UBS Warburg issued an upgrade on Cisco this morning, helping to spark a short lived rally. Quick as you can say "Minnesota Mining & Manufacturing Co.," earnings warnings and profit concerns turned the tide and saved the day from an extended rally. Note the sarcasm in the last sentence. From a Reuters report:
"Earnings announcements and warnings have carried the day," said John Davidson, chief investment officer of Circle Trust, which oversees $9 billion in assets. "We should be looking past the bad news, but itis difficult when you get the reality" of more disappointing results day after day.
"People had higher hopes for the non-tech sectors, but itis been about 50-50," said David Memmott, Morgan Stanleyis head of listed trading. "The issue is lack of visibility because companies have given little guidance (about when profits will improve). It has people concerned. They donit buy shares first, and then they sell them second."
Volume was light across the on both major indexes, and tech stocks closed mixed.
Industry News
The WTO has ruled that a major piece of corporate welfare in the US is an illegal subsidy. The US offers tax breaks to companies that are major exporters, including Boeing and Microsoft. Those tax breaks are the kinds of corporate welfare that many in the US complain mightily about from the EC. The EC itself is threatening US$4 billion in sanctions against the US if the tax breaks arenit eliminated. This issue has been heating up for a while as the EC and the US go back and forth in the press war over this issue. Todayis ruling from the WTO marks the beginning of the next escalation in rhetoric from the EC. Reuters has an interesting report on the subject.
Reuters is also reporting that Mr. Gates has gone to Washington (in the form of negotiators) to discuss a settlement with the US in the antitrust battle with the DoJ. ZDNet reported earlier today that both Microsoft and the DoJ were gearing up for more litigation and were both playing hardball. Stay tuned for more spin and obfuscation from all parties concerned for the next few years.
Apple Industry News
Appleis P/E ratio is officially sitting at 116.84, higher than Compaqis 72.77, Dellis 35.13, and HPis 23.20. Appleis cash reserves still offer a strong support level, but Apple has managed to flip from having one of the lowest P/Es among hardware makers to having one of the highest. We have a discussion on this topic at the Apple Finance Board.
Apple moved higher by some 50 cents in the first hour of trading and then reversed directions just as fast. Better yet, it only took another hour or so to lose another 50 cents on top of that. Again, we ask you to note the sarcasm. AAPL moved back forth for the rest of the day, cresting above the starting point at least 6 times, but fell back again in the last 45 minutes of trading. The stock closed just off the dayis lows and traded in a range of 19.51 - 20.50. Volume was light.
Apple closed at 19.54, a loss of 0.44 (-2.20%), on light volume of 4,300,000 shares trading hands.
The Nasdaq closed at 1988.56, down 40.81 (-2.01%), on volume of 1,349,968,000 trading hands.
The Dow closed at 10424.42, down 152.23 (-1.44%), on volume of 973,280,000 trading hands.
The S&P 500 closed at 1191.03, a loss of 19.82 (-1.64%).
Adobe closed at 40.59, off by a dime (-0.25%), on volume of 2,889,500 shares trading hands.
Akamai closed at 8.15, up a nickel (+0.62%), on light volume of 824,300 shares trading hands. Apple is a large shareholder of Akamai.
Earthlink closed at 17.88, up 1.51 (+9.22%), on strong volume of 3,669,600 shares trading hands.
IBM closed at 105.85, up 0.15 (+0.14%), on light volume of 6,285,900 shares trading hands.
Macromedia closed at 17.31, up 0.11 (+0.64%), on light volume of 384,200 shares trading hands.
Motorola closed at 18.05, off by 0.45 (-2.43%), on light volume of 8,922,200 shares trading hands. Motorola manufactures the processors used in Appleis Macintosh line.
Dell closed at 26.56, down 1.33 (-4.77%), on light volume 23,114,600 shares trading hands.
Gateway closed at 10.04, down 0.95 (-8.64%), on strong volume of 6,919,000 shares trading hands.
Intel closed at 29, down 0.93 (-3.11%), on light volume of 33,905,200 shares trading hands.
Microsoft closed at 67.09, down 2.09 (-3.02%), on volume of 39,536,600 shares trading hands.
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