Summertime Blues Plague Wall Street

Wednesday Morning Activity

The markets continued to show weakness in early Wednesday activity as investors stubbornly remained on the sidelines waiting for more encouraging economic news. The tech sector found itself under heavy pressure, and Sun Microsystems endured a reversal in fortunes following Mondayis large gains.

HP Releases Earnings

On Tuesday, Hewlett Packard reported operating earnings in line with analyst expectations. The company reported a net loss of $2 billion due to extraordinary charges related to the HP-Compaq merger. Exclusive of the extraordinary charges, HP earned $420 million on revenues of $16.5 billion, but the net earnings reflect a positive contribution of $812 from HPis lucrative printer line. In other words, the companyis PC division continues to lose significant amounts of money. According to a Reuters news story, former Compaq chief and current HP president Michael Cappellas suggests that HP will return its PC division to profitability in the first half of 2003. The printer and services divisions of the PC giant are currently the two moneymakers for the company. Revenues were down year-to-year on a theoretical merger model by about $2 billion. Clearly, Dell, which is seeking to regain its number one position in world-wide PCs sales has gained significant ground on HP as the merged company focuses on merger-related issues and deep cost cuts.

Although HPis results were mostly in line with analyst expectations, the companyis somber guidance for the balance of 2002 weighed heavily on the tech sector during Wednesdayis session.

Wednesday Afternoon Trading

In early afternoon trading the markets attempted to move toward positive ground, but volume remains light, as many traders look more to the long Labor Day weekend for relief, rather than activity, in the markets. August is not traditionally a trend-setting month on Wall Street, and the run-up in prices since the July nadir for the indexes has given investors reason to pause, take profits and think more about the last holiday weekend of the summer. The Dow Jones Industrial Average fell 130.32 to close at 8,694.09. The S&P 500 Index lost 16.95 7.09 to end at 917.87. The NASDAQ Composite Index finished off 33.40 at 1,314.38. Apple shed $.15 to close at $14.70.

Apple

Apple has announced that the company had sold over 100,000 copies of Mac OS X, 10.2 by the end of its inaugural weekend of sales. The unit count includes pre-orders by customers prior to the weekend.

We mentioned in Tuesdayis Apple Stock Watch Report the new advertising campaign by Gateway that pits its new all-in-one PC against the Apple iMac. Readers have responded to Gatewayis new campaign with both hot commentary and colorful observations about what may be Gatewayis last desperate effort to find success. Please join the discussion about Gatewayis new ad campaign in The Mac Observer Forums.

In Wednesday trading Gateway finished down $.19 at $3.81 per share. Gateway is trading very close to its 52-week low of $3.08 set in late July and well below Mondayis range when it announced its risky and expensive new ad campaign. Gateway is trading marginally above the value of its reported cash on hand.

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