Apple to Shut 4 Plants for Week to Trim Stocks
Apple Computer Inc. will shut down four manufacturing plants for one week because of excessive inventory and sluggish sales of personal computers, the Cupertino, Calif.-based company announced Thursday.
“The general softness of the computer industry is continuing,” said Delbert Yocam, Apple’s executive vice president, who characterized the shutdowns as a weeklong “spring break.”
Employees will not be laid off, but they are being asked to take their paid vacations during the period of suspended production.
The closures, the first in Apple’s manufacturing history, will affect plants in Dallas; Fremont, Calif.; Cork, Ireland, and Singapore. The company said that inventory has built up at retail stores and that the production halt will “balance inventory.”
The size of the inventory glut was not disclosed, but market analyst Jan Lewis of InfoCorp, a Cupertino research firm, estimated that Apple entered 1985 with an inventory of about 40,000 Macintosh computers alone. She said that, while Apple’s Fremont plant has a monthly production capacity of 80,000 Macintosh computers, only 19,000 were sold in January.
“They planned for sales that just weren’t there,” said Lewis, who called the shutdown “a real black eye” for Apple’s image.
She noted that the announcement comes at a time when Apple’s stock prices are slipping. “People are jittery about Apple right now,” she said.
Apple was the most actively traded over-the-counter stock Thursday, closing down $2.50 to $22.125 with more than 3.4 million shares changing hands.
Barbara Krause, a spokeswoman for Apple, said the decision to suspend production for a week “reflects management that moves quickly in response to market conditions.”
InfoCorp’s Lewis said that the entire personal-computer market has sagged in the opening weeks of 1985--with industrywide sales in January falling by more than half from December levels--and that Apple’s performance has been relatively good.
“Apple actually increased its market share in that smaller market on its IIe and Macintosh computers,” she said.
Also, Apple reported record sales of $689 million for the quarter ended last Dec. 31, an increase of 128% over the same quarter a year earlier.
