Apple Reports Surprisingly High $708-Million Loss After Layoffs
Apple Computer Inc. reported a surprisingly steep $708-million loss Wednesday after sales in the January-March quarter plunged 27%, reflecting a charge for laying off a third of its employees.
The Cupertino-based computer company’s net loss, equivalent to $5.64 a share, for the fiscal quarter ended March 28 compared with a net loss of $740 million, or $5.99 a share, in the year-ago quarter.
Apple previously announced a charge of $155 million, mostly to cover the elimination of 4,100 full-time and part-time positions as part of its attempt to survive as a smaller, more focused company.
The company also took $375 million from its results for the Next Inc. acquisition. Apple plans to use the company’s technology in new operating software, a program critical to its future.
Not counting the special charges, Apple reported an operating loss of $186 million, or $1.48 per share, for the quarter. Wall Street had been expecting an operating loss of about $1.19 per share.
Apple shares rose 12.5 cents to $18.56 on Nasdaq.
The company said strong sales of new, speedy PCs and laptops and lower expenses would help the company meet its goal of reporting a profit by its fiscal fourth quarter, ending in September.
“While the operating results are disappointing, we made significant progress toward executing our strategic plans during the quarter,” said Apple Chairman and Chief Executive Gil Amelio.
Apple is also counting on this year’s updates to its aging Macintosh operating software and a new, next-generation operating system, code-named Rhapsody, planned for 1998.
But the struggling computer maker could get a boost from state lawmakers, who are considering a bill by Sen. John Vasconcellos (D-Santa Clara) that would allow any California computer manufacturer that does not turn a profit to seek a partial sales and use tax refund from the state. The refunds could total up to $15 million.
Apple and Irvine-based AST Research Inc. are the only publicly traded, unprofitable major personal computer makers in California.
The Vasconcellos tax bill was a spinoff from a state law that provides tax credits to manufacturers in California for their equipment purchases.
Under the new bill, struggling computer makers such as Apple would be eligible for tax refunds beginning in 1998 as a way of being reimbursed for their equipment purchases.
The bill is expected to be voted on in the coming weeks in the state Senate Committee on Revenue and Taxation. Representatives from Apple and other computer makers are expected to testify in favor of the bill.
California tax officials estimated that the bill could cost the state’s general fund about $6 million in 1998, $8 million in 1999 and $7 million in 2000.
At a Glance:
Compaq Computer Corp., the world’s largest maker of personal computers, reported that its first-quarter profit jumped a better-than-expected 66% to $387 million, or $1.36 per share, up from $234 million, or 85 cents, in last year’s quarter.
NCR Corp. cut its first-quarter loss by 75% as it reduced expenses and improved margins, although the strong dollar and a change in marketing strategy hurt overall results. The Dayton, Ohio-based manufacturer of computers and business machines, which was spun off by AT&T; Corp. at the end of last year, said its loss narrowed to $16 million, or 16 cents a share, from $65 million, or 64 cents, in the year-ago period.
MORE EARNINGS: D2, D3
