Soft Sales Set Stage For First-Quarter Apple Loss Computer Giant Says Revenue Could Be 10 Percent Lower Than Year Ago
Apple Computer Inc. expects to report an operating loss of up to $150 million in its fiscal first quarter, as weak demand for its Performa consumer line hurt revenue.
The company predicted Friday that revenue will be 10 percent lower in the three-month period ended Dec. 27 than a year ago. Apple said expected shortages of new PowerBook portables also will cut revenue, in addition to the domestic demand softness for its Performas.
Apple cut the price of its Performas up to 30 percent last fall in an attempt to boost sales and market share.
Chairman Gil Amelio said addition restructuring steps now appear necessary. Amelio, who took charge of Apple 11 months ago, already has taken the company through a major reorganization.
“These results suggest that we need to reduce Apple’s cost infrastructure so that we can achieve break-even results at a revenue level of $8 billion,” Amelio said. Apple had revenue of $9.83 billion for the fiscal year that ended in September. That figure, however, was 11 percent lower than the year before.
Apple said its operating loss for the first quarter is expected to come in at between $100 million and $150 million. The company’s statement was released after the close of financial markets Friday.
In trading on the Nasdaq Stock Market, Apple shares closed up 75 cents each at $21.75.
In addition to the profit and revenue projections, Amelio said Apple expects its impending acquisition of Next Software Inc., founded by former Apple chairman Steve Jobs, to help the company save money on research and development.
Apple, the nation’s third-largest maker of personal computers will report its first-quarter results on Jan. 15. Apple’s announcement Friday represented a preliminary look at its finances.
The company surprised industry analysts last fall when it returned to profitability after three straight quarterly losses. Results for the July-September period, Apple’s fourth quarter, showed an 11 percent gain in revenue from the prior quarter.
Apple pioneered the commercial personal computer in the 1970s and made it easy to use in the 1980s with the Macintosh. In recent years, however, it has lost ground as PCs using Microsoft Corp.’s Windows operating software eroded the Mac’s traditional ease-of-use advantage.
Last month, Apple took a bold step in an attempt to regain its technological edge. It announced it would buy Next for $400 million and use its software to develop a new operating system for the Macintosh. Apple’s own efforts to develop the program, which controls the Mac’s basic functions, fell apart last summer.