APPLE Computers will post a second quarter after tax loss of around $700 million (£447.62 million) due to inventory devaluation and restructuring charges, its chief executive Mr Gilbert Amelio, announced yesterday.

But Mr Amelio added: "I'm confident that at this point I know what the problems are and that they are fixable."

The second fiscal quarter for Apple, which employs around 1,500 people in Cork, will end on Friday.

Moody's Investors Services on Tuesday disclosed that it had downgraded $305 million of long term Apple credit to the status of high risk "junk bonds".

On Wall Street, investors reacted calmly to Mr Amelio's announcement, having expected the worst after Apple released a pessimistic forecast at the beginning of the year.

The California based firm then reported a $69 million loss in its first fiscal quarter (October to December 1995).

Apple shares in mid session gained 12 cents to reach $24 on hopes that the firm had hit its lowest point and was now on the rebound.

Mr Amelio, who was named to head the company seven weeks ago, said the market far personal computers is unsettled".

As a result, Apple now faced three major challenges lower anticipated revenues and shipments compared with the second quarter last year, inventory write downs and restructuring charges - necessary to "realign the company for the future".

"These factors will contribute to an anticipated second fiscal quarter net after tax loss of around $700 million, more than half of which will be related to inventory write downs and about a quarter of which will be related to restructuring charges," according to Mr Amelio.

"The inventory write downs and restructuring charges are critical first steps in orchestrating the comeback of the company."

Mr Amelio stressed that "the strategic and operating plans we are currently developing will enable us to build upon Apple's fundamental strengths and competitive position, reinforce our customer appeal, and realise the company's long term earnings potential".

In announcing its downgrading of Apple debt securities from Baa3 to Ba2, Moody's predicted that Apple sales would be subject to severe pressure for the next 12 to 18 months".