Apple Q1 Loss of $195 M

was the biggest Mac news during last week even though it was expected. The loss is nearly $250 M if one-time sales of investments are not included. This is the first quarterly loss for Apple since the fourth quarter loss that ended the 1997 fiscal year. Here is Apple's press release with links to the financial details. Fortunately, Apple has over $4 billion in cash reserves to it carry into subsequent quarters without skipping new product introductions. In addition, Apple took action through price cuts and rebates to try to confine the loss to the first quarter.

The loss was caused by a significant slump in general personal computer sales worldwide plus three Apple-specific issues outlined by Apple's iCEO Steve Jobs in telephone conference calls with financial analysts during the first quarter. The issues are: MHz gap, lack of a BTO CD-R drive and G4 Cube pricing being too high. The price of the 450 MHz Cube has been cut from $1799 to $1499 and each of the other issues were addressed in Apple's new products announced January 9th at Macworld Expo in San Francisco.

With the recent $200 price cut on the high end iMacs and 15" Flat Panel LCD Display, a revised consumer Mac may be in the offing for announcement at Macworld Expo Tokyo next month. Circuit City is advertising iMac DV+ 450s as "Limited quantities. No rainchecks" which also makes one wonder [Dana Baggett]. And Jeff Hubert pointed out that the original hardware requirements for Disc Burner software said "Hardware Required: iMac or later computers that have an internal Apple CD recording drive." Now it says "Power Mac G4s" instead of "iMacs or later".

We noted just before Macworld Expo San Francisco that if iMac sales were slipping badly (which they have), Apple could move the iMac further downscale and fill the gap with an inexpensive G4 Cube. Hopefully, Apple would also put a high end G4 CPU (733 MHz) in the Cube and release an 18" Flat Panel LCD for the executive suite. However, with disastrous first quarter Cube sales (about 29,000 as compared with the disappointing 107,000 in the fourth quarter--MacWEEK) even with the rebates, I fear the best general personal computer ever made may go the way of the Passenger Pigeon.