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Tuesday, August 8, 2006 - Page updated at 12:00 AM

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Apple completes switch to Intel chips, previews next upgrade of Mac OS X

The Associated Press

SAN FRANCISCO — Apple Computer completed its switch to Intel microprocessors and previewed its next-generation operating system Monday, shifting attention — for the moment — from the company's troubles surrounding the mishandling of stock options.

CEO Steve Jobs, speaking to thousands of engineers at the company's Worldwide Developer Conference, showed off Intel-based Macs for professional users and servers for businesses. They replace the last Apple machines to run PowerPC chips built by IBM and Freescale Semiconductor.

Jobs also previewed the upcoming Mac OS X release, dubbed "Leopard," taking a few swipes at rival Microsoft and its much-delayed Windows Vista operating system. Since Windows XP was launched in 2001, Apple has released five major updates to Mac OS X. Leopard is expected in spring 2007.

"Our friends in Redmond, they spend over $5 billion in R&D, but these days they just try to copy Google and Apple," Jobs said. "So I guess it's a good example of how money isn't everything."

Jobs did not mention the stock-option scandal now hanging over the Cupertino, Calif.-based maker of Macs and iPod music players. Last week, Apple said it might have to restate financial results as far back as September 2002 as a probe into its granting of stock options widens.

Details of how some other company executives were granted options right before the stock prices rose during the period under investigation — between 1997 and 2001 — were outlined Monday in The Wall Street Journal. Apple spokesman Steve Dowling declined to comment, saying the company will not be making any further statements until its internal investigation is completed.

Shares in Apple fell 1.6 percent after Jobs did not have his trademark surprise at the conference, such as a new music player or new digital movie rental service.

"They announced exactly what people were expecting. To get a rise [in stock price], you have to surprise investors," said Gene Munster, an analyst at Piper Jaffray.

The new "Mac Pro" computer, available immediately, replaces the PowerMac G5.

The new system, which runs the latest Intel Xeon chip, is two times faster and costs $2,499 — about $800 less than the G5, Jobs said.

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The new Xserve computers, which also run Xeon chips, will be available in October. They are five times more powerful, depending on the applications in use, and will cost $2,999, the company said.

Analysts said Monday doubts surrounding Microsoft's ability to release Vista by its latest target date of January could further help Apple as the Mac maker is expected to ramp up its marketing campaign for the holidays.

Van Baker, an analyst at Gartner, said there's "a distinct possibility" that Leopard now will even come out ahead of Vista.

"Apple is firing on all cylinders and they are executing on everything they say they will do, which is in stark contrast to its Redmond rival," Baker said.

Information from Reuters is included in this report.

Copyright © 2006 The Seattle Times Company

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