Apple will spend more for Next
Apple's acquisition of Next Software is going to cost $30 million more than previously disclosed.
Apple paid $325 million in cash, $55 million for Next's debt, and approximately $5 million for closing, its related costs, and the issuance of 1.5 million shares of company stock--bringing the total price tag to $430 million.
The struggling computer maker had previously announced the deal would cost $400 million. The deal closed February 4.
"The company expects that approximately 75 percent of the comprehensive purchase price will be expensed as in-process research and development in the second quarter," according to the SEC filing.
Meanwhile, Apple said profitability by the fourth quarter remains uncertain.
"The company expects to incur a substantial loss in the second quarter as a result of...in-process research and development and restructuring charges, and...[an] expected decrease in net sales compared with the first quarter of 1997," the filing stated. "The company expects that it will not return to profitability until at least the fourth quarter of 1997, if not later."
In the first quarter of 1997, Apple continued to experience declines in net sales and units shipped, and saw its share of the personal computer market fall as well. Its worldwide market share fell to 4.3 percent from 5.3 percent and its domestic market share tumbled to 5.2 percent from 7.2 percent, Apple said in its SEC filing, citing an industry source.
Net sales through at least the fourth quarter are expected to be lower than the prior year's comparable figures. Sales in the second quarter are expected to fall short of the previous quarter, according to the SEC documents.
Research and development expenditures are expected to decrease in the third and fourth quarters, compared with the same periods a year ago.
The Next acquisition will result in a substantial charge in the second quarter for in-process research and development at the time the purchase was completed.
Apple, which posted a $120 million net loss in its first quarter ending December 31 and is expected to continue operating in the red for most of the year, has been fighting to regain market share with tough "We're Back" advertisements and is also preparing to roll out plans for a major restructuring before the end of the current quarter, which ends in March.
Industry watchers have speculated that 20 percent of Apple's 13,000-member workforce could be dismissed as it tries to pare $400 million in operating expenses out of its budget.
In order to achieve a break-even performance, the company is faced with having to cut expenses as its revenue base is expected to drop by more than $1 billion.