Apple Computer Inc. announced yesterday that its fourth-quarter earnings will be lower than expected because it cannot get enough high-speed G4 processing chips from Motorola Inc. to fill orders for its new line of Power MacIntosh computers.
Net income for the quarter ending Sept. 25 will be $75 million to $85 million, down from the $120 million expected by analysts and also lower than the $106 million earned in the same quarter last year.
The company said it has received orders for more than 150,000 Power Mac G4s in the three weeks since the product was announced, but the chip shortage has produced a backlog. Apple expects to receive the chips and have all current orders processed by the end of December, said Rhona Hamilton, a spokeswoman for the Cupertino, Calif.-based company.
Apple shares rose $2.12 1/2 to close at $79.06 1/4 before its trading was halted yesterday. In after-hours trading, however, the stock fell 13 percent, to about $68. Shares of Motorola were up $1.18 3/4 for the day to close at $90.68 3/4.
"We are very disappointed that this quarter's deliveries of G4 processors will be lower than planned," Fred Anderson, Apple's chief financial officer, said in a statement. "We continue to expect significant year-over-year growth in units and revenue in the December quarter."
Steve Jobs, Apple's interim chief executive, said, "This is a temporary issue, and we hope to catch up early in the coming quarter."
The delayed shipments put a crimp in a recent run of good news for the company. Last year, thanks to robust sales of Apple's colorful iMac computers, the company turned its first annual profit in three years.
Analysts say the G4 problem may reflect the usual delays in testing and delivering a new product, as well as unexpectedly strong demand for Apple's new line of computers, which are designed for publishing, voice recognition and other high-performance programs.
"Apple may feel a little tricked or misled [by Motorola] . . . but the long-term effect on revenue may be negligible," said Mark Specker, an analyst with SoundView Technology Group Inc., an investment firm in Stamford, Conn. "It's the investors that Apple will be seeking forgiveness from," not the buyers, who "tend to be loyal almost to a fault."
Motorola is "thrilled to have an overwhelming response" to its new G4 chips, which make the new computers three to 10 times as fast as conventional personal computers, said Will Swearingen, a marketing manager for Motorola's Semiconductor Product sector in Austin. Swearingen acknowledged that the Schaumburg, Ill.-based company is behind in shipments, and several weeks ago it ramped up to full production, 24 hours a day, seven days a week, to solve the problem. The problem should be solved in the next few weeks, he said.
"It's not a big deal for Motorola," said Mark McKechnie, an analyst with Bank of America Securities in San Francisco. "Apple represents less than 1 percent of their business."
CAPTION: Steve Jobs: "This is a temporary issue."