Apple misses lowered Q1 forecasts

Apple Computer Inc. Wednesday hit its first sour quarter in three years, when it posted a loss for its first fiscal quarter of 2001.

          Apple Computer Inc. Wednesday hit its first sour quarter in three years, when it posted a loss for its first fiscal quarter of 2001.

          For the quarter ending Dec. 30, the vendor chalked up a net loss, excluding one-time investment gains, of US$247 million or $0.73 per share. Analysts surveyed by First Call /Thomson Financial, who had revised their forecasts following a December earnings warning from the company, predicted a loss of $0.65 per share. During the first quarter of fiscal 2000, Apple made $183 million in profit or earnings per share of $0.51.

          Revenue for the quarter was $1 billion, down 57 percent from the year-ago period.

          In December, Apple officials cited lower global sales and previously unplanned price cuts as the main reasons for an expected net loss of between $225 million and $250 million. In a statement Wednesday, Apple's Chief Executive Officer Steve Jobs said: "We took our medicine last quarter."

          Apple worked hard to reduce excessive inventory throughout the holiday season.

          "We spent aggressively on advertising and marketing to reduce our channel inventory," Fred Anderson, Apple's chief financial officer, said on a Wednesday afternoon conference call with press and analysts following the earnings announcement. "In December, we saw a pick-up in demand, particularly with consumer products."

          On the brighter side of things, Apple sold 33 percent of its inventory via its online store. In addition, the European markets held up the best of any geographic region for Apple in first-quarter sales, according to Anderson.

          Jobs kicked off the Macworld event held here last week with a slew of new product offerings. He showed features in the company's new Mac OS X operating system, now due out in March after repeated delays. Apple also released a series of higher-powered desktops and a new line of sleek laptop computers at the show. The question remains, however, whether Apple's latest product releases can pull it out of a major slump.

          "Our cash position remains very strong at over $4 billion, and we are planning a return to sustained profitability beginning this quarter," Anderson said, in Wednesday's statement. "We now expect revenues for fiscal year 2001 to be about $6 billion."

          An analyst with Bear Stearns & Co. Inc., however, before Apple results were released Wednesday called for a shift in Apple strategy. Andrew Neff, senior managing director and PC hardware analyst at the firm, said the company should make a change in its processors and shift from the PowerPC to those made by Intel Corp.

          "Abandon the PowerPC architecture and port the Mac OS X over to Intel architecture," Neff suggested in his report. "This may seem like heresy, but Apple's best option is to play to its strength in industrial design and design the best computers for the Wintel market."

          Shares of Apple (AAPL) closed down 2.5 percent at the close of trading on the Nasdaq exchange to $16.68.

          Anderson reiterated that Apple is looking for its new product line to drive sales in the months ahead. While the company expects its second quarter ending in March to be slow, Apple is hoping to demonstrate some strong showings in the following two financial periods.

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