Stocks Head Lower, Apple Unchanged, Pixar Kicks Tail

| Apple Stock Watch

The Cisco Effect continued to wreak havoc on tech stocks, though the Nasdaq actually started off in soft-rally mode. Despite the positive beginnings, continued worries about the state of the economy and a downgrade from Merrill Lynch on Microsoft quickly slapped the markets back down. That downgrade was sparked as coverage of the stock at Merrill Lynch shifted from Christopher Shilakes to Henry Blodgett who took it from a "Buy" to a "Long Term Accumulate." According to an Upside Today report:

The major long-term concern for Microsoft, Blodget said in his report, is the maturing of the personal computer business and the relative immateriality of new businesses to its base of $11 billion in annual profit.

The personal computer business, which helped propel Microsoft to the largest software company in the world, has shown signs of slowing growth recently, particularly in markets like the United States.

Blodget said the companyis dependence on desktop computers would make it difficult to grow earnings per share faster than 10 percent. But even to reach 8 percent to 10 percent earnings upside, he said the company would have to show solid growth in its desktop business, continued market share gains in enterprise and consumer markets and successful entry into new businesses, like the video game market.

The result is that all the stocks we track in the Apple Stock Watch ended the day lower except for Apple, which was unchanged, and Akamai, which posted a gain. Appleis CEO, Steve Jobsi, also did a little work for his other company, Pixar. Pixar, the maker of computer animated films like Toy Story, Toy Story 2, and A Bugis Life reported earnings. According to a Pixar press release:

For the quarter, Pixar earned $35.2 million, or $0.71 per diluted share. These results compare to earnings of $9.6 million, or $0.19 per diluted share, achieved in the year-ago quarter. Revenues for the quarter were $75.7 million, as compared to $24.9 million in the year-ago period.

Revenues for the fiscal year ending December 30, 2000 were $172.3 million, up from $121.0 million for the fiscal year ended January 1, 2000. Earnings for the same periods were $78.4 million and $49.2 million, respectively. Diluted earnings per share for fiscal year 2000 were $1.57, up from $0.99 for the 1999 fiscal year.

More importantly to Apple investors, Pixar has named Pixar cofounder Ed Catmull as President. This could be to make more time available to Steve Jobs for his work at Apple.

Appleis stock spent most of the day in positive territory, though it also dipped below its opening price in mid day trading. Today, C-Net reported that Apple is running low on supplies of its high-end iMac models and may be about to introduce new models at MACWORLD Tokyo. MSNBC ran an ill-conceived column that suggested AOL buy Apple (you can read our thoughts on the issue as well).

Apple closed unchanged at 20 3/4, on strong volume of 10,787,800 shares trading hands.

The Nasdaq closed at 2562.06, down 45.76 (-1.75%).

The Dow closed at 10880.55, off by 66.17 (-0.60%).

The S&P 500 made it a three-some by closing at 1332.39, down 8.50 (-0.63%).

Akamai was the only other stock we track not to close in negative territory. Thompson Financial Network is reporting some new insider trading sales at the company. AKAM closed at 25 5/8, a gain of 3/8 (+1.49%) on volume of 2,269,700 shares trading hands. Apple is a major shareholder of Akamai.

Adobe churned through 3 times normal volume today. The stock closed at 35 15/16, a steep loss of 4 3/8 (-10.85%) on heavy volume of 12,136,200 shares trading hands.

IBM closed at 114.1, a loss of 2.81 (-2.40%) on strong volume of 8,278,600 shares trading hands.

Motorola closed at 19.82a slight loss of 0.13 (-0.65%) on light volume of 8,528,100 shares trading hands.

Earthlink announced a new rewards program with S&H Greenpoints. The stock closed lower at 8 29/32, a loss of 7/32 (-2.40%) on light volume of 882,000 shares trading hands.

Gateway closed at 20.04, a loss of 0.39 (-1.91%) on light volume of 2,592,900 shares trading hands.

Dell closed lower at 26 1/16, off by 7/16 (-1.65%) on light volume of 23,439,000 shares trading hands.

Hewlett Packard closed at 34.84, a loss of 1.16 (-3.22%) on volume of 5,729,100 shares trading hands.

Intel closed at 34 5/8, down 5/16 (-0.89%) on light volume of 42,819,900 shares trading hands.

Microsoft gave back yesterdayis gains on Merrill Lynchis downgrade. MSFT closed at 62 1/4, a loss of 2 7/16 (-3.77%) on volume of 44,003,300 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.

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