by , 6:10 PM EST, December 5th, 2000
Apple Computer announced today that the company had experienced "significantly slower than expected sales" so far this quarter. The company also warned that they would likely report their first loss since Steve Jobs took over the helm of Apple 3 years ago. Additionally, revenue for the year is now projected from US$6 billion to US$6.5 billion, down from earlier projections. According to Apple:
Apple® today announced that it has experienced significantly slower than expected sales during October and November, which will result in revenues and earnings for its quarter ending December 30, 2000 being substantially below expectations.
The company expects to report revenue of about $1 billion and a net loss, excluding investment gains, of between $225 and $250 million when actual results are announced on January 17, 2001.
The $600 million revenue shortfall from previous expectations is due to lower than expected channel sell-through across all geographies and unplanned sales promotions and pricing actions. The net loss is the result of the revenue shortfall and cancellation charges related to decreases in forecasted component purchases for current products.
"The swift industry-wide decline in PC sales will result in Apple’s first non-profitable quarter in three years," said Apple’s CEO Steve Jobs. "We’re not happy about it, and plan to return to sustained profitability next quarter. We are committed to reducing our channel inventories to normal levels by the end of this quarter, and remain very excited about the new products and programs Apple will be rolling out in 2001."
"In light of the lower results anticipated for the December quarter, we now expect revenues for fiscal 2001 to be in the $6 to $6.5 billion range," said Apple’s CFO Fred Anderson.
Apple was trading as low as the US$14 range in after hour trading and is trading at US$14.6875 as of this writing.
Analysts had been expecting Apple to report a profit of 3 cents per share.
Apple reportedly has 11 weeks of inventory on hand in the retail channel, despite recent rebate offerings and other price drops.
Apple's ongoing processor problems are likely contributing to the current problem as Apple has had less to entice current Mac users to upgrade their current machines. The upgrade cycle is very important to Apple's business model, and it is imperative for their ongoing vitality that they get beyond their current limitations.
All that said, this is not the end of the world or even the end of Apple. Remember that Apple has a big chunk of change in the bank, and their assets surprass their market cap. Unfortunately, the flip side to that is that they become a more and more attractive takeover target should anyone be in the market. See our coverage tday of John Sculley's suggestions that Apple merge with 3COM.