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January 7, 1997updated 05 Sep 2016 12:55pm

APPLE SHARES PLUNGE AS SURVIVAL RETURNS AS ISSUE

By CBR Staff Writer

Shares in Apple Computer Inc plunged right down to the level at which Sun Microsystems Inc was thought to be prepared to pay for the company in the wake of its shock profit warning, which far exceeded Wall Street’s worst fears with shares tumbling 17.8% to close at $17.875 yesterday. Apple warned that it expects to report a loss of $100m to $150m for its fiscal first quarter just ended, a much worse loss than analysts had expected. Apple blamed weak demand for its Performa line of consumer-oriented Macintoshes and short supply of its Powerbook portables. The projected loss comes to 80 cents to $1.20 a share where Wall Street had been expecting a loss of four cents a share. The company also said it plans further restructuring moves aimed at slicing another $1bn of costs from its operations. Revenue for last quarter is expected to be down about 10% from the $2.3bn reported in the fiscal fourth quarter. Apple says it does not yet know whether the latest restructuring moves will involve lay-offs. The latest profit warning has brought out the pessimists in droves on Wall Street, and several brokerages urged investors to throw in the towel and sell their shares as analysts began to ask anew whether Apple could put the company’s business strategies back in order. The latest financial disappointment is seen as deepening Apple’s image problems among personal computer buyers, where the company has already suffered badly from the perception that it can no longer compete effectively with Microsoft Corp’s Windows.

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