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Bad news leaves Mac users at a loss

Some Mac users have been left wondering if they should desert a sinking ship after Apple Computer warned of a staggering loss for its second quarter.

Many Macintosh users, well known for their tenacious loyalty, have been left wondering if they should desert a sinking ship after Apple Computer's warning of devastating financial losses.

The company announced today that it expects to report a $700 million loss for its second quarter, a figure that far exceeded most industry estimates and translates to a drop of about $5.70 per share.

The news may prove the most difficult test yet of Mac users' hitherto undaunted support.

"We currently use Macs at work now, and I'm now seriously wondering if it's a lost cause," said Barry Siller, the technology purchaser for temporary employment agency Bradford Staff. "I'm concerned that as Apple's fortune goes down so will the other opportunities for acquiring good software that keeps up with the progress of other platforms. For that reason I think I'm going to reconsider our chosen platform."

Even die-hard Mac supporters in the desktop publishing industry that has long formed a core part of Apple's business are wondering if Apple can pull off a recovery. "I'm shocked. I think it's clear that one more quarter like this will definitely be the end of the game," said Peter Dyson, editor of the Seybold Report on Desktop Publishing.

But most home users and small-business owners seem worried less about the disease than the symptoms: if Apple keeps losing money, then fewer and fewer developers will produce new software for the platform. "I would like them to get a bigger share of the market so we can get more software," said Gideon Wizansky, a naval architect and Mac owner.

The industry will have to withhold its final analysis until at least early May. That's when Apple chairman Gilbert Amelio will specify his plans for fixing the company's problems.

The delay between today's announcement--which attributed half of the loss to unsold inventory--and the unveiling of Amelio's turnaround plan will fuel a month of speculation about the real story behind the massive shortfall, speculation that has already started churning.

"I find it hard to believe that the number of unsold inventory is so high," said Pieter Hartsook, editor of the Hartsook Letter.

Some Apple dealers also found the explanation hard to swallow.

"Our recent experience has been exactly the opposite. There isn't enough inventory, and there is too much demand. This is the best year we've ever had," said a salesman at one of Northern California's largest Mac-only retail chains. "I'd like to get my hands on the people supplying inventory and shake them. We sold out of all the newest computers, the 7200, the 7500, and the entry-level Power Mac Powerbook. Everything we get our hands on we sell," he added.

The loss will also inevitably reopen questions about Apple's prospects for a merger, several weeks after discussions with Sun Microsystems ended in failure.

"Even if there were absolute catastrophe at Apple, somebody would buy the technology from the ruins and keep it alive," said Geoffrey Burr, senior vice president of sales and marketing at Power Computing, the first company to begin manufacturing Macintosh clones.

Burr said Apple's financial problems are being exploited by the Windows community to scare off potential new users. "Most of the people who predict the demise of Apple are the Windows people," he said.

It's too early to tell if users will be frightened off by Apple's financial problems, but after today many are waiting for action on Apple's part to demonstrate that it can turn itself around.

John Roylance, editor of the Wall Street Watch newsletter, echoed the concerns of many fellow loyalist Mac users: "I still think Macintosh is ten years ahead of Windows, which I also use, but Apple will have to be a software manufacturer in the future."

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