Jim, I'm reposting this article regarding the G4 shortfall
NEW YORK (CNNfn) - Apple Computer Inc. stunned Wall Street Monday by warning its fourth-quarter earnings will fall well below analysts' expectations due to a shortage of high-powered chips to run its new line of personal computers.
Apple officials attributed the shortfall to production problems at Motorola Inc., which manufacturers the G4 processor. The G4 is the heart of Apple's new line of Power Mac computers.
"We are very disappointed that this quarter's deliveries of G4 processors will be lower than planned," Fred Anderson, Apple chief financial officer said in a statement. "Orders for the Power Mac G4 have been strong and we anticipate ending the September quarter with a substantial order backlog. We continue to expect significant year-over-year growth in units and revenue in the December quarter."
In an interview with CNNfn.com, Apple interim Chief Executive Officer Steve Jobs said the company had originally expected to ship around 150,000 Power Mac computers in the fiscal fourth quarter. But the production problems are likely to cut that figure by as much as 60 percent.
"It's unfortunate," Jobs said, adding the company hopes to make up most of the shortfall in the fiscal first quarter ending in December.
News of the earnings warning caught Wall Street by surprise because many analysts had grown accustomed to Apple exceeding expectations since co-founder Jobs reassumed control of the company in 1997.
"We were all surprised by the magnitude of the shortfall," said Louis Mazziucchelli Jr., an analyst with Gerald Klauer Mattison. "I think Apple bet on being able to get these chips from Motorola, and it was a fair bet, but they bet wrong."
In after-hours trade, Apple (AAPL) shares tumbled almost 14 percent to 68, down from Monday's close of 79-1/16.
Motorola disputes Apple's claims
Motorola officials contested Apple's claims of slow shipments, saying they routinely advised the Cupertino, Calif.-based computer company of its timetable as advanced orders increased.
"There are no surprises here," the company said in a statement. "Motorola has advised Apple of the G4 schedule status everyday."
However, Jobs said it was not until the last few weeks that Motorola officials disclosed the full extent of the production problems.
"This is sort of a low integrity statement," Jobs said. "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."
Brian Wilkie, general manager of Motorola's personal computer systems division said the actual number of deliveries has changed constantly the past few weeks.
"Like any high-technology launch, this schedule has gone back and forth quite a few times," Wilkie told CNNfn. "However, the schedule is going well and we expect to catch up fairly quickly."
Supercomputer on a chip
Apple has been promoting the G4 as the world's first "supercomputer on a chip," noting it can process data in 128-bit chunks - double the speed of most traditional computers. Apple officials claim the chip is nearly three times faster than the 600MHz Pentium III chip manufactured by rival Intel Corp. (INTC).
Wilkie said he expected Motorola to fill Apple's current orders within a few weeks and he did not expect the shipment dispute to interrupt his company's partnership with Apple, which spans some 20 years.
He also said he did not expect the pace of shipments to hurt Motorola's earnings forecasts.
"We're always concerned when we have an unhappy customer and we're moving heaven and earth and part of Texas to get this order filled," Wilkie said.
Jobs, while clearly disappointed with Motorola, also said he did not see a change in the company's long-standing partnership.
"Even married couples have arguments," he said. |
