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By editorial@silicon.com, 3 October 2000 18:00

COMMENT When he returned to the helm in 1997 he cast out the Mac clones, crushed the Newton PDA and introduced the iMac to the world. The product range was streamlined: consumer desktop, consumer portable, professional desktop, professional portable. Easy. At each Mac Expo, the massed crowds "ooed" and "ahhed" at the products. The company consistently posted consecutive profitable quarters, it suddenly had $3bn in cash in the bank and brokers garnered its stock with "buy" and "strong buy" recommendations. That stock soared from $38 to a high of over $150 and was followed by a two-for-one split. All was well. The crowds kept "oohing". Then, last Thursday, 28 September, the company issued a profit warning stating that revenue for the fourth quarter would be down to $1.9bn, rather than $2bn as analysts had predicted. This translated to a still decent quarterly profit of $110m, rather than $169m. The news wiped 45 per cent off the company's market cap in after-hours trading. By close of play on Friday, Apple stock was down 53 per cent - and still shows few signs of recovery. In truth, the cracks have been spreading for some time. The clock speed of Motorola's G3 and, particularly, G4 processors has been frozen at 500MHz for over a year, while AMD and Intel have raced past the 1GHz barrier. In response Jobs unveiled a dual-processor computer that, in truth, few applications can exploit. The company enraged European customers by cancelling expos, the release of the much-hyped next-generation operating system Mac OS X was pushed further and further back, and then there was the Cube - an overpriced computer that, although beautifully built, doesn't really fit anywhere in the revamped product chain. This is a bad time for Apple, but not a disastrous one. Tech stocks around the world have taken a hammering recently - just look at Intel. Apple stock will recover, and some brokers are already breaking rank with their counterparts by assigning "buy" ratings rather than last Friday's rapidly assigned "neutral". It might finally give a company that's become a little too smug for its own good a kick in the rear. Apple needs to resolve its processor issues, it needs to listen to its European customers, and it needs to focus on its structure. But above all it needs OS X to be a success. It won't challenge Windows for world domination, and it won't take on Linux on the server, but it may well grab a chunk of marketshare the way the iMac has. The Mac OS was always the jewel in Apple's crown and when it's released afresh in early 2001, that'll be the real reckoning. Apple is as colourful as its computers and the industry would be a far beiger place without it.