There's only one word to summarize Apple's latest plot twist, and that word is "ow." If last September's earnings warning meant that the party might be over, Apple's current press release signals that the house is on fire, someone threw a brick through the big-screen TV, the contents of the fridge and the trash cans are floating in the backyard pool, and the cops are loading drunk and bloody partygoers into the paddy wagon while the host is trying to hide in the upstairs linen closet. In short, ever since faithful viewer Tim Rzeznik first pointed out Apple's announcement that it plans to post its first quarterly loss in three years this coming January, we've noticed the Mac faithful have that look on their faces like they're trying to decide between pills, hanging, or suicide by Windows.

Yes, people, Apple's expecting to post a loss of up to a quarter of a billion dollars for the December quarter-- what the company calls "disappointing results"-- and you can bet the press will consider that solid proof that Apple is beleaguered with a capital "B." Just when you thought Apple's stock couldn't go any lower, it plummeted as low as $13.69 in after-hours trading following the bad news, and at broadcast time was hovering at about 14 1/2-- down a staggering 80% from its year-high. There's no doubt about it; as a community, we are officially firmly entrenched in the middle of some pretty scary times.

The silver lining to this big, black cloud? Well, Apple claims that it's taking its pain in the form of one solid smack upside the head in Q1/2001, instead of spreading it out over the course of several quarters. By opting for the "rip the Band-Aid off the hairy arm quickly" route, the plan is to eat the cost of Apple's eleven weeks of channel inventory, enter calendar 2001 naked but clean, and return to "sustained profitability" by next quarter. Is it a pipe dream, or an honest assessment of the company's performance looking forward?

Personally, we at AtAT are sort of upbeat about the whole thing, since we suspect that Steve's just setting the stage for one spectacularly dramatic "return from the brink" next year. C'mon, the guy's a master showman! This is probably just his way of priming the audience-- first for a thrilling round of product unveilings at next month's Macworld Expo, and then for a triumphant introduction of Mac OS X shortly thereafter. What can we say? The man loves a comeback story... especially when he's the star.

In the wake of an expected $250 million loss in Q1/2001, Steve Jobs once again participated in Apple's conference call with financial analysts, presumably to try and soften the blow with the judicious application of a little Reality Distortion Field energy. The thing is, he seemed relatively spin-free, laying out Apple's problems in plain language with a surprising amount of candor-- or, at least, what passed for candor. With Steve, it's tough to know when he's just speaking frankly, or when we're being taken for a ride.

As a matter of fact, while Uncle Steve blamed Apple's current financial "situation" in part on the overall slowdown in the personal computer business and the generalized global economic malaise, he really focused in on a handful of Apple-specific problems and rattled them off like a laundry list of personal sins. It's as if he's looking to take the blame for the whole mess. If you go back and listen to the QuickTime rebroadcast of his call, he sounds almost personally apologetic as he addresses each mistake:

1) The Megahertz Gap. Imagine our shock when Steve came right out and admitted in September that Apple actually realized that maxing out at 500 MHz when the competition was flirting with twice and three times that clock speed might be hurting Mac sales. Steve reiterated that position last night, saying that he and his minions "are very aware of this."

2) K-12 Education Sales. Steve already acknowledged that Apple screwed up big-time when it shook up its whole education sales structure smack in the middle of the school purchasing season. Duh! This time around, Steve beat himself up even more: "We have slipped to number two in education sales behind Dell. We don't like this. The tragedy is that Dell didn't win it-- we lost it."

3) The Cube. Ah, the Cube... so obviously Steve's baby (NeXT Cube II, anyone?), and the single biggest scapegoat for Apple's current woes. The good news is that Cube sales have finally "stabilized" at a "respectable" level. The bad news is that sales levels are still "far below" what Apple originally expected.

4) CD-RW. This may be the biggest surprise of all: Steve's bald admission that the lack of CD-RW drives in Macs is hurting sales. "Apple completely missed the boat on CD-Read/Write drives. Both HP and Compaq ship approximately half of their computers with CD-Read/Write drives. Apple ships none. We just blew this one."

5) Mac OS X. How weird is this? Yet another of Steve's pet projects (and the reason he's back at Apple in the first place), Mac OS X has the potential to shift the balance of operating system power in a significant way. It may turn out to be the Mac platform's savior-- but until it's actually released, it's doing more harm than good. Steve claims that people are delaying their higher-end purchases until Mac OS X ships. We can see that; heck, we admit that we ourselves aren't likely to replace our aging PowerTower Pro until we can buy Mac OS X preloaded on a new G4.

So there you have it: this is all Steve's fault. Now that we've gotten that settled, it's worth noting that steps are underway to right all of the wrongs that Steve has inflicted on us as a community. He assures us that at least partial relief for the megahertz problem is "on track" and we'll see progress within the next few months. He hired Cheryl Vedoe to tackle the education problems and expects Apple to kick butt in the upcoming spring buying season. We've already heard that reconfigured (read: cheaper) Cubes will surface next year. Steve says the CD-RW issue "will be fixed soon." And when Mac OS X finally ships, expect a sales spurt as pent-up demand gets satisfied: "I cannot stress how well I think Mac OS X is turning out."

Aw, it's okay, Steve; we forgive you. Just don't disappoint us during the keynote, okay?

Okay, so Steve admitted that Apple "missed the boat" on the whole CD-RW thing and promised that the problem "will be fixed shortly." What exactly did he mean by that? A new build-to-order option at the Apple Store? A CD-RW in every new Mac? A diabolical scheme to destroy all CD-RW drive manufacturers, thus mooting the problem completely? Fear not-- the newly-revived AppleInsider springs to action and spills the beans on Apple's surprise CD-RW strategy.

Rumor has it that Apple always expected DVD-ROM to eclipse CD-ROM, and acted accordingly; instead of offering CD-RW drives in its high-end Power Macs, Apple supplied DVD-RAM. Unfortunately, the company put its money on the wrong horse, at least in the short-term, and the lack of CD-R or CD-RW drives in Apple's entire product line is now a source of embarrassment-- not to mention depressed sales. So to fix the problem, Apple is said to be including "DVD/CD-RW combo drives" in the higher-end Power Macs slated for an Expo unveiling. Cool! We didn't even know such things existed; our biggest objection to including CD-RW drives on Macs would be either the exclusion of DVD, or shipping a Mac with two 5.25" drive slots, which would be both inelegant and confusing for novice users. A combo drive is almost a perfect solution.

But what about the rest of Apple's product line? Well, while no new iMacs are expected to surface at the Expo, word has it that at least the iMac DV Special Edition will soon get the DVD/CD-RW combo drive as well. Since neither the iBook nor the PowerBook is currently available with a DVD-RAM drive, we're guessing Apple will stick with plain old CD-ROM and DVD-ROM on those-- although a media-bay combo drive for the PowerBook would be a nice surprise. And we're hoping the Cube at least gains a combo drive build-to-order option.

Meanwhile, AppleInsider reports that Apple is the mysterious purchaser of Radialogic's CD-burning technologies and is furiously working to craft them into an iMovie-like application to demonstrate at Macworld Expo. That certainly makes sense, since burning CDs isn't exactly as simple as copying files to a Zip disk; Apple would want to make sure it was as simple and as painless as possible. So rejoice! Soon Mac users will finally be able to buy standard-configured Macs with removable storage drives built right in-- and it's about time, too.