Apple to Post Big Loss, but New Products on the Way

Amid the Sturm und Drang of Apple's Tuesday profit warning came a hint of news that Mac users may find more heartening -- a string of new products set to arrive from Cupertino in the next year.

Apple made no official product announcements Tuesday -- the afternoon was spent explaining the expected fiscal first-quarter loss of $225 million to $250 million. But in outlining the company's plans to return to profitability for the remaining three quarters of fiscal 2001, CEO Steve Jobs suggested that products in the pipeline will play a role in boosting Apple's fortunes.

"If there's one thing that's the hallmark of this management team, it's that we love good products and good profits," Jobs said.

Faster CPUs Jobs cited the speed gap between PowerPC chips and processors from Intel and AMD as one of the reasons for Apple's lagging sales. "We are very aware of this," said Jobs, adding that Macs will get a speed boost in 2001.

CD-RW Drives Another reason for Apple's slumping fortunes, Jobs said, is that the company doesn't ship computers with built-in CD-RW drives. Its competitors do. "Apple completely missed the boat on CD-RW drives," Jobs conceded. "That will be fixed soon."

New Applications Without revealing any specifics, Jobs told analysts that Apple had several applications "similar to iMovie" in development. The company's beefed-up interest in software may have been piqued by slumping hardware sales dogging every computer maker.

"It has become increasingly apparent that the market for personal computers has slowed beyond our earlier expectations," said Apple Chief Financial Officer Fred Anderson.

Mac OS X Apple believes customers are putting off hardware purchases until a finished version of the next-generation operating system ships. And even then, executives concede that many users will want to see OS X-savvy applications from Mac developers before they upgrade from OS 9. When pressed by analysts to say when key developers may release Carbonized products, Jobs demurred.

"We said all along the transition to OS X is going to take all of next year," he added. "It's not overnight."

But Jobs continued to enthusiastically endorse the operating system. "We are getting significant interest on OS X beyond Apple's traditional markets," Jobs said, suggesting that the combination of Apple's human interface expertise and the power of the Unix operating system upon which OS X is based will prove a potent combination. "I cannot stress enough how well OS X is turning out."

The comments from Jobs and Anderson came during a conference call to Wall Street analysts, warning them of expected losses for the quarter ending December 30. Apple also slashed its projected quarterly revenue to $1 billion from $1.6 billion. It cut projected revenue for fiscal 2001 to a range of $6 billion to $6.5 billion, down from $7.5 billion to $8 billion. The company blamed its woes on slow sales and discounted pricing.

"We were simply not prepared to be hit by three major problems simultaneously," said Jobs citing an overall economic slowdown, a slumping computer market, and "problems of our own making."

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