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Technology Stocks : Apple Inc.

AAPL 271.01

-0.3%

Jan 2 9:30 AM EST

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To: Andrew Danielson who wrote (18480)	9/25/1998 5:48:00 PM
From: Andrew Danielson	of 213177

Never stray far from the flock- This is the lesson GTW is apparently learning. I noted a few days ago that GTW had broken from the PE pack with valuations that would have put AAPL at 43-44 (while AAPL was actually at 36-37). Meanwhile, the last two days have seen AAPL higher by 1/2, CPQ higher by a point, and GTW down more than 3 points. The new PE's at close today are: AAPL 18.45 CPQ 18.93 GTW 19.74 A 1.29 spread between the three stocks: high but within reason. GTW had established as high as a 3 point differential from AAPL at one point, equivalent to a 16% differential in valuation. Now, GTW's valuation would put AAPL at 41 7/16, a much more reasonable 7% above current pricing. I believe GTW's recent underperformance is validating the idea that the market does not consistently prefer one stock over the others in determining how much future earnings are worth for the stock. As long as this holds, watching the other two stocks can be a good indicator for where the third might be headed in the short term. Right now, it looks like AAPL and GTW are headed toward each other and perhaps look to meet somewhere between their current valuations. This looks good for AAPL in the short term. Andrew

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