Apple Stock Watch - Investors Take Early Summer Break

by , 5:30 PM EDT, May 29th, 2002

Investors Take Early Summer Break

The major market indexes moved lower in early Wednesday trading as investors stayed away from stocks. Continued concerns about the prospects of new terror attacks weighed on the mood of the markets. Moody's downgraded the credit rating of AT&T and pressure remained on other Dow components such as IBM and Home Depot.

Concerns About Consumer Confidence

On Tuesday the markets opened the holiday shortened week with concerns about falling consumer sentiment and a possible negative change in consumer buying patterns.

Consumer spending remained surprisingly strong during the recession and economists are concerned that any drop in consumer sentiment will result in reduced spending and slow the pace of economic recovery. An economic bright spot in Tuesday's news was the rate of sales for existing homes. Buyers are taking advantage of low interest rates and are purchasing homes. The stock markets do need to compete with other investments for investor favor.

Memorial Day weekend marked the beginning of the summer travel and leisure season and Tuesday's extraordinarily low trading volume evidenced a leisurely return of Americans to work and investment matters.

In late afternoon trading on Wednesday the markets failed to recover from the morning's losses. The Dow Jones Industrial Average closed at 9,923.04, down 58.54. The S&P 500 ended off 6.89 at 1,067.66 and the NASDAQ Composite Index moved lower by 27.78, ending the day at 1,624.39. AAPL gave up its early gains in late trading, finishing at $23.98, equal in value to Tuesday's closing price.

Apple

In Apple-related news, speculation abounds that Apple will release new G4s with clock speeds up to 1.5 GHz at MACWORLD New York. Apple recently released Xserve, a rackmount server that uses DDR SDRAM chips. Xserve is Apple's first product that uses the more modern and faster memory chips. At this time references to the size of a processor speed bump to Apple's pro line at the big New York show are an educated guess. Apple does not officially comment on rumors and speculation about forthcoming products. However, if history holds true, Apple will incorporate the newer and faster DDR SDRAM chips into the next revision of its popular minitower product.

Macs In Education

It was reported on Tuesday that the Henrico County school board voted unanimously to expand their current iBook program to include sixth graders in the district.

The iBook program in Henrico County, Virginia has been one of the most celebrated and chronicled technology-in-schools programs in the US. This iBook program was the first major one-to-one (one iBook to one student) program initiated by Apple Computer in conjunction with a public school system. The Henrico iBook program was followed earlier this year by the Maine iBook initiative. Education is one of Apple's most important markets and the company's performance in education is considered a linchpin in the Mac maker's efforts to grow market share and increase the company's influence in the PC business.

Apple's activities in education are followed closely in the newest Mac Observer discussion forum called An Apple A Day: Macs In Education.

IBM

The Armonk, NY-based computer giant has announced that layoffs have taken place. While corporate executives have not revealed the number of job cuts, some IBM watchers place the number of layoffs at about 1,000, with job reductions occurring at a number of locations. Worldwide Big Blue employs over 300,000 people and thousands of employees leave voluntarily each year. However, in the current market climate where even the largest and best-established companies have found revenues and earnings growth a daunting challenge, layoffs at IBM have been long expected.

IBM's stock continues to under-perform the broader markets. The company's stock price is down more than a third from its January high. IBM is a heavily weighted component of the Dow Jones Industrial Average. The more than forty-point drop in share price since January has kept the Dow from further outpacing the broader market measures as investors have clung to other blue chip stocks in the current bearish market.

Sun Microsystems

Sun Microsystems announced in its mid-quarter conference call with analysts that the rate of sales orders remains sluggish but the company forecasts a return to profitability after four consecutive quarters of losses in the current quarter. Sun is a leading maker of UNIX-based networking and workstation solutions. It competes head-to-head with IBM and Hewlett Packard in the enterprise market.

Reuters reports that Gartner, Inc., the well-respected research firm, claims the market for large, enterprise-level servers shrank fifteen percent in the first quarter. However, Sun's leadership in the UNIX-based server market increased to over forty percent while IBM earned the king's crown in the small but growing Linux server market.

Sun's shares are down significantly from their 2002 high January high of about $14.00 per share reached in January. The shares are now trading at about half of their January high.

The Mac Observer Stock Quotes and Additional Market Information

Check out the new and vastly improved Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings!

For full quotes on all the companies mentioned in this article, we have assembled a set of stock quotes at Yahoo! for your reference. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.