Apparently, the purchase of NeXT Software is going to cost Apple more than the estimated $400 million it announced when the deal was first made. The new figure is $430 million and Apple is already predicting that this cost will cause another quarter of non-profitability. Apple is now expecting to lose money at least through the fourth quarter of this year, which is one quarter longer than last month's estimate and three quarters longer than CEO Gil Amelio's original plan.
The purchase of NeXT cost Apple $325 million in cash, plus an additional $55 million to pay off NeXT's debt. Apple also issued 1.5 million shares of company stock. The deal finally closed February 4.
In other bad news for Apple, their worldwide share of the personal computer market fell to 4.3% in the first quarter of 1997 as Apple saw more declines in net shipments and sales. This is the second straight quarter that Apple has seen sales slip dramatically. Also, Business Week recently published an article wondering whether the company is slipping into hi-tech irrelevance, citing company inertia and frustration within the company. A growing number of users in the Apple community are already wondering whether NeXT was the right choice for Apple. Be Inc., spurned by Apple when the NeXT deal came together, has already demonstrated Mac software running on a BeOS system: such a feat will be impossible on the NeXT OS for at least a year.
And just when you thought it couldn't get any worse: Apple today made it to the top of a list of top financial underachievers and underperformers. The list is published by the institutional investor and shareholder activist California Public Employees' Retirement System, the nation's largest pension fund. CalPERS named Apple to the list because of the company's quickening downward spiral in the marketplace as computer buyers abandon the Macintosh computer in greater numbers. Other dubious achievers this year include Sybase and Novell.
"It is clear that these companies have lost their competitive edge and without intervening could emerge as financial deadweight compared to their industry peers," said William Crist, president of the CalPERS board of administration in a statement.