MacWorld: $150 million losses kill Apple feel-good factor The feel-good factor following Apple's Xmas acquisition of Next was wiped out on the eve of the MacWorld trade show when the supplier's stock plummeted following predictions of up to $150 million losses for its first quarter. Apple stock plunged by as much as 21% following a warning last Friday that operating losses for the first quarter ended 27 December would top the $100 million mark and might be as high as $150 million. Revenue for the quarter is expected to fall 10% on the previous three month figure of $2.3 billion. The timing of the warning could scarcely have been worse for Apple as the Macintosh faithful gather in San Francisco for what is likely to be the most critical MacWorld conference in the company's 20 year history. Apple bosses had hoped attention would be focused on the surprise $400 million takeover of Next that was announced before Xmas. Instead the company's continued financial plight will share centre stage, with the prospect of further redundancies among the Apple workforce now practically certain. Apple chairman Gil Amelio confirmed: 'These results suggest that we need to reduce Apple's cost infrastructure so that we can achieve break even level results.' In a prepared statement, Apple blamed the unexpectedly bad figures on weak US demand for its Performa computer range - despite 30% price cuts last autumn - as well as shortages for its new PowerBook portables. Fred Anderson, Apple's chief financial officer, admitted: "The weakness in demand for Performa products in the US is an obvious disappointment.' In Brief: Canon to sell Next stake The ramifications of Apple's takeover of Next continue with Canon announcing it will sell its 20% stake in the latter and predicting a troubled future for the former. The Tokyo-based supplier said in a prepared statement: 'Canon retains the rights to use and market selected software developed by Next. However, following the sale, it will no longer be a shareholder in Next.' Canon also intends to seek payment of outstanding loans made to Next and will pull out of PC manufacturing in order to focus on its peripherals business. MacWorld: Advice for Amelio from Silicon Valley Some of Silicon Valley's finest - and some of its not so-fine - have been offering up their advice to Apple chairman Gil Amelio about what needs to be done to get his company back on the straight and narrow, courtesy of the pages of the San Jose Mercury. On the eve of the MacWorld trade show in San Francisco, the newspaper opened up its columns to hi-tech chief executives and industry gurus to answer the questions: how would you fix Apple? Marc Andreessen, senior vice president of technology at Netscape, said the emphasis has to be on building and demonstrating momentum on the back of the Apple/Next merger, particularly among the developer community. "Apple's people need to be totally focused on the main thing -shipping the platform - and Apple needs broad developer support now more than ever,' he writes. Once MacWorld is out of the way, the company needs to spens the next six months to a year concentrating on shiping the first version of the new operating system, while supporting developers to make sure there is a solid mass of applications available for it. A second 6-12 months cycle needs to follow for the second versions of the operating system with full backward compatability and the ability to run System 7 applications. Then, and only then, drop supoprt for System 7. Industry analyst and highly respected commentator Esther Dyson sees Apple's biggest challenge being to stop Mac developers defecting to Windows. 'The next version of the operating system has to support what's being done already for the Mac and it has to take advantage of the Next technology,' she advises.'If they can do that, they're golden?if they can't, they should resign.' As for the return of Steve Jobs to the Macintosh fold, Dyson sees it as 'one of the great romances of the computer business -reunited at last.' But she strikes a more pragmatic note: 'I'd try to get [Jobs] ,pre stock so that he has more of a vested interest in the success of Apple.' Gordon Eubanks, chief executive of Symantec, wants clarification of the role that NextStep is going to, complaining that this is not apparent at the moment. 'Whether they have client dreams with it, I would start by completely positioning it as a server platform and/or a high end workstation fo rhigh end users, ' he suggests. 'They can always come back in a couple of years an dposition it as a good client OS as well, like NT.' Mitchell Kertzman, who as chief executive of beleagured database company Sybase might be thought to have enough on his plate trying to revive his own firm, takes a different tack: they should have bought Be, not Next. 'I think BeOS was a better step than NextStep in advancing state of the art OS design and implementation,' he feels. 'Apple can't succeed by trying the better than Windows strategy. By most accounts, OS/2 Warp is better than Windows, but that strategy didn't win in the market.' Kertzman also wants to see two personalities addressed. 'As soon as you have anything to show, let Steve Jobs show it. If there's one thing Jobs does better than anyone in the industry, it's giving demos,' he argues, adding: "Get Bill Gates attention - convince him he has a two front war to win. That one is a lot easier said than done.'' Jeffrey Papows, president of Lotus Development, wants to see greater communication from the company, with detailed charting of the course the firm is going to take. He also wants to see visible co-operation between Jobs and Amelio, but cautions that Jobs part-time status may lead to divided interests: 'Every second from Steve is a gift. Gil should grab all he can.' The most prosaic response to the newspaper challenge came from Regis McKenna, of the McKenna Group consultancy, whose words will be a pleasure for Amelio to read. 'I am sure the people who made the decision to acquire Next had something in mind, so I am content to wait and hear what that is,' he writes.
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