Apple, IBM Keep Lid On Stocks

Downgrades to Apple and IBM kept stocks in check on Monday.

Shares of Apple dropped 4% after an analyst said the company’s success story might have an ending.

Mark Stahlman of Caris & Co. downgraded Apple to “average” from “above average,” citing rising competition and a new Microsoft operating system that could keep the “halo” effect from Apple’s iPod from translating into higher Mac sales. A Wall Street Journal article also cited potential competition from a joint Sony-Ericsson Walkman phone.

Apple reports quarterly results after the close on Wednesday. Analysts are looking for earnings of 24 cents a share, up from 7 cents in the year-ago quarter, on $3.17 billion sales.

IBM also lost ground Monday after Prudential Equity analyst Steven Fortuna said Big Blue could miss estimates because of server competition from Dell . IBM will report first-quarter earnings April 18.

The downgrades and a warning from Ford weighed on stocks Monday.

The Nasdaq lost 7 to 1992, the S&P 500 was unchanged at 1181, and the Dow slipped 12 to 10,448. Volume declined to 1.53 billion shares on the NYSE, and 1.39 billion on the Nasdaq. Decliners led 18-14 on the NYSE, and 19-10 on the Nasdaq. Downside volume was 58% on the NYSE, and 61% on the Nasdaq. New highs-new lows were 49-76 on the NYSE, and 25-104 on the Nasdaq.

After the close, BMC and Open Text warned.

During the day, MCI rose after an unusual maneuver by Verizon to win its takeover battle with Qwest .

Micromuse jumped 10% on a UK contract win.

Hyperion climbed 5% after the company raised guidance.

Transmeta tumbled on a “going concern” qualification from its auditors.

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