FIRMS CUTTING TO THE CORE : APPLE PLANS TO SHRINK WORK FORCE 30 PERCENT.

Byline: Catalina Ortiz Associated Press

Apple Computer Inc. said Friday that it would slash its work force 30 percent and pare its line of Macintosh computers and software in a dramatic bid to stem financial losses and survive as a smaller, more focused company.

The restructuring - the second in 12 months - will cut into Apple's bottom line by $155 million this quarter, but is intended to reduce annual expenses by $500 million.

Apple Chairman Gil Amelio expressed optimism that the restructuring would restore the company's luster.

``We've made the right decision to focus our energies, and these decisions - I am absolutely convinced - will put us on the road back to health, and we'll be looking at a very different situation over the next few quarters,'' he said.

The retrenchment is the Cupertino-based company's latest attempt to reverse chronic financial losses and shrinking market share for its flagship Macintosh personal computer.

Apple is cutting 2,700 full-time employees and 1,400 contract and temporary workers out of its work force of 13,400. It laid off 1,500 employees in a smaller reorganization last year.

The company said it would simplify its offerings of Macintosh computers and PowerBook laptops. It also would try to cut costs by using technologies developed by other companies instead of developing them in-house.

Apple said it would deliver its next-generation operating system, code-named Rhapsody, next year as planned. But it will cut spending on future upgrades of the Mac OS, reducing the number of new releases of the program beginning next year to one from two per year.

Some industry observers expected Apple to sell or spin off its Newton hand-held computer, which after a rocky start has become admired for its technology but is still losing money.

But Apple pointed out that Newton was one of the few areas not affected by the reorganization because reaction to the device has been so good.

The company announced part of its makeover last month, after reporting a stunning loss of $120 million for the critical October-December quarter. It was the fourth quarter out of the past five in which Apple lost money - a flood of red ink totaling $936 million.

Apple's chief financial officer, Fred Anderson, said the $155 million restructuring charge - most in connection with layoffs - would be in addition to $95 million in charges for parts of the reorganization announced last year but not yet carried out. The company also will take a charge of $300 million to $320 million in connection with its purchase of Next Software Inc. The company also expects to post an operating loss but would not give an estimate.

The company released details of the reorganization after stock markets closed. Its stock closed Friday at $16.56-1/4, up 18-3/4 cents, on the Nasdaq Stock Market.

One industry analyst said the announcement showed that Apple understands what it needs to do.

``It's very clear that they realized this is a very difficult time and that the only way they are going to get back to profitability is to cut costs and focus on core competencies,'' said Tim Bajarin, president of Creative Strategies Research International.

He said Apple's streamlining had simplified its decision-making process, which should help it get things done more quickly and easily.

``My big question, though, is why didn't they do this six months ago?'' Bajarin said.

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Chart: (Color) Apple's travails

Associated Press