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To: Charles Tutt who wrote (1382)	7/17/2002 4:19:32 PM
From: Elwood P. Dowd	Respond to of 4345

Jobs borrows a page from Capellas' book and blames the economy for Apple's woes. Hmmmm, haven't heard Michael Dell using that excuse lately. Apple shows off new products, warns on economy By Ellen Wulfhorst and Peter Henderson NEW YORK/SAN FRANCISCO, July 17 (Reuters) - Apple Computer Inc. (NasdaqNM:AAPL - News) Chief Executive Steve Jobs on Wednesday unveiled new software and gadgets to win over Windows users during an economic downturn he forecast could last another nine months. ADVERTISEMENT As Apple stock sank 13 percent following its disappointing results and a somber financial outlook announced on Tuesday, Jobs showed off an iPod portable music player that works with Windows and Macintosh software that will be free to new users. But loyal Apple fans also will have to begin paying to use a ".mac" e-mail address and Internet storage and tools Apple had offered for free, sparking some dissent among users of the platform, which is seen as the pricey high end of personal computers. Jobs told financial analysts at a meeting alongside the Macworld exposition in New York, where he introduced the new products, that the company would not cut key research spending or marketing of its new campaign to convince Windows users to switch to the Mac. "In hindsight, this downturn is going to look like one hell of a great time to try to gain back some market share for Apple, and that is exactly what we are trying to do right now," Jobs said. Apple has struggled to increase its roughly 5 percent share of the U.S. PC market for years. But, he added, "We play the hand we're dealt. We don't see things getting better in the next six months, probably the next nine months, and that's as far as our headlights go out." Apple predicted a slight profit for the current quarter before potential charges that could push it to a net loss for the first time since the end of 2000, an outlook that led analysts to cut financial targets for the company. Salomon Smith Barney also cut the rating on Apple stock to neutral from buy. Apple fell $2.23 to close at $15.63 on Nasdaq. Analysts at the meeting expressed dismay at the poor "legs" of Apple's iMac, the desktop computer introduced at the beginning of the year which is shaped like a desktop lamp with a flat panel display swinging above a hemispherical base. Revenue from the iMac fell in the quarter ended in June, a drop that Jobs blamed on a combination of the poor economy and high prices for the flat panel displays. He also unveiled a new $1,999 high-end iMac with a 17-inch screen, which drew sighs and howls of appreciation at Macworld. Apple left the price of its cheapest iMac at $1,399, which many analysts call a good value but too expensive for many consumers used to cheap Microsoft Corp. (NasdaqNM:MSFT - News) Windows machines. Some users at the "news for nerds" Web site slashdot.com said that Apple was rolling out a lot of charges. "Some have suggested that the 'switch' in Apple's new ad campaign stands for the unfortunate part of a 'bait and switch,'" one wrote in response to the $99 per year price tag for the .Mac tools. Many lauded improvements to the OS X software such as improved address books and communications between computers and cell phones. Chief Financial Officer Fred Anderson also said that there would be more new products this quarter and that Apple intended to price them competitively. Executives said the company was holding the line on expenses, including opening smaller stores as it continues a retail roll-out begun last year. Some analysts have also urged Apple to move to microchips from Intel Corp. (NasdaqNM:INTC - News) from those made by Motorola Inc. (NYSE:MOT - News) and International Business Machines Corp. (NYSE:IBM - News) to cut costs. Asked about that possibility, Jobs said that first the company had to finish the transition to the OS X operating system, expected around the end of this year. "Then we'll have options, and we like to have options," he said.