned. John Todd, Gatewayis CFO, said the companyis sales are "ramping at expected levels." The PC vendor also announced it will be quick to feature the new Pentium 4 in its PCs. Gateway was lower by 3.53 to 36.20, less than a dollar off its 52-week low.

Dell is already taking orders for its Dimension 8100 which uses the new Pentium 4 chip. Dell slipped 1 9/16 to 23 3/8.

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.

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