Apple expects lower earnings, blames Motorola

Here's an interesting excuse: Apple Computer has notified analysts that its fourth quarter earnings would be much lower than previously expected because of a shortage of Motorola G4 chips. What's interesting about this, of course, is that Apple's fourth quarter ends next week; the company had only announced G4 systems three weeks ago and knew at the time what the shipments would be like. In fact, the company specifically held off on high-end 450 and 500 MHz G4 systems until October and November, respectively, due to its knowledge that Motorola wouldn't be able to deliver the chips until then.

Anyone else smell a rat?

If Apple is to be believed, its fourth quarter, which stretches from July 1, 1999 until September 30, 1999, is a bust because systems that weren't expected to ship until after the quarter was over will not be ready on time. This despite the fact that three of Apple's product lines--the iMac, iBook, and PowerBook lines, do not even run on the G4: They run on the old G3 chip. Meanwhile, Apple's high-end system, the PowerMac, has been available in G3 configuration for two of the three months that make up the quarter. And we're to believe that the G4 delay has cost them the quarter? What about the supposedly strong sales of the iMac? And the 140,000 preorders for the iBook?

"We regret that we will not be able to ship all \[of the G4 preorders\] this quarter," said Apple's interim CEO Steve Jobs. "This is a temporary issue, and we hope to catch up early in the coming quarter."

Apple is now saying that it will earn between $75 million and $85 million, well below the $106 million it earned in the same quarter last year. And the company says that it expected to ship 150,000 G4 systems in September. It will now ship perhaps 40% of that. But you have to think they knew this could happen. That this would probably happen. That this would almost certainly happen.

And yet, the blame falls on Motorola, manufacturer of the G4 microprocessor. Motorola, as you can imagine, is not amused.

"There are no surprises here," reads a statement from the chipmaker. "Motorola has advised Apple of the G4 schedule status everyday."

"This is sort of a low integrity statement," Jobs explained in an interview with CNNfn. "They accepted an order to supply well in excess of what we needed and now they can only ship 40 to 45 percent of that."

Apple hopes to make most of the shortfall up in the next quarter, of course, and the historically strong Christmas period should be a good time to do it. But availability issues have always dogged Apple: The company has been hamstrung by the inability of consumers to get their hands on its machines. Blaming Motorola for the G4 fiasco just glazes over a bigger issue that, even in this instance, is clearly the problem it needs to be dealing with

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish