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Tech Stock Come Back Hurdles AAPL Higher By 9.3%, But Then Apple Issues an Earnings Warning After t

Apple Stock Watch: - Tech Stock Come Back Hurdles AAPL Higher By 9.3%, But Then Apple Issues an Earnings Warning After the Bell

by , 5:25 PM EDT, September 28th, 2000

Yesterday there wasn't a good deal to be had on Wall Street. Today some one turned on the blue light special lamp and investors were tripping over themselves to get in on the bargain hunt which spread through virtual every sector of the markets. Apple's stock bounced off yesterday's 29-day low like a super ball, even as consternation over the so-called "mold lines" in many G4 Cubes made headline news. Then Apple warned it's going to miss earnings this quarter for the first time since 1997. Tomorrow things are going to get ugly for AAPL.

The momentum players began to jump in by midmorning as it became clear that the vitality in the stock market wasn't due merely to short covering. Today's broad rally on good volume may indicate a solid bottom has finally been found after several weeks of searching.

Apple stock soared by 4 9/16 or 9.32% to close at 53 1/2 on good volume of 5.9 million shares.

After the bell, Apple said earnings will fall short of forecasts for the quarter ending September 30th due to slower than expected sales in September.

Fred Anderson, Apple's CFO said, "Three factors contributed to our revenues and earnings coming in below expectations. First, we experienced lower than expected September sales due to a business slowdown in all geographies. Second, our Education sales, which normally peak during September, were lower than expected. And third, our Power Mac G4 Cube is off to a slower than expected start, resulting in revenues below expectations. We are currently re-evaluating our plans going forward, and will provide lower growth targets for next quarter and the next fiscal year when we announce our final results on October 18.''

As quoted by a PRNewswire article, Steve Jobs commented, "We've clearly hit a speedbump, which will result in our earning, before investment gains, approximately $110 million rather than the expected $165 million for the September quarter. Though this slowdown is disappointing, we have so many wonderful new products and programs in the pipeline-including Mac OS X early next year-and remain positive about our future.''

Apple said to look for revenues between $1.85 and $1.90 billion, instead of the $2.1 billion consensus forecast, with earnings per diluted share, excluding investment gains, between $0.30 and $0.33, instead of the consensus estimate of $0.45.

Meanwhile, news of the unusual hairline formations in the polycarbonate shell of some G4 Cubes have finally found their way to the mainstream press. C/NET News' in-depth article on the so called "cracks" reports:

Mac enthusiasts buying the Cube in part for its looks may be sorely disappointed by the hair-thin lines, which typically form around two rivets on top of the Cube, the DVD drive and the Apple logo on the system's front. Industrial designers also warn that only in real-world use will the company be able to tell for certain the nature of the lines. At issue is polycarbonate plastic--the same material used in some eyeglasses--and how it flows and cools when injected in a mold.

The issue is big enough for Phil Schiller to articulate Apple's position on the lines, "When the plastic flows around stuff and comes back together, the coming together of the plastic can form a visible seam line. That's a part of the injection molding process."

The C/NET article said, "Schiller insisted these seam, or mold, lines are typical for the process but are more noticeable because of the thickness of the plastic and Apple's decision to polish it to optical-grade clearness."

This afternoon, Walter Mossberg of the Wall Street Journal gave a favorable reviewed the G4 Cube on CNBC, raving about the elegant design. One downside with the Cube according to Mr. Mossberg is the Cube's lack of a CD-RW.

In other Apple news, the company announced that Phil Schiller, Apple's VP of Worldwide Marketing, will be the keynote speaker with Frank Casanova, Apple QuickTime Marketing Director and Annie Valva, from Boston's public television station WGBH-TV at QuickTime Live! in Beverly Hill, California, October 9-12.

The Expo 2000 began today in London. Macworld online reported, "Show organizer International Exhibitions and Conferences (IEC), claims the show will see over 30 new products launched or shown, including the new iBooks and Mac OS X beta test CDs that Apple announced at the Apple Expo in Paris earlier this month. Most significant will be Microsoft showing off Office 2001, the brand new version of the company's market-leading Mac suite of productivity software."

The Nasdaq rallied 122 points (3.34%) to close at 3778 on volume of 1.9 billion shares. All tech sectors ended higher today. Chips stock were up 4.3%, biotech issues rose 3.6%, Internet stocks jumped 3.55% and the telecom sector climbed 3.3%,

The Dow was better by 195 points (1.84%) to close at 10824 on volume of 1.19 million shares.

The S&P 500 climbed 31.72 points (2.22%) to close at 1458.29.

In Apple related businesses: Adobe's stock price grew 12 3/16 to 160 1/2 after Salomon Smith Barney initiated coverage of the company with an outperform rating and a price target of $177.

Bloomberg reported, "Adobe said it will build a new 275,000 square-foot building next to its San Jose, Calif., headquarters. Construction is expected to take about 18 months, and the building will accommodate 800 to 900 workers. The company, which has 2,500 employees, also plans to expand sites in Seattle, San Diego, Singapore and India."

Meanwhile, Web publisher Macromedia filed counterclaims against Adobe's recent patent lawsuit alleging Macromedia infringed on its tabbed palette feature patent in Macromedia's Flash 5.0 software. Macromedia claims Adobe's patents are invalid, because existing technology was allegedly hidden from the Patent and Trademark Office in Adobe's patent applications.

Earthlink climbed 1/16 to 9 13/16. European regulators are ready to block Time Warner (TWX) and EMI Group PLC's (U.EMI) music-related joint venture. "Meanwhile, difficulties related to the EMI deal appear to be the main hindrance to regulatory approval of the larger merger between America Online Inc. and Time Warner. That deal would place a huge catalogue of music in the hands of AOL," noted the Wall Street Journal.

Akamai lost 1 5/8 to 48 7/8. Motorola slipped 5/16 to 28 3/4.

IBM fell 1/8 to 117 7/8. The company said that a major group of petroleum and chemical companies have joined forces to build a business-to-business marketplace using IBM's hosting and management services.

Apple's competitors: Dell gained a dollar to 33 7/16, after yesterday's new 52-week low.

Gateway was higher by 6.96 to 56 dollars. Analyst Kim Alexy at Prudential Securities said she is confident that the company "will pull out the consensus $2.5 billion in revenue," after speaking with management. She forecasts "a large short squeeze" in the stock as quarterly results hit the street on Oct. 12.

Compaq gained back 1.65 to 30.80. Late in the day news broke that Ben Rosen retired as Compaq's chairman . Intel climbed 9/16 to 44 7/16. Hewlett Packard continued higher after yesterday's big gains by 3 3/8 to 106 7/8.

Shares of Microsoft climbed 11/16 to 61 5/16. The Redmond gang are up to their usual bag of tricks. This time they are attempting to reorganize their business accounting categories to make the Department of Justice remedy to divide the company neatly into two halves impossible. The Motley Fool reported, "The company will break out its revenues into these new segments when it reports first-quarter results on October 18."

In economic news: The gross domestic product was revised slightly higher from 5.3% to 5.6% annual growth in the second quarter. Economists had only forecast a 4.8% annual growth rate.

According to the Wall Street Journal, "Inflationary pressures appeared to be minimal, though, and came in lower than previously estimated. The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.1% in the second quarter, 0.2 percentage point less than in the preliminary estimate."

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 Apple's stock activity, visit our Apple Stock Watch Special Report.

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