Macintosh finally caught in the rain

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The Independent Online
NEW YORK - Apple Computer warned yesterday that the price wars raging in the personal computer industry have spread to its businesses as well, and will probably take a toll on its profits for the rest of the year, writes Larry Black.

Apple's profits per share for the second half of the year will less than the dollars 1.88 it earned in the last six months of 1992, the company said, prompting a sell-off that spread to shares of other PC makers, already battered by cut- throat price competition.

While its Macintosh line continues to gain market share, growth is coming at lower prices than previously expected, the chief executive John Sculley said. But Apple, long insulated from price wars among PC clones, remains committed to widening its customer base. 'We will be taking aggressive actions to accelerate sales momentum,' said Mr Sculley.

Cutting prices again on its Macintosh models will push Apple's gross profit margin - at more than 42 per cent the highest in the industry last year - well below 35 per cent this year, computer analysts said. Apple will earn less than dollars 4.13 a share this year, compared with the dollars 4.33 a share, or dollars 530m, it earned last year on sales of dollars 7.1bn.

Shares in the company have been marked down almost 20 per cent since last Friday, and were trading off 5 cents at 44 1/2 yesterday afternoon.