Apple has admitted it will not return to profit in its fourth quarter as predicted by former CEO, Gil Amelio.
In a filing last week with the Securities and Exchange Commission (SEC), Apple said it does not believe it will return to profitability in the fourth quarter, citing restructuring costs as the reason. The company also warned that net sales throughout the first quarter of 1998 are likely to be worse than they were for the same period in 1997.
Amelio, who quit Apple last month, predicted that Apple would be back in the black by the fourth quarter. However, last month chief financial officer Fred Anderson said the company would not achieve this goal. Last week's SEC filing is the first official recognition by Apple that it still has some way to go before it can report a profit.
The PC maker did however post a much smaller than expected quarterly loss of $56 million (#35.6 million) last month.
It also emerged last week that Apple co-founder and board member, Steve Jobs, sent an internal memo to employees outlining reduced compensation and severance packages and the elimination of Apple's sabbatical program.
The changes will reportedly affect the employee's stock options, bonuses and place constraints on corporate travel.
According to sources, although many employees are upset by the changes, there is a widespread understanding at Apple that drastic steps need to be taken to return to profitability.
It's clear that Apple still has a long way to go but recent indications suggest things are looking up. Earlier this month Apple's share price hit a 52-week high at $29.75.
- See analysis, page 20.
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