As CEO Gil Amelio prepares to unveil a turnaround plan for the company next week, Apple Computer suffers more bad news, this time hardware defects that are forcing the company to recall certain models of Power Macs, Performas, and PowerBooks.
The company yesterday notified its resellers of hardware problems in various Macintoshes, including the 5200 and 5300 Power Macintoshes; PowerPC-based Performas with the model numbers 52xx, 62xx, 53xx, and 63xx; and PowerBook 5300 and 190s. Apple stock closed 5/8 of a point down today at 26-1/8.
The recall comes just as industry executives, Wall Street observers, and ever-loyal Mac consumers anticipate Amelio's comeback plan for Apple scheduled to be outlined Monday at the company's developers conference, a month after it reported a $740 million loss for its last quarter.
Apple is describing its response as a "repair extension program" rather than a full-fledged recall because it is not asking Power Macintosh and Performa users to send their computers into the company. Instead, Apple said it will pay for repairs--which include unexpected freezes and intermittent changes in a monitor's hue--when a user takes the system into an authorized service shop.
Apple is encouraging users to take care of the problems now but will continue to reimburse for repairs up to seven years after the company stops manufacturing both systems, whenever that occurs.
Apple is ordering a full recall, however, of the PowerBook models, asking dealers to return all unsold stock. Users also will be asked to send their PowerBooks--which have cracks in the plastic casing near the display hinge and problems with AC connectors--to a central Apple repair depot. Users can expect repairs to take less than two weeks, according to spokeswoman Nancy Morrison.
The PowerBook 5300 model appears to be jinxed. Last fall, workers discovered a battery defect in the model that could cause it to catch fire.
Although the defect was corrected before the product hit retail shelves, the appearance of quality control problems only compounds user concerns about Apple's finances and strategy. One Apple observer said the company is addressing its problems through a newly formed Quality Council but warned that preventing further defects is critical to the company's future.
"The main hallmark for Apple is ease of use," said Pieter Hartsook, editor of The Hartsook Letter. "If your machine doesn't work, it's certainly not easy to use. They have to do something so that this kind of problem doesn't occur in the future."