Exchange intervenes to stem Apple slide: Poor third-quarter results spark sell-off by investors

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SHARES in Apple Computer took a battering yesterday after the announcement of unexpectedly poor third-quarter results.

Apple shares, which are traded over the counter on the Nasdaq, closed at dollars 35.75 on Thursday. However, a wave of selling that took the shares down nearly 25 per cent by midday yesterday prompted the American Stock Exchange into the rare move of listing new strike prices for options in the middle of the trading day. It added Apple 30 August, October, December and January puts and calls and will issue strikes on Monday. By late afternoon Apple shares were still down dollars 8.25 at dollars 27.50, a year's low for the company, which traded as high as dollars 65 in February.

Selling pressure was exacerbated by the rush of Wall Street brokers to downgrade their ratings on the stock, with Bear Stearns changing its recommendation from hold to avoid. Analysts had expected a special charge in Apple's third quarter, stemming from a restructuring announced this month under which the company will lay off 2,500 employees around the world. But the dollars 320.9m charge reported was higher than expected.

Apple's underlying operating profits were also much weaker than expected, at only dollars 11m, while total sales were dollars 1.86bn for the quarter, although this represented an increase of 7 per cent over the same period in 1992.

Apple, which holds a 12 per cent market share for personal computers, has been cutting prices in an attempt to kick-start sales and fight off cut-throat competition.

Earlier this week it announced price cuts of as much as 29 per cent on its top-end Macintosh Quadra 950 systems, and price reductions of between 7 and 34 per cent on its family of PowerBook notebook computers.

Apple recently appointed a new president, Michael Spindler, who took over from John Sculley, the founder. Mr Sculley is still chairman. Mr Spindler said he hoped the price cuts would boost sales in the fourth quarter, with margins being kept up by the reductions in operating costs through staff layoffs, greater efficiency, and a salary freeze.

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