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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: WebDrone who wrote (13895)	5/21/1998 12:10:00 AM
From: David M. Lomow	Read Replies (1) \| Respond to of 213177

Part One of the Forbes Online Story Hold on to your hats, it starts out positive, but they are setting us up for the other shoe. Congratulations to the Apple Computer (AAPL) public relations team. Last week the struggling Cupertino, Calif.-based computer maker was wallowing in a spate of positive publicity, including uncritical feature stories in both Time and Newsweek. Superficially the stories heralded the introduction of Apple's retro-futuristic-looking iMac desktop (see "Back to the future"), but fresh off two back-to-back profitable quarters (the first in three years) the underlying message was clear: Apple is back. "Apple is already back." And smack in the middle of the spotlight is a rejuvenated-looking Steve Jobs, Apple's once and future CEO. At 43, Jobs seems to be having fun running Apple, a job he took on a (long-term) temporary basis last summer, twelve years after he was booted out of the company he cofounded. By all accounts he is doing a good job too: slashing operating costs by nearly half, boosting employee morale, and dramatically winnowing Apple's once sprawling product line down to just four computers (professional and consumer versions of laptops and desktops). "Apple is already back," Jobs confidently crowed to Newsweek reporter Steven Levy. (Perhaps not coincidentally, Levy is also the author of "Insanely Great", a book-length piece of puffery about the creation of the original Macintosh.) Is Apple really back? Much as we'd love to say yes, and participate in the collective Steve Jobs group-hug, the facts tell us otherwise. Apple Computer is dying and Jobs' return, like a crucial, but toxic, dose of chemotherapy, has only delayed the inevitable. DL

To: WebDrone who wrote (13895)	5/21/1998 12:14:00 AM
From: David M. Lomow	Read Replies (2) \| Respond to of 213177

PART TWO Where's the growth? Apple's sales peaked at slightly over $11 billion in 1995 and have been declining ever since. Last fiscal year, Apple sold about $7.1 billion worth of computers and software--almost exactly the same amount that it was selling five years ago. And despite the "turnaround," sales continue to decline. Apple's most recent quarterly results report $1.4 billion in revenues, a 12% decrease over a year ago. And this in an industry that is not exactly starving for growth. By comparison Dell Computer's (DELL) revenues grew from $2.9 billion in 1993 to over $12.3 billion last year. On the software side, Microsoft (MSFT) grew from $3.8 billion in sales in the year ending June 1993 to over $11.3 billion by last summer. Excepting the first quarter of this year, Apple's market share has decreased every quarter since the end of 1994. To be fair, Apple has shown a smidgen of market share growth as of late. First-quarter data, gathered by market researcher International Data Corp., shows Apple with 4% of the market, up from 3.6% a year ago. But, realistically, that is a tiny bump in a long, sometimes steep, downhill slide. Excepting the first quarter of this year, Apple's market share has decreased every quarter since the end of 1994. As recently as 1996, Apple had a 6.6% share of the domestic market. Then there is the little matter of profits. Last quarter, Apple turned a net profit of $55 million on $1.4 billion in sales. That is certainly a vast improvement over a year ago--when Apple somehow managed to lose $708 million in a single three-month period--but it is hardly cause to be breaking out the Dom Perignon. In fact, Apple's net margin of 3.9% is more comparable to metal-benders like General Motors (4% last quarter) than to the computer industry. Dell's net margin was more than 7.6% last quarter and Microsoft turned in a stunning 35.4%. Even nonmonopolists in the software industry routinely break 10% on the bottom line. And in the computer industry, where success depends partly on support from third-party software developers and compatibility with other machines, low profits and low market share are as final as a pair of death knells. Justifying the price

To: WebDrone who wrote (13895)	5/21/1998 12:16:00 AM
From: David M. Lomow	Read Replies (1) \| Respond to of 213177

PART THREE remember don't shoot the messenger. I for one am long AAPL at 17 3/4, and am holding on. It's the software, stupid Want to play Ultima Online, Electronic Art's groundbreaking multiplayer, online dungeon crawl? Better have a PC. Interested in the new voice recognition software? Too bad if you own an Apple. Dragon NaturallySpeaking won't run on it, nor will any of IBM's top-notch speech recognition products. (Click here for more about speech recognition software.) Fact is, if you want to use your computer for much of anything beyond word processing, number crunching or surfing the web, having an Apple computer is an enormous liability. And getting worse. As recently as the beginning of this month, well into Apple's so-called turnaround, Inuit Inc. (INTU) still wasn't planning to release the next version of Quicken, the leading personal finance program, for the Macintosh. Only after intense discussions between Jobs and Intuit CEO William Campbell (who is an Apple board member) did Mountain View, Calif.-based Intuit change its mind. But it was a close call and an embarrassment for Apple. Apple's lead is slipping even in areas that it has traditionally dominated, like graphic design and desktop publishing. Adobe Systems (ADBE), makers of Photoshop, now earns more, in terms of revenues, from Windows programs than from the Mac. (Click here to read what Adobe Systems' CEO John E. Warnock has to say about Adobe's big switch.) Who cares if Apple still has the slickest, easiest-to-use operating system if no one else is using it? And who can blame the software developers? With a market share below 5%, only the very biggest software hits stand a chance of making money on the Apple. Worse, in the networked economy that we live in, a substantial part of a product's value derives from compatibility--the ability to seamlessly exchange data with others using the same system. Who cares if Apple still has the slickest, easiest-to-use operating system if no one else is using it? And Apple's stylish operating system, Mac OS, no longer enjoys much of an advantage over Microsoft's products. The announcement last week of the latest version of the Mac OS--christened Mac OS X--doesn't offer much hope for the future either. An evolutionary tune-up to be released towards the end of next year, Mac OS X will offer things like better multitasking and memory management. Not exactly the stuff that makes one want to run out and buy an Apple. At the core, Steve Jobs simply misunderstands the nature of Apple Computer. Apple is not--or should not--be in the hardware business. Hardware has long since become a brutally competitive commodity business. But to the exclusion of all external evidence, Jobs has focused on hardware. He quickly pulled the licenses from Apple clone makers like PowerComputing and Umax, and has treated the introduction of a cheap, consumer desktop--the iMac--as if it was the second-coming. The real value of Apple Computer is in its software, specifically the Mac OS, which even now is ahead of the competition. But to get anywhere, Apple needs to quickly remake its OS to run PC software and license its hardware to anyone willing to make it. Only then will Apple have any future. Only then could it possibly justify a stock price near $30 a share.

To: WebDrone who wrote (13895)	5/21/1998 12:27:00 AM
From: David M. Lomow	Read Replies (3) \| Respond to of 213177

For God's sake it gets even worse. This story then links you to a review of the imac, and Hey Lucy, you aint gonna like this. Does anyone on the thread subscribe to the magazine? If so, is the online content a direct crib from the print edition? If so, I am not a happy camper. Say what you want, Forbes is still an influential magazine. I encourage all Forbes subscribers to vote with their dollars and cancel their subscriptions today. What the f**k do these jokers no anyone, they probably all voted for their idiot right-wing boss for president anyone. At least the old man had good taste in women, even if he preferred the fellas. Sorry I'm rambling and pissed off and tired, here is the story on the imac. Read it and weep DL Apple Computer's new iMac desktop looks slick. Due to be released sometime in August, Apple's newest consumer computer comes wrapped in curvy, translucent blue plastic and features the "all-in-one" look of the original Macintosh. Overall, the machine sports a retro-futuristic look sure to appeal to Generation X fans of the Jetsons--the same crowd that brought back bell-bottoms and fell in love with Volkswagen's recent update of the Beetle. Considering the lack of Apple software on the market, looking at it is all you are likely to do with your iMac. Under the hood the iMac (the i stands for--what else?--Internet) is nothing to scoff at, either. With a rambunctious 233MHz PowerPC microprocessor and a standard 32 megabytes of memory, the iMac compares well technically with any of the current crop of sub-$1,000 PCs on the market. The $1,300 price tag seems a bit high, but not once you consider that the iMac comes with a built-in monitor. Altogether, not a bad piece of machinery. But buy one? Not unless you are an Apple diehard or a complete fool. Sure the iMac might look nice sitting next to your Barcalounger, but considering the lack of Apple software on the market (see "Apple offers sizzle"), looking at it is all you are likely to do with your iMac. Add to that the annoying fact that the iMac doesn't have a floppy drive (Jobs apparently thinks we all already get software from CD-ROMs or the web. He'll be right in five years), and you have a product that will sell like hotcakes to Apple fanatics for about two months and then will gather dust in the footnotes of computer history.