Stock in Apple Computer dropped precipitously overnight Friday after the company announced Thursday that fourth-quarter earnings will fall well below analysts' expectations due, in part, to slow September product sales.
While shares of Apple closed up almost 10 per cent at the end of Thursday's trading, the market reacted badly to the news of the forecast, and the stock plummeted $27 in overnight trading, standing at just over $26 early Friday, a loss of over 51 per cent. The stock had closed at $53 on Thursday.
Over the past few months, Apple released a number of new products, displaying the vendor's usual flair for contemporary design and sound performance. Some analysts, however, are suggesting the new product line has adversely affected the prices of older Apple hardware models, pushing them lower than expected. Additionally, analysts say the adoption rate of the latest Apple technology lags below forecasts.
For the quarter ending Sept. 30, 2000, Apple said it expects to report revenue between $1.85 billion and $1.9 billion, the company said in a statement. The vendor expects to post diluted earnings per share in the order of 30 to 33 cents. Apple is due to report its fourth-quarter results October 18.
First Call/Thomson Financial had pegged Apple's earnings significantly higher. With 17 analysts polled, First Call had been expecting Apple to earn 45 cents a share in its fourth quarter.
"We've clearly hit a speed bump, which will result in our earning, before investment gains, approximately $110 million rather than the expected $165 million for the September quarter," Steve Jobs, Apple's chief executive officer, said in the statement. He described the slowdown in his company's performance as "disappointing."
Apple's September sales do appear to be behind schedule, Fred Anderson, the company's chief financial officer, said in the statement. The company's sales to the US education sector haven't peaked during the September rush back to school as Apple had expected. The new Power Mac G4 Cube computer also caused problems with slow sales, following its launch, the vendor said.
"We are currently re-evaluating our plans going forward, and will provide lower growth targets for next quarter and the next fiscal year when we announce our final results on October 18," Anderson said.
Apple also failed this year to release its new operating systems on time. A public beta version of the Mac OS X arrived on Sept. 13 of this year. The final version of the OS should appear early next year.