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Apple posts $56 million loss |
July 16, 1997, 2:00 p.m. PT
update Apple Computer (AAPL) today handed Wall Street a major surprise, posting a net
loss far narrower than analysts had expected, as expenses fell and sales
were driven by high-end Macintosh sales.
The computer maker reported a net loss of $56
million, or 44 cents a share, for the quarter ending June 28, compared with
a loss of $32 million, or 26 cents a
share, a year ago.
Wall Street had expected the computer maker to
loss of $77 million, or 61 cents, according to First Call.
Revenues fell to $1.7 billion for the quarter, down from $2.2 billion a
year ago. Revenues, however, were up slightly from the previous quarter--$1.6 billion.
Fred Anderson, chief financial officer, said Apple shipped 698,000 units in
the quarter, up 16 percent from the previous quarter. He noted that this
increase was largely driven by the education market and a 60 percent
increase in sales to Japan.
Entry-level products, which were sold into the education and consumer
markets, represented 50 percent of sales and grew by 27 percent in the
quarter, Anderson said.
Meanwhile, the high-end Power Macintosh line accounted for about 36 percent
of sales and grew by 32 percent from the previous quarter.
But PowerBook sales were
weak in the quarter, falling by 29 percent over
the previous period and representing 13 percent of sales in the quarter.
Anderson cited an easing of demand for the high-end 3400 PowerBook series,
which was introduced last quarter, and general softness in the entry-level
Fred Anderson on missing Q4 profitability
Despite beating Wall Street's estimates by a wide margin, Apple will
not meet its goal of profitability in the fourth quarter, a goal that
ousted chief executive Gilbert Amelio had previously stated.
Amelio's resignation last week raised concerns on Wall Street that the
company would miss its earnings mark. The high and low predictions made by
analysts in First Call's consensus
called for Apple to report a loss of as much as $126 million or as little
as $14 million.
In the past week, the chorus
of naysayers gained voices. Three analysts
revised their third-quarter estimates downward for Apple, and four have
lowered their fiscal 1997 estimates, according to a First Call report. Also
in the past week, two analysts have lowered their fiscal 1998
earnings outlook for Apple.
Fred Anderson on product lines contribution to sales
Analysts and investors were
concerned by the shakeup at the top and by
chief financial officer Fred Anderson's reluctance to pick up Amelio's refrain
that the company hoped to achieve profitability by the fourth quarter,
which ends in September. Those concerns were borne out by today's
One analyst had the following explanation for Apple's third-quarter
"The reason for the [higher loss estimates] was Gil was let go and
that raised a lot of speculation," said Richard Schutte, an analyst with Goldman Sachs.
Schutte said he had expected Apple to post a loss equal to or narrower than his earnings
estimate, but did not anticipate the company to come in as far under as it
Schutte said that despite a seasonally weak third quarter, Apple was able
to largely hold its own against the previous quarter. He added that the
fourth quarter ending in September and first quarter ending in December
tend to be the company's strongest periods.
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