Apple Shares Plunge After Loss Warning

Apple Computer Chief Executive Steve Jobs, who was given a Gulfstream V jet by his grateful board of directors this year, may be wishing he had a flak jacket instead.

Jobs said Tuesday that the company he co-founded would post its first quarterly loss in the three years since he returned to the helm.

The company said it expected to lose $225 million to $250 million in the last three months of the year as sales to consumers drop across the computer industry.

The company said sales in the quarter would fall to $1 billion, instead of the $1.6 billion it projected in mid-October. A year earlier, sales topped $2.3 billion.

The firm’s third profit warning in less than three months sent Apple shares plunging to $13.50 in after-hours trading on Nasdaq, from a closing price of $17. That’s the lowest since mid-1998 and less than a fifth of the stock’s March high of $75.19.

Jobs told investors and analysts that the company is being hurt by worldwide economic and computer industry slowdowns as well as its own missteps--lost education sales, bloated inventories and a failure to ship disk drives that allow consumers to save music files.

“We were simply not prepared to be hit by three major problems simultaneously,” Jobs said during a conference call.

Apple said it would spend $115 million this quarter--the first of its fiscal year--on cancellation charges for parts it no longer needs and $135 million for unplanned discounts and rebates to reduce inventories.

Apple’s announcement follows similar warnings from such competitors as Gateway, which said last week that sales in its current quarter would be about the same as those a year earlier.

Apple, which roared back to fiscal health with its stylish iMacs, is in worse shape from an economic downturn than other computer companies because of its reliance on consumer sales, according to analysts.

“They’re in the bad part of the market,” said Stephen Baker, vice president at research firm PC Data. “If the economy is slowing, people aren’t buying to improve what they already have.”

Preliminary retail and mail-order figures for November show U.S. computer sales down 14% from a year earlier, Baker said. Sales of Apple computers are down 25%.

In January, when Jobs dropped the “interim” from his CEO title, the company granted him options for what are now 20 million shares--options that are worthless at the current stock price. They also threw in the jet, which cost $90 million.

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Sour Apple

Apple’s stock hit a 52-week high of $75.19 in March. But in September, the company warned investors that its fourth-quarter earnings would be less than expected, sending its stock plunging nearly 50% in one day. Tuesday’s new warning of lower earnings sent the stock as low as $13.50 in after-hours trading.

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Apple, weekly closes and lastest on the Nasdaq

Tuesday after-hours trading: $13.50

Source: Bloomberg News