Tech Stocks Under Pressure As Prospects Of Recovery Grow Dim

Friday Recap

On Friday the markets moved higher on better than expected employment news. NASDAQ stocks were the prime beneficiaries of Fridayis rise in investor sentiment, as the NASDAQ Composite Index posted a more than three percent gain.

The markets continue in a reactive mode as traders respond to positive and negative economic news, sending socks higher or lower based on the often-conflicting indicators of US economic performance. We are entering the final weeks of the third calendar quarter, and analysts and investors will be looking for guidance from corporate America. The big news will be the quarteris anticipated results and management expectations for the final three-month period of the calendar year.

Monday Morning Activity

Following the weekend hiatus, the markets opened sharply lower as traders sifted through the results of Fridayis gains in search of leadership. A report from market research firm IDC that suggests the recovery in corporate IT and consumer tech spending may be postponed until well into 2003 chilled investor enthusiasm for tech stocks.

Monday Afternoon Trading

The markets reversed direction in afternoon trading and the major indexes realized modest gains on the day. In after hours trading Ford moved higher on news that the companyis restructuring efforts are returning the auto maker to profitability. Dell Computer and Intel moved slightly lower after the close following a statement by Intelis president concerning the uncertainty of PC sales growth during the upcoming holiday season.

The Dow Jones Industrial Average moved up 92.18 to finish at 8,519.38. The S&P 500 Index gained 9.04 to close at 902.64. The NASDAQ Composite Index jumped 9.30 to end the day at 1,304.60. Apple shed one cent on below-average volume to finish at 14.37.


An AP story published in the Boston Globe highlights the delivery of Apple iBooks in Maine. The Mac Observer has covered the Maine iBook program since it was fist announced by Maine Governor Angus King. We will continue to cover this pioneering statewide program as the iBooks are delivered to the first group of middle school students in the state and as the program is expanded in the coming years.

Over the weekend Apple debuted a new series of switch ads, featuring a new slate of former Windows PC owners. The ads are designed to increase the traffic to Appleis retail stores and reduce the number of returns trips to the stores before a "switcher" makes the decision to purchase a Mac.


On Monday, Microsoft released an update to its Windows XP operating system. The update is intended to make the operating system used by most PC owners more secure and it allows users to remove certain Microsoft add-on products. Microsoftis decision to add the removal feature is due in large part to the weak settlement hammered in the anti-trust suit filed by the Justice Department and 18 states. That settlement is still being considered by the judge overseeing the case.

In recent public statements Microsoft has been unusually frank about the security deficiencies in its operating system product. Security concerns are one of the major reasons current Microsoft customers are evaluating Windows alternatives such as the Mac. Security is on the top of the list of issues mentioned by corporate customers that use Windows alternatives.


The beleaguered PC mini-major set a new 52-week low in intra-day trading and is at-risk of falling through its all-time low set in the early months of 1994. Analysts and investors have lost confidence that Gatewayis new ad campaign that compares its all-in-one desktop to Appleis stylish iMac can reverse the struggling companyis declining fortunes. A series of investments by AOL that total roughly $400 million have helped to keep Gateway afloat, but even Gatewayis partnership with the worldis largest Internet service provider may not be enough to save the troubled company. A company that captured the imagination of investors and computer buyers in the 1990is. The TMO staff is monitoring developments concerning Gatewayis perilous positions in the financial markets. Stay tuned to TMO for a detailed report on these issues, and how they may impact Apple.

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