Several of us were knocking around the investment-income numbers reported by

Intel

(INTC) - Get Report

and

Microsoft

(MSFT) - Get Report

on

RealMoney.com's

Columnist Conversation a little earlier this afternoon.

Herb Greenberg

and I have had it out on this before: He thinks investment income confuses investors by masking poor operating results, and is very suspicious of it. I think that's certainly a risk, but that in general, investors are smarter than that. I also wonder what companies

should

do with excess cash, rather than investing it -- and doing it as well as Intel does -- to buy friends, buy loyalty, buy an early look at new technologies ... and also, by the way, make a bucketful of money.

No point going through that here again. You can read our exchange on

RealMoney.com's archives. I also want to be clear that I have a world of respect for Herb (and

Adam Lashinsky

, who lines up with him on this one), and understand their worries. I just think the danger is overstated.

Anyway, our markets guy,

Brett Fromson

, chimed in with a note about

Apple

(AAPL) - Get Report

taking a hit this afternoon after it reported, and pointed out that shorts he knew were gleefully anticipating a slaughter in Apple Wednesday morning.

I responded that lots more was at work here than the effect of Apple's investment-income returns. After I posted my note, it occurred to me that the issues around Apple's trip this afternoon to the market's woodshed have broader implications, and are worth a little more exploration.

I think three things were at work this afternoon that conspired to knock down Apple's stock price: A quarterly report that disappointed; an acknowledged flattening of iMac sales; and bad market-share news for Apple reported in this morning's

New York Times

about a

Media Metrix

survey showing a steady decline in the number of Mac-using households.

At more length:

The quarterly earnings report was mixed news, and sloppy

. By

First Call/Thomson Financial

consensus estimates, Apple was expected to report earning 44 cents a share. It did a penny better, after excluding nonrecurring items, such as a $37 million after-tax gain from selling its stake in

ARM Holdings

, the British firm that developed the StrongArm processor once used in Apple's ill-starred Newton handheld PC.

Sounds good.

And overall, revenue was up 17%, to $1.82 billion. But analysts were looking for somewhere north of $1.9 billion. Not so good.

And investment income, measured against last year's quarter, was lower than expected. In the context of Apple's subsequent treatment tonight in after-hours trading, this illustrates very well what Herb and Adam worry about so much: You may get a pop as long as those investment-income numbers are high, and rising, but stumble -- not

lose

money, mind you, just fail to do as well on your investments as you had been doing -- and investment income becomes a terribly swift sword. You're gonna take a hit.

Apple took exactly that kind of hit tonight. Well, maybe not a

hit

-- yet -- but the price was moving down.

Apple's business is not going so well

. As Apple CFO Fred Anderson acknowledged, "iMac sales were a bit below original expectations." And later, "iMac sales were relatively flat." This not only hurts the bottom line -- miss the sales targets on which your guidance to the Street is based, and you're going to miss your numbers, period -- but was seen by many analysts and investors as an early warning.

Apple has repeatedly pitched the iMac to Wall Street as the big enchilada in saving Apple, and if iMac sales are flat, or nearly so, that is

not

good news.

Apple has not been managing its business very well

. Sales fell short of expectations for two big, bad reasons: Apple's much-hyped new operating system, OS X, is very late. And Apple hasn't had a significant new-product rollout for nine months.

The notion of "refreshing" your hardware product line frequently has become central to success in PCs, and Apple booted it. (It will begin to remedy that Wednesday morning at New York's

MacWorld

trade show, when CEO

Steve Jobs

is expected to roll out several new, upgraded iMacs, and maybe some new "G" machines as well. Mac fans are also looking for word Wednesday on a real release date for OS X, and maybe even some freebie beta-version CDs with fairly stable code.)

Apple's hold on the consumer market is slipping.

Tuesday's

Times

had a tough, tough story, leaking a Media Metrix study on home-PC penetration. According to Media Metrix's numbers, the number of U.S. households with a Mac --

any

Mac -- fell from 4.9 million in 1996, to 4.1 million in January 1999, to 3.8 million in January 2000.

If the Mac is saving Apple, it's a funny kind of salvation. While the Mac, especially the powerful G4 Power Macs, still hold sway in many publishing and Web-design firms, Apple has to have that mass consumer market -- the iMac market -- to get the numbers it needs to remain a viable choice. If in fact, as the Media Metrix numbers portend, Apple is losing ground in that market, serious troubles lie ahead.

This was, of course, lousy timing for Apple -- bad news about market share, from an independent source, on announcement day, yet no flashy product rollouts amid the cacophony of a MacWorld cheerleading session as an offset.

So, in fact, a sag in investment income, though an easy target in Apple's worries today, was only a part, probably a very small part, of the forces pushing Apple stock downward.

I think the more interesting issue here is the market's sensitivity to underlying operating results, expressed not only as gross revenue, but as market-share retention and product-line management. Apple hasn't been asleep at the wheel -- I think Mac fans will like what they see at MacWorld on Wednesday, though I think many will be disappointed at the continuing delays in OS X development -- but it has been nodding off.

Up against a market presence so dominant as the

WinTel

duopoly, that's a painful, if not quite fatal, mistake.

Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in any securities mentioned in this column, although holdings can change at any time. Seymour does not write about companies that are current or recent consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at

jseymour@thestreet.com.