Apple posts $56 million loss
Apple today posted a loss of $56 million for its fiscal 1997 third quarter -- a much better result than most pundits expected.
"It's very encouraging," said analyst James Staten with Dataquest Inc. of San Jose, Calif. "The company still hasn't been built back up to 1996 levels, but things seem to be getting better."
Following last week's forced resignation of CEO Gilbert Amelio, Wall Street had predicted the deficit would be closer to $80 million. Apple today attributed the smaller-than-expected loss to savings in operating costs instituted by the former CEO.
The company posted a net loss of 44 cents per share for the quarter, which ended June 27.
Revenue was $1.7 billion, down 22 percent from $2.2 billion for the same quarter last year but up 8 percent from $1.6 billion during the preceding quarter, when the company lost $708 million.
The loss from operations was $60 million, up 48 percent from operational losses of $116 million a year ago and a 68 percent improvement on the $186 million operating loss for the March quarter.
Apple CFO and acting CEO Fred Anderson said the company will try to drive its annual break-even point down to about $7 billion from $8 billion. During a conference call with analysts, Anderson said Apple will be able to shave expenses without the additional restructuring some analysts had feared.
Apple sold 698,000 Macs during the third quarter, down 17 percent from last year's shipments of 838,000 but up 16 percent from the previous quarter.
Anderson said that while PowerBook sales were disappointing -- they dropped 27 percent from the second quarter -- sales to the K-12 and consumer markets helped boost overall U.S. sales by 27 percent.
Overseas sales were also vigorous, Anderson said. Shipments in Japan, for example, saw a 60 percent hike.
Gross margins grew to 20 percent for the quarter, up from 18.5 percent last year, which Apple attributed to improved sales of high-end Power Macs.
During the quarter, the product mix included 50 percent entry-level machines; 36 percent higher-end Power Macs, up 13 percent from the previous quarter; and 13 percent PowerBooks, down 22 percent from the previous quarter. Servers made up the remaining 1 percent, Anderson said.
During the quarter, Apple spent about $200 million on operating costs, including $60 million in severance packages for 2,700 employees laid off during the quarter. Apple finished the quarter with about 11,000 workers, Anderson said.
The company ended the quarter with $1.2 billion in cash and short-term assets. Meanwhile, inventory dropped to $534 million.
Despite the relatively good news, Anderson again refused to speculate when Apple would return to sustained profitability. Before Amelio's departure, Apple executives had maintained the company would be profitable by the fourth quarter.
"Our highest priority is to return to profitability as quickly as possible," he said.
Anderson said the company this week signed a headhunting agency to help it search for a new CEO. As for Amelio, Anderson said he had successfully improved product quality, trimmed the company's expense structure, overseen the release of the company's best-ever products and planned a coherent OS strategy.
However, the board demanded Amelio's resignation because he had failed to stabilize the company's top line and had not returned the company to profitability, Anderson said.
Addressing another hot topic of industry gossip, Anderson denied buyout rumors, saying he had not been approached by any potential buyers.