ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Saturday, December 16, 1995 TAG: 9512190017
SECTION: BUSINESS PAGE: A-10 EDITION: METRO
DATELINE: CUPERTINO, CALIF.
SOURCE: Bloomberg Business News
Apple Computer Inc. said it expected a loss this quarter because of lagging sales and price cuts of its personal computers, a stunning disclosure in the strongest selling season of the year.
The news surprised Wall Street, which expected fiscal first-quarter earnings of 78 cents a share, based on estimates of 22 analysts surveyed by Zacks Investment Research. Apple's shares fell $3 per share, or 7.8 percent, to $35.20.
The gloomy forecast by the No. 3 PC maker may prompt the ouster of Chief Executive Michael Spindler or force as many as 2,000 job cuts, some investors said.
``Both [events] are really distinct possibilities,'' said Jim Holmes, portfolio manager at Dreman Value Management LP, an Apple shareholder. ``They've obviously got internal problems.''
Friday's prediction is the latest in a string of woes plaguing Apple, from production snafus and poor forecasting to management rifts and disappointing earnings.
``It's an ongoing problem,'' said Peter Hartsook, a Macintosh industry analyst. ``If other computer companies can grow their business in these markets, why can't Apple?''
That's a question Apple hasn't been able to answer.
It's
The paltry earnings are reflected in Apple's share price. The stock reached a record high of 71 3/4 in April 1991 and has dropped by half since, in the midst of a bull market for technology stocks.
Compare that to competitor Compaq Computer Corp., whose share price quadrupled in the same period. Dell Computer Corp. has done even better, rising to about 31 from an average of 3 1/2 in 1988.
This year's fourth quarter has been steady for most computer makers, with none expecting a loss. Compaq, in fact, said it won't be able to fill customers' orders.
Spindler, who has been blamed for Apple's problems, said the computer maker will hold an ``intensive review of all aspects of the company's business.''
The Cupertino, California-based company cut prices on its Macintosh machines 25 percent last week. It said the ongoing reductions contributed to the earnings shortfall. The cuts will drive Apple's gross margin down from the fourth quarter's 20.7 percent.
Apple officials declined to comment further.
LENGTH: Medium: 52 linesby CNB