The company attributed the better portion of the loss to inventory write-downs of $388 million and restructuring charges of $130 million after tax. But net sales of $2.2 billion were also down 18 percent compared to the same period last year, when the company turned a profit of $73 million.
Apple stock closed down 3/4 of a point today, at 25-1/8.
To hasten a financial turnaround, the company plans to outsource more functions such as manufacturing, liquidate unspecified assets, and eliminate 2,800 jobs. The layoffs include the 1,300 previously announced after the company declared a $69 million loss in January. The company now has about 14,500 employees worldwide.
Some industry analysts say layoffs aren't the answer. "Getting aggressive with staff reductions can be troublesome for the company because employees will most likely look for new jobs, which will affect productivity," said Rob Enderle, an analyst with the Giga Information Group. "The problem is they can only cut back so much or it stops being a company."
Other observers are concerned about the year time frame that the company is projecting for its turnaround. "Itseems that they are taking their time in terms of returning the company to profitability," said Pieter Hartsook, editor of the Hartsook Letter and Macintosh market expert. "They are being very conservative in saying that it's going to take them 12 months. They should be able to do it faster than that."
Enderle says the software licensing agreement Apple signed with Motorola and a similar deal that is expected to close with IBM will boost Apple's credibility but won't be enough to solve the company's immediate problems. "They are still dealing with a bad series of strategic decisions that occurred over the last ten years, and they don't appear to be addressing the short-term issues as well as they could," he said.
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