-Caveat Lector- from: http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- US Stocks Apple's Stock Price Falls 50% in One Day And that's the good news . . . CUPERTINO, Calif. (CBS.MW) -- Apple Computer shares plunged 52 percent Friday after the company issued a quarterly earnings warning that cast a shadow over the broader computer industry. "This is a further erosion of confidence that the PC market is healthy and growing," said Bill Meehan, investment strategist at Cantor Fitzgerald. "It is very hard to believe -- given Intel's comments and other signs that demand for handheld devices and computers is decelerating -- that this is company-specific." Analysts reverse field Apple's warning, issued after the market closed on Thursday, prompted some backpedaling by analysts. The stock was cut to "neutral" from "attractive" at PaineWebber and was slashed to "neutral" from "buy" at Salomon Smith Barney. Both firms cut their 12-month price targets to $35. Apple shares were also lowered at Merrill Lynch, SG Cowen, Bear Stearns and Banc of America. Merrill's take was that this warning was just the beginning of more bad news to come from Apple, based in Cupertino, Calif. The analysts' recommendation changes were cold comfort for many investors who wondered about their tardiness. "If the stock is a 'buy' at $50 a share and it plunges to $25 a share, it should be a screaming buy now, shouldn't it?" asked John Kinsey, a portfolio manager at Toronto-based Caldwell Securities. "A downgrade after the fact doesn't help anyone." The shares (AAPL: news, msgs) plunged $27.75 to $25.75 on trading of 132 million shares compared with an average daily trading volume of 5 million shares. The stock had dropped as low as $23.19 at the opening bell. Friday's slide wiped out about $9 billion of Apple's market cap. Apple said it expects to earn between 30 and 33 cents a share in the quarter ending Sept. 30. Apple was expected to earn 45 cents a share, according to the average estimate of analysts surveyed by First Call. Apple earned 31 cents a share in the same period a year earlier and 55 cents a share in the third quarter. The company said revenue would range from $1.85 billion to $1.90 billion. Apple made $1.34 billion in the fourth quarter of last year. Growth targets cut In light of the slowdown, the company said it would cut growth targets for the next fiscal quarter and the year. Apple said it would provide new earnings estimates when it reports fourth-quarter results on Oct. 18. Apple's chief financial officer, Fred Anderson, pointed to lower-than-expected back-to-school sales, while receipts for the company's Mac G4 Cube have gotten off to "a slower-than-expected start." Apple's warning comes amid a torrent of earnings and revenue warnings in recent days that have pummeled the tech sector, sending the Nasdaq Composite Index down 13 percent in the last month. Intel, the world's largest maker of computer chips, warned last week that its revenue would slow due to sluggish European markets. Apple's warning "plays into what we've been looking at for a while," said Rob Schumacher, chief investment strategist at Van Kampen Funds, which oversees about $80 billion in assets. "We believed that as economic activity slows, we would see PC sales slowing down." "Overall, while back-to-school sales are still growing, they are not growing as quickly as was built into share prices" across the computer-maker industry, Schumacher said. Interest rates Apple's warning seemed to ratify expectations among some analysts and investors that rising interest rates and raging oil prices have sapped the economy of some of its strength. Higher rates deter consumers and companies from taking out loans for large purchases. Oil prices at 10-year highs mean more money leaving consumers' pockets for gas tanks and home heating, with less money left over for shopping. It also means higher production costs for companies, regardless of the industry. "Oil is squeezing profit margins everywhere," Meehan said. "Even companies that don't use a lot of energy sell to companies that do." "People believed that technology stocks were impervious to a slowdown in the economy, impervious to everything," Meehan added. "But that holds true only if they sell their products to each other." CBS Market Watch, September 29, 2000 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! 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