Apple warns on earnings
Published: 19 Jun 2002 11:44 BST
Citing slack demand, Apple warned on Tuesday that sales and earnings for the current quarter will fall short of prior company estimates.
The Mac maker said it now expects earnings of 8 cents to 10 cents per share, down from its previous guidance of at least 11 cents per share. Revenue is now projected at $1.4bn to $1.45bn for the June quarter, down from an earlier estimate of about $1.6bn.
Analysts had been expecting the company to report a profit of 13 cents per share, according to First Call.
Some analysts had cautioned that as consumer demand softened, Apple could be one of the more vulnerable computer companies. In June, many on Wall Street questioned whether sales of the new iMac were flattening out. Apple at the time shrugged off such sales concerns.
"They're doing just fine," chief executive Steve Jobs said of iMac sales in an interview earlier this month.
During a conference call, Apple chief financial officer Fred Anderson said sales of all products fell below expectations, but he did not offer specifics on sales of the new flat-panel iMac.
Apple blamed the shortfall on softness in consumer spending and weakness in the advertising and publishing markets. Geographically, the company said sales in Europe and Japan were particularly sluggish.
"Like others in our industry, we are experiencing a slowdown in sales this quarter," Jobs said in a statement. "As a result, we're going to miss our revenue projections by around 10 percent."
Ahead of the warning, Apple shares closed down 39 cents to $20.15. In after-hours trading, shares tumbled further, changing hands at $17.30 on the Island ECN.
Like Palm and other companies that have warned, Apple said it did not see a pickup in the "Dads and Grads" season that comes as people snap up electronics for Father's Day and graduation gifts.
"The seasonal sales (improvement) that Apple typically experiences did not materialise" in late May and early June, Anderson said.
The slower sales were somewhat offset by lower component costs, Apple said.
One area that Apple did not mention as noticeably slower than expected was the education market. However, Anderson cautioned that education sales typically are heavier in June than in April or May.
"So far it is not a major area of weakness," Anderson said. But, he added, "We have two weeks left to go."
Jobs sounded an optimistic note for the coming year, despite the current situation.
"We've got some amazing new products in development, so we're excited about the year ahead," Jobs said.
"As one of the few companies currently making a profit in the PC business, we remain very optimistic about Apple's prospects for long-term growth," he said.
When asked whether Apple made a mistake in March when it raised the price of the flat-panel iMac, Anderson said he could not speculate. Asked whether Apple might be considering cutting the price, he declined to comment specifically, though he did say, "We think that our flat-planel iMac has a great value in the marketplace and is very (price) competitive."
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