PEELING TO THE CORE\Apple betting high-end Macs will be fruitful.

Byline: Mike Langberg and Dean Takahashi San Jose Mercury News 

Apple Computer Inc. probably will announce Wednesday that it is restructuring its operations into three new business units focused on selling its higher-end, more profitable computers.

The reorganization would affect the jobs of thousands of Apple workers and could signal the start of a new strategy that would leave clone makers as the sole proprietors for consumers who want a cheaper, less-powerful Macintosh computer.

In the process, it allows Apple to focus on selling its more powerful Macs that will increase its profit margins. Low profit margins were one of the key reasons the company announced last week that it would report a $68 million loss in its first fiscal quarter.

Tim Bajarin, president of Creative Strategies Research International in San Jose, said he was told of the pending realignment last week by Apple USA President James Buckley.

"Apple has finally realized they can't be all things to all people," Bajarin said. "They have to concentrate on bringing products to market that they do best with good (profit) margins."

The Cupertino, Calif., computer company also may announce within the next few days a new chief financial officer, succeeding Joseph Graziano, who resigned last year after a philosophical falling out with Chief Executive Michael Spindler on the strategic course Apple was taking.

The reorganization will involve the creation of a new "Business" unit that will target companies and software developers, particularly those in the publishing and entertainment industries; an "Education" unit, which will cater to schools, colleges and other educational communities where Apple's computers are widely used; and a third focused on the "Consumer/Home Market," Bajarin said.

By focusing its energies on its more powerful computers - probably at prices of $2,000 and up - Apple is addressing an issue that has plagued it for years. With its high overhead because of its extensive research and development operations, the company cannot compete effectively in the cutthroat market for cheaper computers, where clone makers that spend nothing on R&D can survive on ultra-thin margins.

It also leaves clone makers such as Power Computing and Umax the field to themselves for cheaper entry-level computers.

The new strategy allows Apple to sell its popular, easy-to-use Macs to faithful users like the 80,000 people who crowded into the Macworld Expo in San Francisco earlier this month. These are the people who have stayed with Apple through various management shake-ups, reorganizations and other woes because the computers work so well. Even with the recent release of Microsoft's heralded Windows 95 operating system, Mac users remain nonplussed, sporting T-shirts like: "Been there. Done that."

"Most Macintosh people are used to hearing bad news all the time," said Jeannean Ryman, a professor of health sciences at the University of Texas-Pan American in Edinburg, Texas, and leader of a Mac users group on America Online.

Bray Jones, a systems administrator from Aiken, S.C., and a Mac devotee for a decade, added: "They do this kind of restructuring all the time. . . . People have looked at them as dying or going downhill, but Apple is here to stay.

"They set the standard for the way the operating system should work," he said.

Nonetheless, Apple's financial woes have its fans worried.

Peter Worlock, a London-based editor of Macworld magazine, said it's clear that Apple is hemorrhaging talented people.

"They need to do something," he said. "God knows what. Apple itself doesn't know. The big disappointment is that Spindler was supposed to come in and keep his eye on the bottom line. . . . If Spindler can't do the job, they should get someone else who can."

But he predicted the Macintosh industry would live on despite Apple's troubles.

"Anything with 20 million users takes a long time to die," he said. "The industry is the Macintosh, not Apple," Worlock said.

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Photo (Color) Despite rumors about Apple Computer Inc.'s woes, 80,000 gathered at the Macworld Expo in San Francisco, a tribute to the company's popularity. Associated Press Chart (Color) Apple losses Apple Computer Inc. recorded a loss of $68 milion for the October-December quarter due to fierce competition. Apple is expected to lay off more than 1,000 people. Associated Press