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May 10th, 2000

[4:00 PM] Apple Stock Watch: AAPL Falls Below 100
by Wes George

Not a good day on Wall Street, but they can't say it took 'em by surprise. Motorola got downgraded, Intel will be charged for flawed memory boards, and the charts of the major indices forecast continued stormy weather. Hard to believe only 40 days ago a run to 6000 on the Nasdaq looked feasible. Apple sunk as low as $98.75 per share just minutes before the session's end.

It's not that the news about Motorola and Intel was so bad and that's the scary part. This market is moving south on thinnest hint of problems. Cisco beat earnings estimates yesterday but still got punished, down 4 1/4 to close at 58 1/2.

Of course, ever looming in the background is the long shadow of next week's FOMC meeting where interest rates are expected to swell by 50 basis points. For over a week now buyers have sat on the sidelines waiting, allowing the market to drift downward.

Applied Materials (AMAT) reported earnings of $0.55 per share meeting the consensus forecast but up significantly from $0.18 from the 2nd quarter 1999. The company said net sales hit a record 2.19 billion, up 87% from last year, while margins rose to 51% over 46% last year at this time. AMAT traded lower by 6 dollars ahead of the earnings news to 84 5/8.

Dell reports earnings after the bell tomorrow.

Tomorrow a slew of US economic data is released including jobless claims, retail sales numbers and the M2 money supply. On Friday look for the producer price index and business inventories.

The Mac Observer Stock Watch Virtual Portfolio slogged lower as IBM, Apple, Akamai and Lucent sunk along most other tech stocks.

Apple slid 6 1/8 or -5.81% to close near the day's low at 99 5/16 on high volume of 4.7 million shares .

The Nasdaq declined 199 points (-5.58%) to closed at 3385 on volume of 1.57 billion shares traded. Semiconductor stocks are down about 20% for the month, while both Internet and computer hardware stocks are off 11%. The Nasdaq is down about 400 points or 11% for just this week.

The Dow fell 168 points (-1.60%) to close at 10367 on volume of 977 million shares. The few groups escaping today's downdraft were some paper, utility and oil stocks. For the month oil related stocks are up 5.5%, while food stocks are up 13% and gold stocks are up 13%.

The S&P 500 lost 29.06 points -(2.06%) to close at 1383.08.

In Apple related businesses: Akamai slid 5 7/8 to close at 77 3/8. ARM Holdings lost 2 7/8 to close at 28 dollars. Adobe traded down 6 1/8 to close at 106 3/16. Earthlink beat the trend gaining 9/16 to close at 19 dollars.

Motorola's stock plunged through a key support zone by 17 1/4 or 16.5% to close at 87 1/4 after Salomon Smith Barney telecommunications analyst Alex Cena lowered his rating on the stock to outperform from buy and reduced his price target on the shares to $120 from $200.

According to a Reuters' report, "In a research note, Cena said his long-term outlook on Motorola remained positive, but said an aggressive product rollout in mobile phones and the confirmation of the loss of a major customer to rival Nortel Networks Corp. (NT) suggested that it was unlikely Motorola would beat expectations in 2000."

Lou Gerstner, CEO of IBM, told analysts the Y2K slowdown hit the company hard but expects a turn around to come in the second half of this year as IBM concentrates its business on new products including advanced semiconductor and disk drive design.

The Wall Street Journal reported, "Mr. Gerstner said Tuesday that the company doesn't need to increase its revenue in double digits. 'It is not in our model,' he said, adding, 'It is not necessary to us.'" Underwhelmed investors sold off shares, pushing IBM down 5 1/16 to 103 15/16.

Apple's competitors: Hewlett Packard fell 6 9/16 to close at 126 1/4. Gateway lost 2 3/8 to close at 48 1/8. Compaq lost a buck to close at 25. Shares of Microsoft fell 1 5/8 to 66 3/16. This afternoon Microsoft asked the judge to throw out the DOJ's remedy plan to bust up the company or at least push the time table back.

Intel said it will replace motherboards that are causing some PCs to crash. The cost to the world's largest semiconductor manufacturer could run into the hundreds of millions of dollars. Shares of Intel closed down 10 7/8 at 106 1/16.

Analysts told Reuters, "the replacement of the so-called motherboards on PCs shipped since November 1999 would dent Intel's earnings per share by at least a couple of cents during the current quarter. Motherboards are the computer equivalent of an automobile chassis, serving as the platform on which chips and other circuitry are mounted. Before the news of the glitch, analysts on average were expecting Intel to earn 71 cents per share in the second quarter, according research firm First Call/Thomson Financial. Intel on Wednesday said it was not changing its guidance."

The bellwether 30-year US Treasury bond climbed 22/32 to 101 5/32. The yield, which moves inversely to the price, dropped to 6.16%.

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 many of these same quotes reported live (20 minute delay) on our home page. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.


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