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To: Charles Tutt who wrote (149114)	12/12/1999 7:23:00 PM
From: TechMkt	Respond to of 176387

Apple may be having trouble in Japan. Fez _______________________ A Bite Out Of Apple (12/10/99, 5:24 p.m. ET) By Sandy Portnoy, Computer Reseller News Slowing retail PC growth, and reports that the JapaneseFair Trade Commission (FTC) is investigating alleged pricefixing have taken a bite out of Apple Computer. Shares of the Cupertino, Calif.-based company were down $4.81 to $105.25 Thursday, a drop of 4 percent. In late afternoon trading Friday, the stock was down $5.44 to $99.81, a decrease of 5 percent. But Smith Barney analyst Richard Gardner Friday kept his outperform rating and $115 target, and issued the statement that although he sees retail PC growth slowing, he doesn't believe shareholders should overreact. Apple and Gateway "are poised to take market share in U.S. retail during 2000, both in the $600-plus and the sub-$600 markets," Gardner said. "Apple's first truly sub-$1,000 iMac, [released] in early October, should give the company access to a larger percentage of the consumer market, and [Apple] will also benefit from the ramp up of its new consumer notebook, the iBook, beginning in the December quarter," said Gardner. The other drag on Apple is an investigation by the FTC that Apple allegedly engaged in price-fixing at the retail level. Some Japanese retailers have accused the company of dictating what price they can charge for Apple products. Gardner said Smith Barney has spoken with Apple management, and Apple flatly denies allegations that it dictates retail pricing to its Japanese retailers. He anticipated three possible outcomes of the investigation: either nothing, a letter from the FTC recommending (but not mandating) changes in Apple's policies, or an order to cease current practices. Gardner said that even if the FTC orders that Apple change its current channel policies in Japan, which he believes is unlikely, "there are no penalties or fines associated with such an action. Furthermore, Japanese resellers have no right of private action," Gardner said. "The largest risk for Apple in this case is damage to the company's reputation and/or relationship with certain Japanese retailers/resellers," said Gardner. "We do not view this FTC investigation as a significant threat to Apple's sales in Japan [which represent 15 percent to 20 percent of Apple's unit shipments and revenue]. End-user demand for Apple's products is so strong in Japan that loss of sales through one or several retailers would most likely be made up for with sales via others. Apple's Japanese unit shipments have increased 52 percent and 99 percent, respectively, during the last two reported quarters," Gardner said.