[Street.com] Apple's Fall

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From: Linda (joelinda1@home.com)
Date: Fri Sep 29 2000 - 05:51:18 PDT

[Rather undesirable news following Intel's earnings warning. The
Markets are in an unforgiving mood. Apple's stock is down
over 40% in pre-market trading, and it looks like most PC stocks
are moving down in sentiment.



Apple's Fall Shaking Up the PC Tree
By Thomas Lepri
Staff Reporter
9/28/00 9:27 PM ET

That story about the turtlenecked marketing genius who brought an
upstart and innovative company back from the brink of extinction --
you won't be hearing that again for a while.

Not after Thursday night, when Apple (AAPL:Nasdaq - news) warned after
the bell that fiscal fourth-quarter earnings would fall "substantially"
short of expectations. The company said it expects to earn 30 cents to
33 cents per share, leaving it well short of the 45-cent
First Call/Thomson Financial consensus. Apple forecast quarterly
revenue of $1.85 billion to $1.9 billion, up from $1.83 billion in
the third quarter.

That indicates extremely modest sequential growth, even as shareholders
have been betting demand will rebound in the second half of this year
as Apple rolled out the new product line it unveiled this summer at

Now, many investors may have to consider the possibility that the
strong boost the company got from the introduction of the colorful
iMac in 1998 may not be sustainable. For unlike Intel (INTC:Nasdaq
- news), Apple didn't blame the euro, saying instead that sales were
weak across all geographies. It noted slow sales of its new G4 Cube
and a sluggish education market, which has historically been a strong
point for Apple.

In a press release, CEO Steve Jobs said: "Though this slowdown is
disappointing, we have so many wonderful new products and programs in
the pipeline, including Mac OS X early next year, and remain positive
about our future." But investors just don't care. Apple last traded at
$29.13 on Island, down 46% from New York trading close.

'Wonderful' The iMac brought Apple back from the depths. What can the
new products do?

"It's a shocking preannouncement because it's so bad," says Jeff
Matthews, president of Connecticut-based hedge fund Ram Partners,
which, quite luckily, is short Apple. "But it's not shocking in the
context of Eastman Kodak (EK:NYSE - news), Intel and Dupont
(DD:NYSE - news). The most interesting thing Apple said was that
there was a sudden slowdown in all geographies all over the world.
That's exactly what Eastman Kodak said the other day. I think
we're having a slowdown worldwide right now."

Fears about weakening worldwide demand for PCs, sparked by downgrades
of big chipmakers and deepened by Intel's revenue shortfall, conspired
to take about 20% off Apple stock this month. Interestingly, the shares
rebounded Thursday, rising $4.56, or 9.3%, to $53.50 ahead of Apple's

It's not clear how investors will extrapolate Thursday's news to the
rest of the sector. Because Apple's machines use a proprietary
operating system and proprietary microprocessors, Wall Street has
resisted treating the company as a bellwether for the other boxmakers,
whose products run on Microsoft's Windows and chips made by Intel or

Apple's competitors have each offered different assessments of demand
since Intel's warning. But Dell (DELL:Nasdaq - news), Gateway
(GTW:NYSE - news) and Hewlett-Packard (HWP:Nasdaq - news) have each
said they were on track to meet forecasts for their current quarters,
while Compaq (CPQ:NYSE - news) has said that Europe was tracking within

Apple hasn't been saying any of those things, mind you.

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