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by Wes George
 Apple,

Finances,

Money,

and Trading.

Mmmmmmm...... Good




Tough Love For Apple Computer
December 14th, 1998

When you point your browser to macobserver.com, you can safely assume that you have arrived in the midst of the Mac faithful. Yet as long time supporters and end users of the Mac platform we must not turn a blind eye to the errors of Apple’s sometimes wayward management team. The New Apple has arrived, we’re all thinking different and the winds of change are blowing in our faces. We mustn’t allow the recent success of the iMac and a few points of regained market share to let Apple’s management team get sloppy.

This team or various incarnations of it over the years are the foremost reason that the Macintosh is not the world’s dominant personal computing solution. Let’s be honest about this, Apple’s technology is the world’s best. Corporate management, not research and development, made the blunders that gave Microsoft the universe on a sliver platter. Of course, finger pointing and 20/20 hindsight aren't constructive. But neither is a blind cheerleading section.

I am concerned by what I have read about Apple’s German Subsidiary at http://www.heise.de/ct/english/98/25/028/. Apple Computer GmbH seems to be doing everything wrong, from poorly organized marketing campaigns to screwing up the distribution channels to adopting cavalier attitudes about how and when to report earnings and/or losses. I was shocked to read that Apple spokeswoman Theresa Wermelskirchen is reported to have said, "The guideline from Cupertino clearly says: less revenue, more earnings," while denying that they missed their numbers for 1998.

"Less revenue, more earnings"! Those are the foulest words imaginable to the Mac loyalists who want to grow the platform. Worst, they are suicidal words from a company whose future success is hinged on building more market share and mindshare. It implies that Apple Germany is going to keep its prices way high and move less product, but the books from the profit margin point of view will look peachy. Meanwhile, Apple’s market share in Germany will continue to decline. It sounds as if the Gil Amelio era has never ended in Europe. Heads need to roll. The ranks of Apple in Europe need to be purged of the dead wood.

Apple’s market in Germany is only a small percentage of Apple’s worldwide sales figures so the numbers aren’t going to be noticeable in the bigger scheme of things. However, the mindshare lost in an incredibly important market space like Europe is not measurable by the conventional tools of the accountant. The Mac Loyalists in Germany are organizing to let Cupertino hear their voices raised in protest. This is the only way we would have ever heard about this situation. What about Apple’s operations in more silent parts of the world? Are the same bad management policies being pursued in Asia, and South America?

Can we trust the corporate suits in Cupertino to do the right thing or are they going to blow it again? It looks like Wall Street doesn’t trust them judging from the lackluster performance of the stock even with the in-your-face-success of the iMac.

The rule of thumb here is when you're ten points behind in the game, one homerun isn't going put you in the lead. Not only does Apple need more homeruns (we’re all betting on the P1,Yosemite and OSX), Apple’s management needs to execute flawlessly over the years not just for a few quarters.

I would encourage all serious MacHeads to read about the Apple Germany GmbH crisis and then submit your appalled signature to the "Open Letter to Steve".

Your comments are welcomed.


Check out the Apple Trader Forum in the new Mac Observer Forum section! Talk about Apple's stock, the markets, or give your best stock tips, just come on in!

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Wes George writes about the financial side of being a Mac nut. Wes has followed Apple's finances for the last 7 years and comes to The Mac Observer every Monday to tell all about his opinions. He is, in his own words, "inordinately fond of money." If you would like to write Wes, make it nice. Someday you might own a company that has something to do with Apple, and Wes will probably still be writing for The Mac Observer...... On the other hand, Mr. George is known to love a rousing, hair-raising debate, so send him your worst!

Disclaimer: This column is for informational and entertainment purposes. While Mr. George may be sage indeed, his writings can not be construed as a solicitation to buy, nor an offering to sell any particular stock. As with any trading in the financial markets, you must use your own judgment to make the best trades that you can. Neither The Mac Observer nor Wes George may be held accountable for trading advice.



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