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October 20, 1995

SHORTAGES CAUSE APPLE A QUARTER OF AGONY

By CBR Staff Writer

Apple Computer Inc warned analysts in its conference call that gross profit margins in fiscal 1996 just started will be significantly below the 1995 average of 25.8% of net sales, but would be above the 20.7% to which they slumped in the 1995 fourth quarter. Fourth-quarter net profits plunged 48% to $60m or $0.48 a share, against a consensus average of $0.52 a share. Turnover jumped 20% to $3,000m to put the company over the $11,000m mark for the year, and shoot it into the top five US computer companies by turnover. Unit shipments for the quarter rose by more than 25% to a record level exceeding 1.25m units. Total shipments of Power Macintosh products accounted for more than 70% of units shipped during the quarter. But the woes loom large and chief executive Michael Spindler and chief financial officer Joseph Graziano told analysts that supply constraints are likely to persist until early calendar 1996: the company is sitting on $1,000m in unfilled orders, and it appears that the biggest problem is shortages of PowerPC 604 microprocessors, which means Apple can’t meet demand for the higher-margin high-performance models that help to offset pricing pressure among entry-level Power Macs. raae. Analysts were busy lowering their forecasts for the current year yesterday.

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