ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, January 30, 1996 TAG: 9601300101
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: The New York Times SAN FRANCISCO
STANDARD & POOR'S downgraded the computer maker's debt to ``junk'' Monday, and the stock price hit its lowest point in a year.
Uncertainty about Apple Computer Inc.'s future continued to gnaw at the company Monday, as Apple froze most research spending, while Standard & Poor's downgraded Apple's debt rating and a sell-off of shares pushed the company's stock to a new 52-week low.
Standard & Poor's lowered its rating on $300 million worth of Apple's debt to ``junk'' level Monday, citing expected operating losses, uncertain strategic direction and management turmoil.
The decision raises Apple's cost of borrowing, adding to the company's financial pressure.
An internal memo announcing the research freeze said Apple's management was preparing a reorganization plan that would be presented to the board within two weeks.
The memo gave no details of what that revamping might entail, but it was the first indication from inside the company that Apple has been continuing independently to explore a recovery strategy since it received a stock-swap merger offer last Tuesday from Sun Microsystems Inc. That offer valued Apple at only about $23 a share.
Apple shares closed at $29.125, down $1.50, in Nasdaq trading, still far higher than the Sun offer. Shares of Sun Microsystems closed at $44.25, up $2, as many investors apparently concluded that Sun was not in a hurry to overextend itself by acquiring Apple.
Meanwhile, people in the Silicon Valley investment banking community said Apple, based in Cupertino, Calif., had started exploring the interest shown by several companies that had previously considered buying it, including IBM and Motorola. Those companies would not comment Monday.
In temporarily freezing most research and development spending, Apple is trying to contain the part of its cost structure that is frequently cited as a reason for the company's financial woes.
Because Apple must develop and maintain its own hardware and software standards, while the rest of the personal computer industry adheres to common standards set by Intel Corp. for hardware and Microsoft Corp. for operating-system software, Apple has been hard-pressed to weather recent PC price wars.
In an attempt to reassure its customers, Apple ran advertisements Monday in a number of daily newspapers, including The New York Times and The Wall Street Journal, with a signed statement from Michael Spindler, Apple's president and chief executive. The statement said that ``the top priority of Apple's board and management team is to take action to prepare Apple for its next chapter of growth and profitability.''
LENGTH: Medium: 56 linesby CNB