Apple to Unveil Long-Delayed Mac Operating System

Apple Computer Inc., battered recently on the stock market because of expectations of weak earnings, will unveil a new operating system Monday for its Macintosh line that analysts say will give the company a much-needed boost.

The long-delayed System 7 is being described as “smooth” and “more elegant” in the computer trade press and is expected to be well-received by users of Macintosh personal computers.

“My initial reaction was very positive,” said computer analyst Paul Fox at Montgomery Securities, who was given a demonstration of the system. “I think in some ways it is revolutionary.”

Apple is clearly excited about the new system, sending out promotional T-shirts and announcing an unveiling of the system for the media and analysts in San Jose with Chairman John Sculley.

The timing could not be better.

Apple’s stock fell a sharp $7.75 to $47.25 on May 1 after the company caught Wall Street off guard with an announcement that its third-quarter profit was expected to be lower because of narrowing profit margins and exchange rate pressures. The news led industry analysts to slash their earnings estimates for the Cupertino, Calif.-based company.

The stock has since recovered somewhat, and closed Wednesday at $49.75, up 87.5 cents.

Apple has being saying for some time that it is in the midst of a major transformation. It has been cutting prices to boost its market share in the hotly competitive personal computer market and recently has introduced several low-end versions of its popular Macintosh.

Analysts say System 7 should help boost sales of Apple’s high-end computer products, mainly in the business market, where demand has been falling.

It is expected that the software will allow greater networking capabilities in offices and enhanced memory capabilities.

In an innovation that will appeal to all users, the system employs cartoon-like bubbles that can be called up on the screen to provide help at vexing moments.

“It’s very easy to use,” said Bruce Lupatkin, at Hembrecht & Quist. “It’s an important evolution in their development.”

S. G. Warburg analyst David Wu said the system will show that Apple’s software still has an edge over rival Microsoft Corp., which developed the easy-to-use and competitive Windows operating program for non-Apple computers.

“The system looks good,” Wu said. “I think it helps Apple across the board.”