Architosh News Reports
  Architosh Staff ([email protected])


Apple Financial News and Notes from Conference Call

19 Jan 2000

News coverage of Apple's Q1 '00 Financials

Apple's Q1 '00 financials were outstanding, besting estimates made on the street for both profit and overall revenue increases. These statements were made by Fred Anderson, CFO, after the market's close and based on these extremely positive figures Wall Street should react enthusiastically to the news tomorrow.

Key Q1 '00 Figures

Apple Financials Q1 '00 Q4 '99 Q1 '99
Net Profit $183 million $152 million
Revenues $2.34 billion    
Gross Margins 25.9 percent 28.2 percent
Units 1.37 million    

The quarter's results include a $5 million net favorable impact from non-recurring items, including an after-tax gain of $101 million resulting from the sale of approximately five million shares of ARM Holdings plc., a net restructuring charge of $6 million, and a one-time charge for special executive bonus of $90 million.

iMac and iBooks sales reach very near a million, by themselves!

Total unit sales were 1.37 million systems with over 700,000 iMacs and 235,000 iBooks. These two top sellers drove unit growth over 46 percent over the year-ago quarter, outpacing the industry average.

"Strong earnings combined with superb operational efficiency resulted in positive cash flow from operations of $373 million," said Fred Anderson, Apple's CFO. "Apple finished the quarter with over $3.6 billion in cash and short-term investments, and over $5 billion if the Company's investments in ARM and Akamai Technologies, Inc. are included."

Questions and Answer Session:

We were unable to get all of the conference call, as our QuickTime streaming seemed to be overloaded (due probably to popular demand and Apple's under estimate of interest in hearing the Webcast -- the first time Apple has streamed a live webcast of a financial statement)

The first question we heard was about Apple's inventory levels at the end of the quarter (Q1 '00) due to inventory issues following the last quarter and the constrained backlog. Anderson noted that Apple's backlog levels and inventory are now back to normal levels. Later in response to another question Anderson noted that G4 supply issues for the 450MHz and below processors have improved. Inventory is now slightly less than five weeks. This is above Apple's best industry leading inventory levels but still better than most of the industry. Apple will no doubt improve these levels over the next quarter.

Another question addressed if Apple had any other ISP's lined up for possible partnerships other than EarthLink? Anderson said at this time it was just EarthLink.

One analyst asked if Anderson could comment on upcoming G4's, especially the newer faster G4's (the missing G4 500 MHz version) and the missing 500 MHz model. Anderson declined saying that Apple does not comment on unannounced products.

Due to the success of the iMac and iBook did Apple see any price erosion (average price for unit) over the quarter? Anderson commented that many iMac customers wanted the Special Edition iMac DV and that [Apple] "didn't see any price erosion". This was partly due to high-end versus low-end ratios being favorable. What it breaks down to is: that while Apple sold a lot of iMacs and iBooks in the last quarter they tended to see larger than expected demand for the high-end iMac DV Special Edition and the iBook naturally cost more than an iMac in general. What percentage of iBook owners chose an iBook over a PowerBook is not known.

Anderson commented that over the next quarter Apple should continue to see momentum in the Apple Store (which he commented is one of Apple's fastest growing segments) as well as lower operational cost associated with advertising. Seasonally, Q2 advertising for Apple is lower.

What is Apple Worried About (or What Makes Apple Worry?)

This was one of the last questions directed at Anderson. He said that the most important thing for Apple to be concerned about is getting products out on time and making sure their suppliers can deliver enough components to meet demand. This was understandable, as Apple was plagued in the Q4 '99 pre-holiday season with shortages of G4 processors (no G4 500 MHz microprocessors) and iBook constraints.

For more information see the press release.


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