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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Apple Deal Raises Hopes But Analyst Says Moves Don’t Solve Basic Problem

David Zielenziger Bloomberg News

Apple Computer Inc.’s new directors and its ability to attract nemesis Microsoft Corp. as an investor aren’t enough to get Brown Brothers Harriman & Co. analyst Richard Scocozza to recommend Apple shares.

“We’re waiting for the dust to settle, waiting for a new CEO and to learn what the new battle plan will be,” he told the Bloomberg Forum.

While Apple’s announcement Wednesday of four new directors including co-founder Steve Jobs, plans to recruit a new chief executive and a $150 million investment by Microsoft may be a shot in the arm, they aren’t a cure.

“Apple needs to gain market share, pure and simple” to remain viable in the worldwide computer business, said Scocozza, 33, who worked as a technology consultant for Andersen Consulting before moving to Wall Street.

Investors shouldn’t buy the stock until they see evidence the Cupertino, Calif.-based Apple is gaining market share, Scocozza said. Apple’s share of the personal computer market has dwindled to about 5 percent from about 15 percent five years ago.

The analyst gives the company about six months to prove it can sell PCs and software and boost its market share. That will be difficult.

“Frankly, as a consumer, I’d go buy a Windows machine,” the Brown Brothers analyst said. He has a laptop from Dell Computer Corp. at home and uses an IBM PC model in his office.

Microsoft’s investment in Apple may be more “antitrust insurance” than a demonstrated commitment to Apple’s future, he said.