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October 5th, 1999

[3:45 PM] Apple Stock Watch: Apple Pushes Ahead 5% As Street Welcomes New iMac

Apple's stock actually benefited from the announcement of new iMacs and held onto those gains throughout the trading day. Early gains enjoyed by the broader market were washed away as the markets reacted very negatively to news from the Federal Reserve. The Federal Reserve announced that they would not raise interest rates (an expected move), and that they were adopting a "tightening bias" (another expected move).

Though both moves were expected, the markets turned broad gains from earlier in the trading day into broad losses. This momentarily swept Apple along as well, erasing much of the 4 point gains Apple saw in early trading. Apple held on to stay in positive territory and ended the day more than 5% up.

Apple closed at 67 15/16, a gain of 3 3/8 or 5.23%. Volume was heavy with 7,266,700 shares trading hands.

Macromedia shared in Apple's glory as the stock closed up more than 3 points as well. Adobe and Symantec closed lower. Apple's PowerPC partners were mixed as Motorola closed lower and IBM closed higher.

On the PC front, Compaq, Intel, and Microsoft all ended the day lower while Dell, Gateway 2000, Hewlett-Packard ended the day lower.

The Dow closed at 10400.59, down 0.64 and the Nasdaq closed at 2799.67, a gain of 3.70.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. We also have these same quotes reported live (20 minute delay) on our home page [Editor's Note: As of this writing, the home page stock quotes are down for maintenance.] For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.

The Mac Observer Spin: Wall Street loves the sub-US$1000 iMac and views the overall new product line as a cheaper product line. The reality is that Apple introduced a new, faster iMac and raised the price to US$1299. The sub-US$1000 model represents a new emasculated version of the iMac when compared to the rest of the new product line, and therein lies Apple's brilliance. No other computer manufacturer could possibly introduce a revision to an existing product line and actually raise prices. Apple, however, will be able to pull this off fantastically as The Street and consumers focus on the low end version.

Please don't misunderstand, the new 400 MHz iMacs are certainly worth US$1299. The video upgrade, DVD player, software, and FireWire all combine to make the iMac DV a fantastic improvement over the iMac 350 MHz model, and well worth the higher price tag. The point of this commentary is that M. Jobs and his team crafted a situation that allows them to raise their prices in a market where that is largely considered suicide. From a business standpoint, this is nothing short of outstanding for Apple's bottom line.


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