Apple, reorganizing, faces sales drop; struggling computer maker expects period's revenue to hit three-year low

Article Abstract:

As Apple announced its latest cutbacks, it also acknowledged that its estimated 2nd qtr 1997 revenue is down 25% from the year ago quarter, and is the fifth straight quarter of declining revenues. Apple's reorganization includes a 30% payroll reduction, or 4,100 layoffs, and the cancelation of some minor product lines and research projects. Apple will post a huge loss for 2nd qtr 1997, including a $155 million charge, $325 million for the NeXT purchase, and losses on operations. The restructuring plan is similar to previous reengineering efforts, and merely compounds Apple's quandary: the company needs innovative products to regain market share, but cannot afford research. The continuing downsizing also makes software developers reluctant to develop software for the Macintosh platform. Some analysts are questioning CEO Gil Amelio's comeback strategy, and he is unpopular with Apple employees. Amelio has not developed any new initiatives for the Internet, and is cutting back on planned updates in support of its current operating system software.

Company sales/revenue

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Latest Mac sales yield mixed message for Apple

Article Abstract:

Market share for the Macintosh and Macintosh-clone computers rose to 11.2% of business-oriented sales, up from 9.5% in Dec 1996. Clone sales are very strong, indicating support for the Macintosh platform, but analysts suggest that sales of clones from Motorola, Umax Technologies and Power Computing are sales cannibalized from Apple. Apple receives a small royalty for each clone sold, but the company had hoped that the real payback would come in the form of increased usage and software development for the platform. Apple's sales are steady in business and notebook models, but sales in the consumer market continue to be weak; poor 4th qtr 1996 sales resulted in a $120 million loss. Apple is expected to report another huge loss for 1st qtr 1997, reflecting the costs of the NeXT Software acquisition. Apple is also planning another restructuring, including a possible 20-40% reduction in payroll and the sale of divisions which are not performing.

Company Sales/Revenue, Company Earnings/Profit

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Apple's quarterly results exceed forecasts

Article Abstract:

Apple's financial report for its quarter ending Jun 28, 1996, is much better than expected. The company's $2.17 billion in sales are just 15 percent lower than last year's same period. The sales were basically at the same level as Apple's 2nd qtr 1996. The company lost $32 million, compared with a profit of $103 million for last year. The results would not be considered a disaster in normal times, but the company continues to lose market share and unit shipments are declining. Many analysts had predicted greater losses for the company, but these predictions were based on the retail market. Apple's strengths actually lie in the corporate and education markets. The company also sold more high-priced systems with higher profit margins than it has in the past. The quarters results indicate that Apple may have stabilized and is on its way to recovery.

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