With surprising dexterity, Apple Computer managed to candy-coat its US$56 million quarterly loss reported Wednesday, just a week after ushering out CEO Gil Amelio for failing to curtail the company's financial free fall.
The lackluster numbers all but glowed in comparison to the dire predictions bouncing around Wall Street and Silicon Valley in recent days. Forecasts of losses as high as $120 million had been prompted by Amelio's sudden departure and insinuations of a gloom-and-doom earnings report.
But the $56 million figure - which leaves the company far from its earlier expectation of a return to profitability next quarter - was greeted as a sign of promising news. The loss looks relatively light when positioned beside last quarter's massive $708 million slide into the red, or the year-ago quarter's $116 million loss.
"I see it as encouraging," said James Staten, an analyst at Dataquest, referring to Apple's quarterly revenues of $1.7 billion, up slightly from last quarter's $1.6 billion. "The thing I'm discouraged by is that PowerBook shipments are still down," he added.
PowerBook unit sales dropped from 22 percent to 13 percent of Apple's total mix, while Power Macs now make up 37 percent of unit sales. Education and consumer machines are holding strong at 50 percent of unit sales. Staten surmised that Apple's failure to meet last quarter's demand for PowerBooks may have sent its would-be customers to buy Wintel Notebooks.
Fred Anderson, Apple's CFO and acting CEO, sounded just like Amelio as he parroted this year's Apple motto: "Our highest priority is to return this company to sustainable profitability." But unlike the ousted CEO, he refused to make forecasts of when that day would come, despite repeated questioning during a conference call. The break-even point remains a hefty $8 billion and despite impressive operations cost-cutting, is not likely to dip below $7 billion even after another 500 layoffs (part of the 4,100 announced in March, but not yet carried out) and other measures are carried out.
Still Anderson sounded enthusiastic."Our management team is incredibly energized because we have our former [sic] founder Steve Jobs back in here," he said. Jobs, whom pundits favor for the CEO role even as they dismiss the idea as improbable, has been devoting whole days to jazzing up the Apple team and coming up with creative ideas to jumpstart his baby.
But one founder-as-advisor is apparently enough, and Steve Wozniak is now out of the loop. "Steve Wozniak was an advisor to Gil," Anderson danced around the issue. Certainly we all have a lot of respect for Steve Wozniak," he added, saying he hoped the Woz would still share his thoughts with Apple execs, but there is no formal relationship in place.
In the meantime, Apple decided Wednesday on a headhunter to track down a new CEO, but wouldn't divulge which firm will try to find a chief officer for the company, which has repeatedly had trouble finding a true match. Anderson said Apple is looking for "somebody who can really turn on our developers, our customers, and our employees; someone who's looking for a big challenge and has the energy level to meet that challenge."
Apple's stock closed at $16.44 Wednesday before the company released its financial report. While on the mend from its recent all-time low of $13, the poor stock price - which once topped $73 - reflects the company's reduced stature. Aside from bleeding cash to the tune of about $1.6 billion in the past year and a half, Apple was forced to trim its work force by a third this year and lost much of its top management, including chief technology officer Ellen Hancock, who walked the gangplank with Amelio last week.
"We're looking for a bright spot here," Staten said, laying out a scenario in which Apple's speedy new product line is being snapped up by eager customers. "But it's not clear that anything like that is happening," he lamented.
