The fact that Apple Computer Inc is having to make a second round of brutal cuts (CI No. 3,121) less than 12 months after the last massacre, is being seen as a counsel of despair that will alienate the last of the software companies that have remained true to Apple, while doing little to improve […]
The fact that Apple Computer Inc is having to make a second round of brutal cuts (CI No. 3,121) less than 12 months after the last massacre, is being seen as a counsel of despair that will alienate the last of the software companies that have remained true to Apple, while doing little to improve the company’s prospects. On the operating front, it warns that sales this quarter will likely plunge 22% to just $1.6bn. Out of total job cuts of 4,100 – 2,700 permanent, the rest contract – 350 are to go from the 1,000-strong European sales, marketing and finance groups. The cuts will lead to a $155m charge against current quarter figures, to add to the $322.5m charge for acquisition of NeXT Software Inc, and $95m in charges for parts of the reorganization announced last year but not yet carried out. Another $95m is expected to be taken over the following two quarters for the new round of cuts, which wipe out almost a third of the 13,400-strong workforce. On the product front, what is going is much less clear. The Performa line, as expected, dies, but that is cosmetic: new models will fill the gap. Apple is halting funding for the Video Conferencing Solution and AIX Server Software and is still exploring options for its Newton handheld line. It is reducing investment in the OpenDoc component software technology, Cyberdog, Open Transport, Game Sprockets, and Mac OS Development Tools, but that is as good as telling the world they are dead. Apple will not produce Apple branded Pippin devices – but it never said it would. It is also pushing back the delivery schedule for future Mac OS releases; Mac OS 8 will ship this summer, Allegro will follow in the middle of 1998 and Sonata in mid-1999. It now plans to deliver the Rhapsody Mac OS successor in June 1998. Losses this quarter are likely to approach $1bn but it says it could report profits in the fourth quarter to September.
