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Apple to cut 4,100 jobs
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March 14, 1997: 9:51 p.m. ET
Move expected to cut costs by $500M a year, improve bottom line by 4Q
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NEW YORK (CNNfn) - Apple Computer Inc. said late Friday it was slashing its work force by 4,100 in a last-ditch effort to save the troubled computer maker.
Out of the total number affected, about 2,700 are full-time workers. The remainder are part-time and contract employees. The cuts will affect about 30 percent of Apple's work force. Fifty-five percent of the job cuts will be in the United States.
Cupertino, Calif.-based Apple also estimated it would take a restructuring charge of $155 million in the company's second quarter.
Apple said its goal is to cut $500 million from annual operating expenses, and expects its gross margins to improve by the fourth quarter of its fiscal year '97.
Smith Barney computer analyst Barry Bosak said there was a good chance the cutbacks would help if they were done correctly. (106K WAV) or (106K AIFF)
Apple began to pare down its staff in April 1996, when it cut 1,500 employees out of 15,800. In September 1996, the company trimmed another 1,300 workers.
While it is cutting back on some technology developments, including videoconferencing, Apple said it is committed to delivering Rhapsody, its next-generation operating system, in mid-1998. The company also plans to keep its Newton and Claris software divisions intact.
"The top priorities guiding our reorganization are the rapid delivery of distinctive products for our loyal business, education and home customers and the development of a robust next-generation operating system to carry them into the future," Apple Chairman and CEO Gilbert Amelio said in a statement.
"We can best achieve these goals by streamlining our organization, simplifying our product lines to deliver fewer, but much stronger models, and stopping investments in activities that are not central to these core businesses."
The job reductions came in about in line with analysts' expectations. Some on Wall Street had predicted the company would fire as many as 6,000.
Layoff notices will go out to employees later this month.
"It is very painful to have to lay off people who have worked very hard to get Apple back to health. The people who remain are essential to that task," Amelio said.
Amelio admitted that "Apple has suffered in the past from lack of business discipline."
"With this restructuring, and the painful decisions that come with it, we are addressing the problem of resource fragmentation and the resulting weakness," he said.
"We will limit our focus and put significant muscle behind targeted efforts in order to successfully develop and market winning solutions that have made Macintosh customers some of the most passionate and loyal in the industry."
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Apple Computer Inc.
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