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EARNINGS

Apple Computer's Profits Drop 27% to $22.4 Million

October 18, 1985|DONALD WOUTAT and For detailed data and results of other companies, please see tables, Page 8.

Apple Computer did considerably better than analysts had expected in its July-September quarter but still recorded a 27% decline in profits to $22.4 million. Sales were off 16% to $409.7 million.

Analysts originally expected Apple to barely break even for its fourth fiscal quarter and more recently had been raising their estimates. But the Cupertino, Calif., firm, citing results of its reorganization and cost cutting, exceeded all forecasts. For the year, Apple earnings slipped 4.4% to $61.2 million despite a 27% gain in dollar sales.

Analyst John Dean of Montgomery Securities, San Francisco, said Apple "did a very quick and professional job of reorganizing." He predicts a 25% earnings gain next year.

John Sculley, the firm's president, said the results "offer the most compelling results possible" that its streamlining efforts have worked.

Apple's reorganization, which led to the demotion and eventual resignation last month of founder and chairman Steven P. Jobs, included widespread layoffs and the closing of three of its six factories. It was precipitated by the sharp slowdown in the personal computer industry.

As Burroughs had recently signaled, the Detroit-based maker of a broad range of computers reported a 36% drop in earnings to $32.2 million for the quarter ended Sept. 30. It blamed half of the decline on losses at its Memorex computer component business and called the quarter "below our expectations and a disappointment."

Also as expected, Lotus Development of Cambridge, Mass., the leading developer of software for personal computers, said quarterly earnings plunged 30% to $6.4 million. Sales gained 9% to $49.7 million. Sales of its Jazz software program haven't met expectations. But Lotus said: "We look forward to the fourth quarter with the largest order backlog in our company's history."

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