Tech Sell-Off Sinks Apple's Stock

An ugly day for tech stocks turns into the worse rout for AAPL shareholders since April 12th. Newly released research reports show that PC shipments have slowed, especially in Europe. The whole PC sector got body slammed and Appleis stock slipped by more than 10% at one point today.

Merrill Lynch lowered its growth rate expectations for Dell and the PC sector as a whole. Envision Capital Management fund manager Marilyn Cohen told CBS Market Watch, "How many more boxes are they going to be able to sell?" saying PCs are a "slow-growth sector of the high-tech market. Thatis not where the growth is. The growth is the Internet, the growth is the infrastructure that feeds the Internet." But Internet infrastructure stocks got hammer hard today too.

According to the Wall Street Journal:

Two reports from market-research firms released Monday suggest that PC sales in the U.S. have slowed considerably since the beginning of the year. According to Dataquest Inc., a unit of Gartner Group based in San Jose, Calif., sales in the U.S. market grew only 12% in the quarter from a year earlier, compared with world-wide growth of 18%

International Data Corp., of Framingham, Mass., was even more pessimistic, showing U.S. unit-shipment growth at 7% versus 15% world-wide. Thatis down from 15% U.S. unit-shipment growth in the first quarter versus a year earlier and 17% U.S. unit-shipment growth in the fourth quarter of 1999. Data from the two firms often differ slightly because they use different methodologies.

Investors reevaluating their AAPL positions in light of the announcements at MACWORLD exaggerated the damage done to Appleis stock today. Apple is thinking quite differently about the future as compared to the by now conventional wisdom of the beyond-the-box strategies the other PC vendors have articulated.

See Steve Jobis Q&A session excerpts in this weekis Apple Trader column for some insight into Appleis strategy going forward.

Apple sank 4 7/8 to close at 48 11/16 on high volume of 7.3 million shares.

It should be noted that Apple repurchased slightly over 1 million shares of AAPL last quarter at an average price of $48.47 per share. $334 million remains in the stock repurchase plan. This is significant since it indicates that Apple has recently been eager to support their stock in the $48 range.

The Nasdaq fell 112 points (-2.76%) to closed at 3981 on volume of 1.4 billion shares. There are 31 tech IPOs this week, which is expected to dilute the market as money flows into them from more established names. The Nasdaq is lagging way behind the performance of the Dow this year.

The Dow fell 48 points (-0.45%) to close at 10684 on volume of 873 million shares.

The S&P 500 dropped 15.90 points (-1.07%) to close at 1464.29.

In Apple related businesses: Akamai slid 9 1/8 to 107 7/8. Adobe fell 9 1/2 to 125 3/16. Earthlink fell 7/8 to 14 11/16. Motorola gained 1/8 to 36 5/8. IBM shed 2 1/4 to 112 1/2.

Appleis competitors: Hewlett Packard lost 5 3/16 to close at 118 13/16. Dell got crushed down 6 bucks to 46 7/16. Gateway was off by 4 1/4 to close at 58 5/8. Compaq gave back 1 1/8 to close at 26 5/8. Shares of Microsoft lost 1 11/16 to 70 5/8. Intel fell 3/16 to 138 dollars.

Texas Instrument (TI) beat earnings by a penny at $0.31 per share after the market closed. Their stock lost 2 9/16 to 134 15/16.

In economic news: Look for Fed Chairman Alan Greenspanis testimony before Congress tomorrow on the state of the economy. Meanwhile, the last hope for our dying summer rally may rest on the Employment Cost Index to be announced on Thursday and the Gross Domestic Product number out on Friday.

The Mac Observer Stock Watch Virtual Portfolio. The portfolio was hammered today as losses swept through the high-tech world.

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.