September 26, 1997: In one of his first assignments after returning to Apple as interim CEO, Steve Jobs reveals the company’s large quarterly loss of $ 161 million.
Sending bad news to investors is miserable, but things will change dramatically for Cupertino.
Apple’s biggest loss isn’t as bad as it seems
First of all, Jobs did not cause the biggest loss to Apple ever. The bloodshed of earnings stemmed from decisions made by Jobs ’predecessor, Gil Amelio. During Amelie’s 500-day rule of Apple, the company lost a whopping $ 1.6 billion. This essentially erased every cent of the profit that Cupertino had earned since fiscal 1991.
Amelio left his role as Apple on July 7. Jobs took over the running of the company, while reportedly seeking a replacement.
More importantly, the $ 161 million loss is actually a reflection of some good things starting with Apple. The loss included a write-off of $ 75 million because Apple bought the Mac OS license from Power Computing. This marked the end of the catastrophic era of “cloned Macs”.
Mac OS 8 improves Apple’s score
Apple was also encouraged by the recent launch of Mac OS 8, which sold a whopping 1.2 million copies in its first two weeks. This marked the most successful sales performance of Apple’s software product at the time.
Although Mac OS 8 was not enough to bring Cupertino back to profitability, the new operating system significantly exceeded many expectations. It also showed that Apple still benefits from the huge fan base it supports.
“We remain focused on our primary goal of restoring Apple to sustainable profitability,” Apple CFO Fred Anderson said when the company’s grim quarterly “face-to-face” data was announced. “Our goal for fiscal 1998 is to continue to reduce Apple’s profitability point by combining further cost reductions and improved gross margins.”
As with Apple’s current strategy of “too few promises and over-fulfillment,” the forecast proved too cautious. The following year the company did quite well.
Apple’s big turnaround begins
While it sounded a bit ridiculous in a year that saw Apple’s biggest losses to date, 1998 marked the beginning of a turnaround. The company released the iMac G3 that year, returning to profitability as early as the following quarter. And Apple hasn’t slowed down since.
But before that, Apple had to go through this disappointing call to make money. Shareholders who are willing to endure a little more have reaped big rewards. Today, Apple’s market capitalization reaches north of $ 2.4 trillion.
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