Apple Computer Tuesday added its name to the ever-growing list of technology companies issuing profit warnings. The company said it will report its first loss in three years for its first fiscal quarter of 2001.
Due to slower than expected sales in October and November, Apple expects both its first-quarter earnings and revenue will be well below its previous expectations, senior company executives said during a Tuesday afternoon teleconference. The first quarter is due to close December 30 with the final results to be announced January 17.
Apple is predicting it will record a net loss, excluding investment gains, of between $US225 million and $250 million, on revenue of around $1 billion. This latest revenue estimate is $600 million less than the company had forecast on October 18 on the release of its fourth-quarter results. Apple said the revenue shortfall is related to lower than expected channel sales worldwide, while the net loss is related to cancellation charges for components.
"Apple was simply not prepared to be hit by three major problems at the same time," Apple co-founder and CEO Steve Jobs said. One of the problems relates to a variety of internal issues at Apple, while the other two were a slowdown in demand for PCs and overall weakness in the worldwide economy, he said.
Jobs noted that the first quarter loss will be Apple's first quarter in the red since he returned to the company three years ago. "It's not something I'm proud of," he said.
A slowdown underway in the consumer computer market is likely to be "more than a one quarter phenomenon", chief financial officer Fred Anderson said, adding that Apple has already scaled back its revenue predictions for the year. For fiscal 2001 Apple now expects revenue to be between $6 billion and $6.5 billion, down from the $7.5 billion to $8 billion, the company estimated back in October, Anderson said.
In the second half of November, Apple didn't see the "huge spike" in consumer demand for its products which it historically experiences as the US holiday buying season ramps up, Anderson said.
Both Anderson and Jobs stressed that Apple intends to return to "sustained profitability" in the second quarter of fiscal 2001. Jobs also emphasized Apple's financial health, saying the company has an "Arnold Schwarzenegger balance sheet" with more than $4 billion in investments on hand. "There's no question that Apple can survive this quarter," he said.