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Expected Loss Puts Worm In Apple Lowering Of Earnings Expectations Hammers Stock

Apple Computer Inc. said Friday it would probably lose money in the current quarter despite higher sales, a sign of the competitive pressure it faces in the United States and Japan.

The loss would be the first for Apple since the summer of 1993.

The company’s stock fell almost 8 percent, losing $3.00 Friday to close at $35. 25 on the Nasdaq Stock Market. Shares in other personal computer makers were mixed, but none dropped as much as Apple.

The Cupertino, Calif.-based company said its sales in both units and revenue would increase though not as much as previously expected.

The trouble is that profit from each sale had fallen from a year ago when its gross margin was 20.7 percent, already considered low in the computer industry.

“We are currently engaged in an intensive review of all aspects of our business, including the factors contributing to our first quarter results, and will take appropriate actions to address the challenges,” said Michael H. Spindler, president and chief executive.

Wall Street analysts had been expecting a profit of around 80 cents per share in the quarter ending Dec. 31, the first in Apple’s fiscal year. A year ago in the quarter, Apple earned the company earned $1.55 per share.

The company said its forecast could change in the last two weeks of the year if consumer and business buying improves and competition eases.

Apple blamed the outlook on price cuts offered to meet competition in the United States and Japan.

Overall demand for personal computers this quarter, though stronger, has not grown as much as computer makers anticipated.

In addition, consumers are buying more high-powered computers that will take longer to become obsolete. And so manufacturers have cut prices to less powerful machines to make sure they are sold.

“Machines that don’t perform at high-end Pentium levels are at a significant discount,” said Richard Shaffer, president of Technologic Partners, a New York market research firm. “They’ve lowered the prices and Apple has followed to be competitive.”

Tags: business