Apple isn't going to make anywhere near as much money this fiscal quarter, the company worriedly told the world yesterday evening after Wall Street had closed for the day. The quarter, Apple's fourth of fiscal 2000, ends on Saturday.
The reason? Poor demand across all territories, said CFO Fred Anderson, thanks to what he termed a "business slowdown" and lower-than-expected sales into the education market.
Apple also highlighted the much-vaunted Power Mac G4 Cube as a product whose launch had proved disappointing. So sorry, Steve, they just don't get it out there...
The combined effect of these factors will ensure the Mac maker's fourth quarter will effectively see earnings of around two-thirds of what Apple and analysts had been expecting. Apple said it will see profit of around $110 million - or 30-33 cents a share - from sales of between $1.85 billion and $1.9 billion. Various analysts had recently been touting earnings of 45 cents a share.
That leaves Apple's sales static. Last quarter's revenue hit $1.85 billion. Earnings were $163 million.
Worse, the downturn is likely to hit Apple's business beyond the current quarter, to the extent that the company is now busily rethinking its strategy. "We are currently re-evaluating our plans going forward, and will provide lower growth targets for next quarter and the next fiscal year when we announce our final results on October 18," Anderson said.
Of course, Apple isn't alone here. Last week, even Intel was forced to announce that its next set of results won't be as good as it had hoped, and other PC vendors have not been having an easy time of it of late, either.
That said, Apple, as a minority player, is in some ways rather more vulnerable than the rest. Quite apart from the real, financial impact on its business, there's the less tangible effect the news may have on confidence. While the industry has been impressed with Apple's turnaround after its near collapse four years back, there's always been that nagging doubt that its new-found success was a short-term effect. It's only a matter of time before it falls again, we've been told on numerous occasions.
Still, CEO Steve Jobs' revitalised Apple has weathered a couple of poor performance quarters in the past, but this latest problem quarter should come as a wake-up call to Apple, forcing it to realise that it really can't afford to take its customers' support for granted.
Jobs yesterday bullishly stated that the company has "many wonderful new products and programs in the pipeline". It better have. Customers want faster PowerPC G4-based notebooks - now made possible by Motorola's new PowerPC 7410. And they want faster Power Macs, again dependent on Motorola's chip development programme. Throwing in an extra, but largely unused CPU isn't going to help Apple on jot here - it really needs Motorola to get higher clocked PowerPCs out of the door. They're coming, but probably not quickly enough to get Apple out of trouble yet. ®
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