Apple warns of slow sales

Apple has blamed "significantly" slower sales during the past two months for its first quarter profit warning issued yesterday.

The announcement by the Mac manufacturer follows a similar warning by Gateway, which also blamed sluggish sales during the US Thanksgiving holiday weekend at the end of November. Apple also failed to meet its downgraded expectations for its fourth quarter results, which were announced in October.

The company expects to report second quarter revenue of about $1bn, $600m lower than previous expectations, and a net loss of between $225m and $220m, excluding investment gains. Wall Street had been expecting earnings per share of three cents.

The revenue shortfall is blamed on lower than expected worldwide channel sales, and unplanned sales promotions and pricing actions, said Apple. The net loss is also the result of revenue shortfall and cancellation charges related to decreases in forecasted component purchases.

Apple executives said the company did not see the usual rush of sales at the end of November, and that although sales in October beat those of last year, the figure is below expectations. The company also discounted the price of its G4 Cube system in October to boost flagging sales.

However, Apple chiefs are confident that the company will return to profitability in its second quarter, and would report revenues of between $6bn and $6.5bn for the whole of fiscal 2001.

Chief executive Steve Jobs said: "The swift industry-wide decline in PC sales will result in Apple's first non-profitable quarter in three years. We're not happy about it, and plan to return to sustained profitability next quarter."

In its fourth quarter results, Apple reported net profit of $108m, or 30 cents a share, excluding profit from a stock sale. In late September, the company warned that earnings would be between 30 and 33 cents. Analysts had revised their earnings per share estimates to 31 cents.

Apple is expected to publish results for its second quarter, which ends on 30 December, on 17 January.