January 17, 1996 4:00 PM PST
Apple loss hits $69 million
For the same quarter a year ago, the Cupertino, California, company posted a $188 million profit, or $1.55 a share. For the first quarter of 1995, gross margins as a percentage of net revenue dropped to 15.1 percent, compared to 20.7 percent for the same quarter the previous year. Officials said gross margins decreased due to more aggressive pricing during the holiday season--especially in Japan--and an $80 million inventory adjustment.
To cut costs and get the company back on track, Apple will lay off 1,300 employees over the next 12 months, officials said. Those employees will include full-time, temporary, and contract employees worldwide. The cuts will pare Apple's workforce by at least 8 percent, officials said.
In addition, the company will move to aggressively license its Macintosh operating system. Unfortunately, deciding at this juncture to license the operating system probably won't matter much, said one industry analyst. "I think it's way too little, too late. Two to four years ago you had people clamoring to license the Mac OS. This would have been earth-shattering news back then, but not now," said Rob Enderle, an analyst with Giga Information Group, in San Jose, California.
"IBM did license it last year. The question now is, who can afford to actually build the platform," added Enderle.
Abandoning low-end system manufacturing and sales to clone-makers so Apple can concentrate instead on more expensive systems with heftier profit margins probably won't help either, according to Enderle. "It still puts them in a death spiral, but it would slow the decline down. Their biggest problem is that they're a hardware and software manufacturer in a world where most companies have moved to separately defined businesses," he noted.
And despite talk of replacing Apple CEO Michael Spindler, a change is unlikely to happen immediately, said Enderle, "They don't have anybody warming up in the bullpen. Who could they get?"
