Apple Computer peels off a fifth of its work-force

Offering one more glimpse of the enormity of its financial crisis, Apple Computer revealed yesterday that it is to eliminate 2,700 jobs - equivalent to 20 per cent of its workforce.

The action by Apple, the once-mighty pioneer of the personal computer, represents one more attempt to halt the downward spiral of its fortunes brought on by declining sales and a disastrous contraction of market share over the past two years.

The company, based in Cupertino, California, also announced plans to pare down its product line, in particular by reducing the number of different models in its Macintosh and Power Book lines. It confounded speculation, however, that it would terminate its slow-selling Newton hand-held computer.

So daunting are Apple's problems that some had been expecting an even more cruel lay-off programme. A few analysts had been predicting that to achieve a turn-around, the company's chief executive, Gil Amelio, would have to lose a full one-third of a workforce of 13,400 employees.

Mr Amelio took charge of the company in February last year after the dramatic ousting of his predecessor, Michael Spindler. Even though Apple registered an unexpected profit of $25m (pounds 16m) in the quarter that began last July, it has since slipped back once more into the red.

The new lay-offs will lead to an additional $155m in this financial quarter. Few observers were crying for those losing their positions - Apple is located in booming Silicon Valley, where hi-tech companies have recently been complaining of negative unemployment.

Whether the latest action will be enough to save Apple is unclear. Mr Amelio's broad strategy appears to be to concentrate on areas of strength such as the schools market and graphics. "We are going to start doing what we do well and stop doing what we don't do well," commented his vice president for marketing, Guerrino DeLuca.