Apple only gets A for effort

Macworld Expo Apple's Wall Street self-report card shows sales and marketshare are down even if hopes are up.

CNET News staff
2 min read
"helvetica"="" size="-1" color="#cc0000">Macworld Expo Apple Computer (AAPL) is gearing up for a fresh start at Macworld Expo next week now that it's confessed to the Securities and Exchange Commission exactly how rough 1996 has been.

The company recently filed its year-end financial statement with the SEC, a filing that reveals a company plagued by falling unit sales and falling marketshare and undermined by widespread customer anxiety about its strategic direction. (See the full text of Apple's year-end financial report. Apple users can also read Apple's proxy statement written to prepare shareholders for an annual company meeting scheduled for early February.)

The report also says that Apple expects its first-quarter net sales this year to come in below last year's.

Unit sales for the Macintosh computer began to fall by double digits starting in the second quarter. And by the end of the year, unit shipments for the 12-month period had declined 11 percent over a year ago, according to the SEC filing. Sales of peripheral products also started tumbling starting in the second quarter.

Apple blames the decline trend on customers' concerns about its strategy, financial condition, prospects, and quality problems with some PowerBook models.

Apple has seen its worldwide market share slip to 5.4 percent from 8.7 percent in the fourth quarter, and its domestic marketshare drop to 7.3 percent from 13.2 percent.

In the SEC filing, Apple pins its hopes on a new strategic direction it hopes will improve its competitiveness and profitability. Under the new game plan, Apple plans to develop and market products and services more selectively, targeting education, home, and business buyers.

The company has also put erformance incentives in place. Gilbert Amelio, Apple's chief executive, hired in February, will have to hit targets for revenue growth and gross margins, and platform and channel strategy, in order to receive bonuses.

Amelio earned $655,061 in base salary for the year, and racked up $2.3 million in bonuses, according to the company's proxy statement.