Apple Computer stuns Wall Street with $700m loss
Thursday 28 March 1996
The announcement can only cast further doubt over the long-term viability of the once-mighty company as an independent force in the personal computer industry that it helped to pioneer. It came one day after Moody's Investors Service in New York downgraded its debt to junk-bond status.
The dismal performance guarantees that this quarter, which ends on 29 March, will be the worst in Apple's history. The losses far outstrip the $188m of red ink that was revealed in one quarter in the middle of 1993.
The company emphasised yesterday, however, that the losses would be attributable in a large part to a write-down in the value of unsold inventory and to costs associated with restructuring. The company began a process of laying off 1,300 of its 14,500 employees at the start of this year.
Apple conceded, however, that both its shipping volumes and its revenues for the quarter would be significantly down on the same quarter last year, when the company earned $73m on sales of $2.65bn. The slowdown has burdened Apple with a huge backlog of unsold computers and accessories that it has been unable to sell.
Although Apple had been signalling to Wall Street that a large loss was likely this quarter, few analysts had been expecting anything so dramatic. "It's a shocker in one sense because I don't think anyone realised how big the inventory write-off would be," remarked Tim Bajarin, president of Creative Strategies Research International in San Jose, California.
Gilbert Amelio, who took over as Apple's chairman two months ago, tried to put an optimistic veneer on the news, insisting that he remained convinced that the company's fortunes could be turned around. He promised to unveil a detailed rescue plan in May.
"I'm confident at this point that I know what the problems are and that they are fixable," Mr Amelio said from Apple's headquarters in Cupertino, California. "We plan to aggressively address these issues and take the necessary corrective actions. We will be able to articulate our plans by early May."
Much of the personal computer industry in the US has been issuing warnings of tumbling earnings as demand for home computers has begun to slide. Some manufucturers, notably Compaq, have introduced across-the-board price cuts, which can only compound the squeeze on Apple. Apple has been doubly hurt, meanwhile, because of falling consumer confidence in the company and its future. Fears about its viability were fed by rumours at the start of this year that it was contemplating a merger with Sun Microsystems as its only escape route from disaster.
Shortly after taking the reins at Apple, Mr Amelio put an end to tentative takeover talks with Sun Microsystems and indicated his own preference for maintaining Apple's independence. Apple began to hit the headlines with its difficulties early this year, when it revealed a $69m loss for the last three months of 1995. Once the whizz-kid of the industry, Apple has found itself increasingly sidelined by the dominant standards of the Microsoft Windows operating system and the chip technology of Intel. The ensuing turmoil led to the replacement of its then chief executive, Michael Spindler, with Mr Amelio.
- 1 Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
- 2 The truth about 'girl things': Three cheers for Heather Watson's honesty
- 3 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 4 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 5 Men behaving badly: Urinating while standing, 'manspreading' and the gendering of selfishness
Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Edgar Froese dead: Tangerine Dream founder dies aged 70
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Syrian refugee child beaten by Istanbul Burger King manager for eating customer’s leftover food
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...