Poor Tech Earnings Drive Markets Down, Apple Sheds 22 Cents

Houston based Compaq Computer rained on everyoneis parade today by announcing lower than expected profits and revenue after yesterdyais closing bell. It seemed this wouldnit have much of an effect on todayis trading as investors shrugged of the poor earnings report from Compaq, and another from JDS Uniphase, to trade higher in morning trading.

Helping the markets out during the morning session was a lower than expected Consumer Confidence Index for April. The thinking goes that this will prompt further aggressive action from the Fed in easing interest rates, and investors decided to take this as a good sign. Within moments of the release of the report, the markets reversed some early morning losses to immediately trade in postivie territory. Ironically, something that made the April CCI lower than it may have otherwise been is that the data included in the April report stops just before last weekis surprise cut in the Fedis rates. Had that data been included, it would likely have boosted consumer confidence. That too will have an impact on the Fedis actions, so investors may be hoping for a big pile of nothing from this report.

In any event, stocks reversed their upward direction in afternoon trading and erased morning gains. This marks two straight days of losses for all three major indexes. Volume for the Dow and the Nasdaq was on the moderately light side. According to a CBS Marketwatch report:

"Weire in a base-building phase and I believe the market will stay in the upper end of the trading range it carved out last week," remarked Peter Cardillo, chief strategist and director of research at Westfalia Investments.

"This is typical earnings-related trading. We had some negative noise Tuesday and the market must still back and fill [after] last weekis performance," echoed Scott Curtis, senior equity trader at Kaufman Brothers.

A Big Deal in the world of computers, aside from Compaqis poor quarter, was the announcement that IBM would be buying Informixis enterprise database business. The deal is worth US$1 billion, and Informix will change their name to the name of their application division, Ascential. According to Reuters:

"This clearly, I believe, will be viewed by Oracle as a shot across their bow," said Steve Mills, IBM senior vice president and head of the companyis software division. "IBM competes extensively and aggressively against Oracle across the market worldwide today."

The acquisition nearly doubles IBMis market share in database software running on Unix and Windows distributed systems, pushing it share to somewhere in the 20s, Mills said. Informixis products are used by more than 100,000 customers, including phone companies Verizon Communications and Deutsche Telekom AG, retailer Sears, and airline reservation system Sabre.

Nice comments from Steve Mills. We wonder how the temperamental Larry Ellison took that. In a commentary for ZDNet, Sergio G. Non says that people are missing the big picture, and that the real purpose of this buyout was to get Informixis 100,000 customers in order to leverage their own DB2 project. According to Mr. Nonis perceptive piece:

Certainly IBM isnit pretending to preserve Informixis database in perpetuity. Although IBM will support products from Informix Software for a while, the long-range plan revolves around Big Blueis own DB2 database product.

Informix closed lower, IBM closed slightly higher, while Oracle also closed lower.

Apple announced a new resource for teachers called Apple Teacher Institutes. The plural "institutes" refers to a series of workshops with which Apple is kicking off the initiative. The workshops offer educators the opportunity to learn more about how technology can help them in their jobs as teachers. As one Observer pointed out in the comments of our coverage of this story, this is something for which many teachers have asked for a long time. This could have a positive impact on Appleis education sales.

Apple followed the tech trend today as the stock opened up higher, played around in a narrow range, then closed lower in the last hour and 15 minutes of trading. AAPL traded in lower than average volume, and traded in a range of 23.51 - 25.

Apple closed at 24.03, a loss of 0.22 (-0.91%), on light volume of 6,733,700 shares trading hands.

The Nasdaq closed at 2016.61, down 42.71 (-2.07%), on volume of 1,984,471,000 shares trading hands.

The Dow closed at 10454.34, a loss of 77.89 (-0.74%), on volume of 1,214,220,000 shares trading hands.

The S&P 500 closed at 1209.47, down 14.89 (-1.22%).

Akamai continued their PR blitz with the announcement of a deal with Signiant and a separate deal with ReleaseNow. AKAM closed up a dime at 9.24, up 0.10 (+1.09%), on light volume of 2,784,900 9.14 shares trading hands. Apple is a large shareholder of Akamai.

Adobe closed at 42.73, down 0.25 (-0.58%), on light volume of 3,524,800 shares trading hands.

IBM hardly budged on the informiz purchase. IBM closed at 112.67, up 0.67 (+0.60%), on light volume of 8,696,400 shares trading hands.

Motorola announced that it is considering closing a phone plant in Scotland. The Wall Street Journal has a good article of the subject. MOT closed at 14.85, a loss of 0.54 (-3.51%), on light volume of 9,382,600 shares trading hands.

Earthlink beat expecations for the March quarter and announced it will be selling 12.5 million shares of stock for Sprint. ELNK closed at 11.55, a gain of 0.65 (+5.96%), on strong volume of 2,622,600 shares trading hands.

Gateway closed at 18.01, a loss of 0.03 (-0.17%), on strong volume of 5,085,300 shares trading hands.

Dell closed at 25.85, down 3.50 (-11.93%), on heavy volume of 57,283,000 shares trading hands.

Intel announced the purchase of three separate privately held optical networking firms. INTC closed at 29.14, down 1.18 (-3.89%), on light volume of 50,124,600 shares trading hands.

Microsoft announced the formation of a new division to help businesses set up servers running on MS equipment. What a horrible job that would be... The company will form the new divisiion by combining their consulting and support divisions into one. MSFT closed at 67.55, down 0.70 (-1.03%), on strong volume of 44,583,700 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.