Apple Computer needs to cut costs 20% to return to profitability and has finally decided to layoff a large portion of its workforce. The layoffs-- estimated at 2500 to 4000 people--will be announced in February. Macintosh prices will drop 27% as well. Apple CEO Gil Amelio is also taking a close look at Newton, the disastrous "personal digital assistant" that has yet to turn a profit. Apple will probably sell the Newton technology to a third-party company. "Maybe we missed the boat," he said. Apple will decide Newton's fate soon.

One product that is definitely doomed is "Pippin," the TV-based game machine that attempted a rebirth as a WebTV-type device. Pippin was quickly eclipsed by Nintendo 64 and WebTV in its target markets and has sold poorly. "I've backed away from Pippin," Amelio says.

Amelio also admits that Apple will have to shrink more that expected, to $7.5 billion a year in revenue. Unusually poor Macintosh computer sales --down 30% from the previous year, the first drop in yearly sales ever-- are forcing the company to reassess