CUPERTINO, California—December 5, 2000—Apple® today announced that it hasexperienced significantly slower than expected sales during October andNovember, which will result in revenues and earnings for its quarter endingDecember 30, 2000 being substantially below expectations.

The company expects to report revenue of about $1 billion and a net loss,excluding investment gains, of between $225 and $250 million when actualresults are announced on January 17, 2001.

The $600 million revenue shortfall from previous expectations is due tolower than expected channel sell-through across all geographies andunplanned sales promotions and pricing actions. The net loss is the resultof the revenue shortfall and cancellation charges related to decreases inforecasted component purchases for current products.

“The swift industry-wide decline in PC sales will result in Apple's firstnon-profitable quarter in three years,” said Apple's CEO Steve Jobs. “We'renot happy about it, and plan to return to sustained profitability nextquarter. We are committed to reducing our channel inventories to normallevels by the end of this quarter, and remain very excited about the newproducts and programs Apple will be rolling out in 2001.”

“In light of the lower results anticipated for the December quarter, we nowexpect revenues for fiscal 2001 to be in the $6 to $6.5 billion range,” saidApple's CFO Fred Anderson.

Apple management will conduct a conference call today for financial analystsand the news media at 2 p.m. (PST)/5 p.m. (EST). The dial-in number forfinancial analysts is (913) 981-5510, and the number for news media is (913)981-5519. A recording of this call will be available for replay for sevendays beginning at 5 p.m. (PST)/8 p.m. (EST). The number for the replay is(719) 457-0820 and the confirmation code is 446507.

Apple ignited the personal computer revolution in the 1970s with the AppleII and reinvented the personal computer in the 1980s with the Macintosh.Apple is committed to bringing the best personal computing experience tostudents educators, creative professionals and consumers around theworld through its innovative hardware, software and Internet offerings.

Except for the historical information contained herein, the statements inthis press release are forward-looking statements that involve risks anduncertainties. Potential risks and uncertainties include, withoutlimitation, continued competitive pressures in the marketplace; the effectcompetitive and economic factors and the Company's reaction to them may haveon consumer and business buying decisions with respect to the Company'sproducts; the ability of the Company to make timely delivery of newprograms, products and successful technological innovations to themarketplace; the continued availability of certain components and servicesessential to the Company's business currently obtained by the Company fromsole or limited sources and the ability of the Company to successfullyevolve its operating system. More information on potential factors thatcould affect the company's financial results is included from time to timein the Company's public reports filed with the SEC, including the Company'sForm 10-K for the 1999 fiscal year, and the Company's Form 10-K for thefiscal year ending September 30, 2000, to be filed with the SEC.

Apple, the Apple logo,Macintosh and QuickTime are either registered trademarks or trademarks ofApple. Other company and product names may be trademarks of their respectiveowners.