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Apple stems tide of red ink

Apple is still in the red but managed to limit its latest losses to $32 million.

While still swimming in red ink, Apple Computer this quarter managed to limit its losses to $32 million, a substantial improvement over last quarter's staggering $740 million deficit and significantly less than analysts expected.

In its results for the quarter ending June 28, Apple said its condition was helped partly by the sale of its shares of America Online, which gave it an after-tax gain of $39 million. Analysts had projected a loss of as much as $240 million for this quarter.

Still, Apple's third-quarter results were down substantially from the same quarter in 1995, with revenues totaling $2.179 billion, a 15 percent decrease from the previous year. Net earnings from the same quarter in 1995 were $103 million. The company's March 1996 revenues were virtually the same as this quarter's: $2,185 billion.

Apple said it is continuing with its 12-month restructuring of the company, which it announced last quarter. During the third quarter, it reduced its workforce from 15,544 to 13,729, mostly in manufacturing and administration.

One longtime Apple observer was encouraged by progress the company made last quarter in its manufacturing process, which helped improve operating margins, but said Apple still has to battle the perception that it's let key markets, such as laptops, slip away.

"I was surprised that the loss was as low as it was. Even without the sale of its AOL shares, they would have beat the street [estimate of their losses]," said Tim Bajarin, president of market research firm Creative Strategies in San Jose, California. "[But] their 12-month goal of turning the company around probably isn't going to be a reality until the second quarter."

But Apple's numbers still looked bleak to other analysts.

"The fact that they're running at an operating loss shows they haven't fixed the business model, Although the crisis isn't over, the worst part of the crisis could be over," said Kevin Landis, a portfolio manager at Interactive Investments, a Silicon Valley technology mutual fund. "It may take a great Christmas this year."

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