Apple Misses Lowered Estimate; Forecasts Lousy December Quarter

Updated from 5:52 p.m. ET

Apple (AAPL Quote) warned investors Wednesday that the pioneer computer maker has started a no-growth movement -- revising revenue forecasts downward for this quarter and predicting revenue will be relatively flat this fiscal year.

In a conference call after the company released disappointing fiscal fourth-quarter earnings, Chief Financial Officer Fred Anderson said he was forecasting revenue of $7.5 billion to $8 billion for the year -- essentially flat year-to-year growth. In addition, he gave a sharply reduced estimate of $1.6 billion revenue for the December quarter, the company's fiscal first quarter.

The problems, according to CEO Steve Jobs and Anderson: The poor reception of the PowerMac G4 Cube, which made up $90 million of the most-recent quarter's revenue shortfall, and slumping educational sales, which made up $60 million of it.

Anderson set the earnings-per-share estimate for this fiscal year, which ends in September 2001, at $1.10 to $1.25, compared with Wall Street's estimate of $1.73, according to First Call/Thomson Financial.

"The guidance was dramatically lower than we expected," said David Bailey, an analyst with Gerard Klauer Mattison. "They are basically saying that on a unit basis they are going to grow slower than the industry, which seems conservative, but they have challenges in front of them." (Gerard Klauer hasn't done underwriting for the company.)

In after-hours trading, Apple was down about 13%, trading at $17.46 a share, according to Island. It finished regular trading at $20.13 a share.

In the September quarter, Cupertino, Calif.-based Apple earned 30 cents a share excluding a gain. The computer maker, which warned last month that its results would fall short of what analysts expected then, was projected to earn 31 cents a share in the fiscal fourth quarter. Revenue climbed 40% to $1.87 billion from $1.34 billion in the year-earlier quarter. Gross profit margins were 25%, down from 29% in the year-ago quarter.

Jobs promised that the company would tough out a couple of "disappointing" quarters and resume course. Much of that disappointment comes from the G4.

"In the eyes of our customers, the G4 Cube is simply priced too high," Jobs said, adding that there will be lower-priced models by spring.

Other problems included some flawed switches on some early models that caused random turn-offs and some lines in the plastic molding mistakenly perceived as cracks, Jobs said. And consumers have expected, and not gotten, machines with processors closer to the higher megahertz rating of PCs based on the Intel (INTC Quote) and Microsoft (MSFT Quote) technology.

Educational sales, long a staple of Apple, slumped badly. Anderson and Jobs said sales were hurt by Apple¿s transition in July from a third-party to an in-house sales force.