Apple Revises Third Quarter Guidance

CUPERTINO, California—June 18, 2002—Apple® today announced that it expects to generate revenues of about $1.4 billion to $1.45 billion in the June quarter, down from previous guidance of about $1.6 billion. The lower-than-expected revenues are primarily due to soft demand in the consumer and creative markets such as advertising and publishing. Geographically, revenues in Europe and Japan have become particularly weak. The revenue shortfall is expected to be offset significantly by higher-than-expected gross margins primarily due to lower costs of some components. Accordingly, the Company has revised its earnings guidance to $.08 to $.10 per diluted share, compared to previous guidance of $.11 or slightly higher.

“Like others in our industry, we are experiencing a slowdown in sales this quarter. As a result, we’re going to miss our revenue projections by around 10%, resulting in slightly lower profits,” said Steve Jobs, Apple’s CEO. “We’ve got some amazing new products in development, so we’re excited about the year ahead. As one of the few companies currently making a profit in the PC business, we remain very optimistic about Apple’s prospects for long-term growth.”

Apple will conduct a conference call today for financial analysts and the media at 2 p.m. (PDT)/5 p.m. (EDT). The dial-in number for financial analysts is (913) 981-5517 and the number for the media is (913) 981-5528. A replay will be available beginning at 5:30 p.m. (PDT)/8:30 p.m. (EDT) and will be available for one week thereafter. The number for the replay is (719) 457-0820, code 631127.

Apple will provide live streaming of the conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The webcast can be accessed at https://www.apple.com/quicktime/qtv/conference_call/ and will also be available for replay. The QuickTime player is available free for Macintosh® and Windows users at www.apple.com/quicktime.

Except for the historical information contained herein, the statements in this press release are forward-looking statements that involve risks and uncertainties. Potential risks and uncertainties include, without limitation, continued competitive pressures in the marketplace; the effect competitive and economic factors and the Company’s reaction to them may have on consumer and business buying decisions with respect to the Company’s products; the ability of the Company to make timely delivery of new programs, products and successful technological innovations to the marketplace; the continued availability of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangements, and reduced end-user purchases relative to expectations; risks associated with the Company’s retail initiative including significant investment cost, uncertain consumer acceptance and potential impact on existing reseller relationships; the effect that the Company’s dependency on manufacturing and logistics services provided by third-parties may have on the quality or quantity of products manufactured; and the ability of the Company to successfully evolve its operating system and attract sufficient Macintosh developers. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the 2001 fiscal year, and the Company’s Form 10-Q for the quarter ended March 30, 2002.

Apple, the Apple logo, Mac, Mac OS, Macintosh, and QuickTime are trademarks of Apple. Other company and product names may be trademarks of their respective owners.