Tech Talk

December 21, 1998

December 28, 1998

January 4, 1999

Tech Week

Santa Claus apparently has been good to Apple Computer investors this year, awarding them with a fat holiday bonus that contrasts nicely with the lump of coal they have become accustomed to in recent years.

During last week, word got around that Apple's new iMac computer, which hit stores this summer, remained in the top spot in personal computer sales for the fourth straight month in a row. This piece of news has helped give Apple's stock a 12 percent boost during the shortened holiday week last week. The company's stock continued to climb Monday.

This jump in stock prices has helped fuel speculation of a full-fledged comeback for the Cupertino-based computer maker, which revolutionized the personal computer in the early '80s only to lose valuable market share to Windows-based PC models. The company reported a profit for its fiscal 1998 year in October, its first profit since 1995.

The strong sales are due almost exclusively to the iMac. According to PC Data, a market research firm based in Reston, Va., the machine accounted for 7.1 percent of unit sales at retail and consumer mail-order outlets during the month of November. iMac sales represented 8.2 percent of dollars spent on computers, according to the firm. The company now has a 10 percent share of the personal computer market, which still puts it behind leaders Compaq, Hewlett-Packard and IBM.

But experts are cautioning that the company is not quite out of the woods yet, despite the strong showing of the iMac against competitors. Although iMac sales a strong, the company has virtually no other hot selling models on the market, which is a risky position in the fast-changing computer industry. And a glut in supply of the machines has caused some retailers to drop their prices on the iMac to under $1,000 from its suggested price tag of $1,299.

But Mac enthusiasts also have reason to be optimistic. Rumors are heavy that the company will unveil new iMac models at its MacWorld trade show in San Francisco next week. The new models will likely have a faster processor than the 233 MHz chip that the iMac currently uses as well as more memory. The new models may also come with removable media capabilities that are absent from the current model.

Those who are bullish on the company foresee that Apple may break the $50 barrier this year, which would be a major boost for a company that was trading at less than $10 a share a year ago. Whatever the outcome, Apple already has shown that it can take a beating and get back up. And that makes for a very happy new year.

Speaking of beatings, Baby Bell telephone companies lost another round in their ongoing battle to get into the coveted long-distance telephone market. Last week, a federal appeals court ruled against the companies in their challenge to federal regulations that keep them from offering long-distance service to their customers.

The companies are challenging the constitutionality of the regulations that say they must open up their local markets to competition before they can be allowed to sell long-distance service. In this particular case, BellSouth brought the challenge after the Federal Communications Commission turned down the company's application to offer long-distance service in South Carolina.

The U.S. Court of Appeals for the District of Columbia, in a 3-0 decision, said in its ruling that the law "does not violate any of the constitutional provisions raised by BellSouth."

The ruling is expected to continue to hurt the Baby Bells' campaign to get into the long-distance market, estimated to be worth some $90 billion. In California, state regulators have ruled that Pacific Bell must demonstrate greater compliance with federal regulations before the state will support the company in its own long-distance bid. Other Baby Bell firms have brought lawsuits over the regulations, which they claim unfairly punishes them and gives long-distance firms greater monopoly power over their markets.

Long-distance companies like AT&T counter that the Bell companies have purposely kept them out of the local market to protect their own monopolies.

Part of the Baby Bells' argument is that the regulations amount to a "bill of attainder," which punishes companies without a trial. The court ruled, however, that the law "is a rational and nonpunitive congressional enactment that serves to open telecommunications markets."

SBC Communications, US West and Bell Atlantic successfully had made similar arguments to a federal judge in Texas who overturned the regulations last year. That decision, which never took effect, was reversed earlier this month by a federal appeals court in New Orleans. SBC has asked the Supreme Court to overturn the decision by the New Orleans court.

December 21, 1998

December 28, 1998

January 4, 1999