Cisco Drags Techs Down, Apple Dips Below 24

Pessimism may have made a new beachhead on Wall Street in the wake of Ciscois mediocre earnings report turned in after yesterdayis closing bell. The company beat profit estimates, but missed revenue estimates. The company also wrote off a staggering US$2.2 billion in inventory and posted a loss of US$2.69 billion. From a Reuters report:

"Everybody wants to believe that the worst is over, but why does that have to be?" asked Donna Van Vlack of Brandywine Asset Management, which oversees about $7 billion. Cisco stock is "still not cheap, thereis still no visibility, it has a lot of issues, and the news seems to be getting incrementally worse."

Nonsense, say other investors. Cisco may be sucking exhaust fumes, but the rest of the market is just taking a little break. From a CBS Marketwatch report:

"The marketis in a holding pattern. It needs a shot of adrenaline which can come in three possible ways: Fridayis economic numbers, next weekis Fed meeting and Congress finalizing a tax plan," observed Mike Sheldon, chief market strategist at Spencer Clarke.

Sheldon said psychology has changed dramatically over the past month with market participants willing to buy the dips rather than sell rallies. "Investors now feel that the Fed will really make a difference."

Those analysts may be on to something. Though stocks declined today, especially tech stocks, volume continues to be very light. Light volume in a decline is often welcomed by the Bulls as a sign of healthy market. All the stocks we track in the Stock Watch closed lower with the sole exception of Earthlink, which tacked on 6% to its value.

Microsoft announced a release date for their highly ignored NeXT generation Windows OS, Windows XP. The company will release the new OS on October 25th. Analysts had hoped the company would be able to release Windows XP in time for the Back To School buying season. The silver lining of this news for PC manufacturers is that the late October release should spark new hardware sales to the Wintel hordes. No one seems to think this is going to be the same kind of blockbuster success that Windows 95 was, however, because it is not seen as offering significant advantages over the current line of about 4,237 different versions of Windows that have been released in the last 2 years. Microsoft is expected to spend "hundreds of millions" of dollars on promoting the new OS. The company will also spend lots oi money on promoting the Xbox which is also supposed to be released at the end of the year. That should be a boon to the advertising industry and those that depend on ad revenues.

Speaking of box makers, Michael Dell announced that he sees an increase in hardware sales for the 1st quarter of 2002. His reasoning is that all those people who were duped into buying new hardware because Windows and some Wintel hardware couldnit handle it are about due for an upgrade. From a Reuters report:

"If you fast forward three years from the second quarter of 1999, you get to the second quarter of 2002, which is about the replacement cycle for all those machines installed for the anticipation of the year 2000," [Michael] Dell said.

Praise be to the Wintel Hordes.

All of this Post-Coital Y2K news didnit help the PC manufacturers, nor did the Windows XP release date. Microsoft, Intel, the box makers, even Apple, all closed lower.

Apple started off the day down and stayed there. The stock traded in light volume in a range of 23.67 - 24.55, never coming all that close to positive territory.

Apple closed at 23.98, a loss of 0.59 (-2.40%), on light volume of 5,801,500 shares trading hands.

The Nasdaq closed at 2156.63, a loss of 42.14 (-1.92%), on volume of 1,793,690,000 shares trading hands.

The Dow closed at 10866.98, down 16.53 (-0.15%), on volume of 1,040,236,000 shares trading hands.

The S&P 500 closed at 1255.54, off by 5.66 (-0.45%).

Adobe closed at 41.52, a loss of 0.54 (-1.28%), on very light volume of 2,556,400 shares trading hands.

Akamai saw coverage initiated by Bear Sterns at a Neutral rating. On24 has a RealAudio report on this. AKAM closed at 10.07, a loss of 0.26 (-2.52%), on volume of 2,552,100 shares trading hands. Apple is a large shareholder of Akamai.

Earthlink closed at 12.73, up 0.72 (+6.00%), on volume of 2,125,300 shares trading hands.

IBM closed at 116.98, down 0.72 (-0.61%), on volume of 7,212,900 shares trading hands.

Macromedia closed at 20.65, up 0.45 (+2.23%), on volume of 1,488,400 shares trading hands.

Motorola released iSketch, a program for Palm devices that allows you to write notes or make a sketch and send it across whatever network you can access to another Palm or a PC. MOT closed at 16.40, a loss of a nickel (-0.30%), on light volume of 8,979,600 shares trading hands.

Dell closed at 24.60, a loss of 0.23 (-0.93%), on volume of 33,722,200 shares trading hands.

Gateway closed at 17.75, down a quarter (-1.39%), on light volume of 1,831,000 shares trading hands.

Intel closed at 29.93, off by 1.55 (-4.92%), on strong volume of 61,625,100 shares trading hands.

Microsoft users were hit by a new virus called HomePage, a cousin to Anna Kournikova. According to a Reuters report, its not so bad because only about 100,000 were infected. Stupid Windows lemmings... MSFT closed at 70.40, a loss of 1.66 (-2.30%), on volume of 38,334,600 shares trading hands.

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 updated Apple Stock Watch Special Report. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Appleis financial dealings.