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Apple ready for action

OS X will give Apple a short-term shot and a long-term lift. Stocks hed: Apple ready for action dek: OS X will give Apple a short-term shot and a long-term lift.

Apple Computer’s stock (Nasdaq: AAPL) chart is a bit of an enigma. After a half a year in the stratosphere, AAPL came back to earth and was mostly ignored by investors for another nine months. Those who analyze charts as their investment methodology wouldn’t touch Apple’s stock since it flatlined at 30 last October.

But aside from looking for bargains, I don’t pay much attention to the intricacies of a stock chart. I’m not a gambler. Regular readers know I rely more on the strength of a company’s technology and its market position than on statistical analysis. Investors who use some variation on my methods have been eyeing Apple’s stock and waiting for the right time to strike.

Well, in my view, the time is now. The reason: Apple will roll out its long-awaited new operating system–OS X–sometime this month. And, for the first time in more than two years, Mac users will have a compelling reason to upgrade. Not only have Mac users been waiting to upgrade software or hardware, but investors also have been waiting for X before they even think about buying the stock. I expect robust sales numbers from Apple in the third and fourth quarters this year, and a steady stream of stock buys the rest of the year.

I still would be leery about Apple’s stock based on the size of the Macintosh market. To me, OS X is not just another Mac upgrade, however. For the first time in more than a decade, serious IT folks (outside of the publishing and education markets) will start considering the Mac as an alternative platform to their Windows- or Linux-based systems.

OS X represents the first commercial operating system from Apple that does the things MIS directors need: In theory, it has all the power of a Unix-based system (multithreading, multitasking, memory management, etc.) with better usability than Windows or Linux. This combination will enable the Mac to make inroads in commercial markets that have shut it out since the late ’80s.

Short-term, many managers who rely heavily on Windows clients are waiting for Windows XP before they upgrade. Like OS X, XP is supposed to be the first OS in years that users will demand. Also like X, XP will have the robustness of a good commercial system (in this case, NT) with the usability Windows 98 to which users are accustomed. Microsoft does not expect to release XP until early 2002, however. This will give Apple six months to make inroads in commercial markets, while it continues to be a solid choice for the education and publishing markets. I will buy some AAPL this month, and sell some after Apple releases its Q4 earnings report.

But I’m still going to hang on to some AAPL for the long term. I’m not saying that the Mac will make a huge dent in either Windows or Linux in small-to-midsized commercial markets. But even small inroads here will make Apple a good long-term play. There are still many technical questions that need to shake out before Apple convinces a lot of small-to-midsized businesses to make the switch. But these questions should be answered by the end of 2001. And XP will come with many of its own questions; the smart manager will wait the customary six-month settling period before she upgrades the whole shop.

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