Light ahead for Apple?

While Apple Computer Inc.'s frighteningly negative first-quarter earnings are still fresh in the public's memory, some signs indicate that the Mac maker may have come through the worst of its financial woes.

One symptom of the Q1 crisis: Apple (aapl) was forced to sell products practically at a loss to clear inventories left rotting on the shelves from the fourth quarter. Investors were fully prepared for Apple to lose money, but their real concern before the announcement was that the company couldn't pare its bloated inventory to normal levels in just one quarter, thereby undermining earnings for the current quarter.

Fortunately, Apple reported that inventories have been reduced to near-normal levels, albeit at a high price. "We took our medicine last quarter and brought our channel inventories back down to about five-and-a-half weeks," said CEO Steve Jobs in a prepared statement announcing the Q1 2001 results.

Apple's price slashing, combined with an advertising blitz, worked: The company cleared out more than 300,000 Macs. It can now resume business as usual as it anticipates a small profit, despite slackening demand and a decelerating economy. Full story to follow. -- Wes George, MacWEEK.com