March 17, 1997 1:15 PM ET
Wall Street on Apple: Show us
By Margaret Kane

While industry analysts anxiously pored over Apple Computer Inc.'s latest restructuring announcement for signs of how the company will rebuild itself, Wall Street analysts focused in on one statistic. The Cupertino, Calif., company warned last Friday that revenue for the quarter ended March 28 would be significantly lower than what analysts had predicted, shooting up a red flag to investors. "They came out of December, which was a disappointment, and stuffed the channel to boot," said Jim Poyner, senior vice president at Oppenheimer & Co., in New York. "They're having that revenue problem haunt them, and we just don't see a bottom yet." Company officials indicated that Apple's revenues in the current quarter would range between $1.6 billion and $1.7 billion, or about $200 million short of Poyner's expectations. As a result, Poyner now expects Apple to finish with a loss of $1.60 per share, excluding the $155 million charge associated with Apple's restructuring. The early reaction on the street was mildly negative, with Apple shares down slightly in early morning trading. By 10:30, Apple's shares were off .437 to $16.125. As part of its restructuring, Apple plays to lay off 4,100 employees and temporary workers. At the same time, it plans to kill several projects, including OpenDoc and videoconferencing. But there were few surprises in the announcement, and analysts said the absence of a major change in strategy left them unsure about Apple's ability to regain lost market share. "I don't see the options. I really sit back and don't see big choices that Apple has in terms of where they go," said Eugene Glazer, senior vice president at Dean Witter Reynolds, in New York. "They're caught in a situation of losing market share, and a niche market at that--and it's going down. That's what has to get turned around. That's critical. You have to give investors confidence it's going to turn around." Although Apple suffered another revenue drop in December, analysts said many other PC vendors turned in good numbers during that quarter. "Apple just continues to sink, and in the meantime, the rest of the industry is growing. Apple can't say industry conditions are lousy," Poyner said. "They haven't had the industry crutch to use. This is just, plain and simple, further doubt on the part of that buying public that these guys are going to offer something worth buying." Copyright(c) 1997 Ziff-Davis Publishing Company. All rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Ziff-Davis Publishing Company is prohibited. PC Week and the PC Week logo are trademarks of Ziff-Davis Publishing Company. PC Week Online and the PC Week Online logo are trademarks of Ziff-Davis Publishing Company. Send mail to PC Week