Apple Sinks on Profit Warning

Apple Computer (Nasdaq: AAPL) Corp. (Nasdaq: AAPL) plunged 2 3/8 to 14 5/8 in the first few minutes of trading Wednesday after the Cupertino, California-based computer maker became the latest to warn that slow sales will hurt quarterly results.

Apple said "significantly slower than expected sales" of its products in the past two months will result in revenue and earnings for the first quarter ending December 30th that are "substantially below expectations." Promotions aimed at boosting sales also hurt revenue, the company said.

Revenue will be about US$1 billion, some $600 million below previous expectations, and the loss before investment gains will be between $225 million and $250 million, Apple said.

"The swift industry-wide decline in PC sales will result in Apple's first non-profitable quarter in three years," said chief executive officer Steve Jobs. "We're not happy about it, and plan to return to sustained profitability next quarter."

As a result of this quarter's shortfall, revenue for fiscal 2001 will be $6 billion to $6.5 billion, the company said.

Jobs said Apple's management is "committed to reducing inventories" this quarter, and is planning new products and programs for 2001.

Apple shares, which last spring traded above 71, are now close to a 52-week low.

Apple's forecast follows similar warnings from rival computer makers Dell and Gateway, which have also said slow sales of personal computers during the holiday season will hurt results for the current quarter.

Other technology companies are also running into difficulty. Just a day ago, 3Com Corp. said results will be worse than previously thought, because a consolidating telecom industry has led to weaker demand for its network equipment products.