Apple Rockets Back 4% -- What's Driving Today's Gains?

On Friday, Apple (NAS: AAPL) closed 13.5% off the record high share price it hit on the day of the iPhone 5 launch day a month ago. That's a pretty stiff correction, especially for a company where investors are used to largely uninterrupted gains across the past year. Well, Apple found its way back into investors' good graces today, surging 3.97% on a day markets were largely flat. Let's take a look at today's news and what could be changing investor sentiment.

Coming to our senses?
As my colleague Evan Niu noted on Friday, the company's recent sell-off looked absurd. Complaining about a monthlong sell-off of a $600 billion company whose shares are up more than 50% on the year might look like sour grapes; however, there are some intriguing aspects around Apple's recent swoon.

For one, the sell-off in tech markets on Friday was driven in large part by earnings that fell short of expectations. Earnings across the space were far worse than expected, but they were driven by a common thread: the PC is in deep trouble. Microsoft (NAS: MSFT) reported fiscal first-quarter profits off 22%. Not only that, but across the supply chain, PC companies struggled. Advanced Micro Devices (NYS: AMD) saw its own shares plummet 17% and announced a restructuring. Windows 8 was supposed to "save" PCs, yet PC manufacturers are taking a cautious approach to the launch of the operating system while IT departments and consumers keep shifting spending to tablets and smartphones.

The point here: The ills of the PC industry are the result of Apple's influence. Selling off the company because of tech-sector woes seems to be missing the point that Apple's not a stampeded company fleeing a weak tech market, it's the big cat causing the stampede.

iPad Mini mania?
Another area that could have contributed to more optimism around Apple is the nearly certain unveiling of the iPad Mini tomorrow. On the precipice of the device's media event tomorrow, there was plenty of positive analyst chatter, including a note from an analyst at Topeka Capital that he'd handled a reported prototype at a supplier in China.

At the end of the day, even at a $300 price point that's above the level (NAS: AMZN) is pricing its entry-level Kindle Fire or other entry-level Android devices, the iPad Mini attacks a segment where Apple has been weakest and there seems to be ample consumer demand.

Also, if Microsoft is really charging its traditional rates for desktop versions of Windows on the Windows RT tablets hitting the market (reports put them north of $85 for smaller players, though larger companies such as Hewlett-Packard and Samsung certainly pay less), Apple's entry at the $250-$350 price level means it has economics Windows tablets simply cannot beat without losing money. With the added costs associated with paying for Windows, tablets running Windows RT will have to attack the same levels as the 9.7-inch iPad, which has historically been a losing proposition.

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