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October 26th, 1999

[3:15 PM] MacMall's 3rd Quarter Results Impacted By Apple Product Shortages

MacMall's parent company, Creative Computers, has announced its 3rd Quarter results. The company reported an increase in total sales, though the company's Apple sales declined sharply due to product shortages. Apple had US$700 million in backorders at the end of the last quarter (Apple 4th fiscal quarter), which ended September 30th. These shortages were due to a confluence of events including G4 production problems at Motorola and the Taiwan earthquake tragedy. According to Creative Computers:

Creative Computers: 3rd Quarter Highlights:

  • Basic EPS $(.24)
  • EPS $(.07) excluding investment in eCOST.com.
  • Internet sales grow to $32 million - up 237% from the prior year.
  • eCOST.com sales for the quarter increase to $8 million and exit the quarter with monthly sales at $4 million.
  • Out-bound business-to-business sales for the quarter grow 87% over last year.
  • Apple sales decline 12.3% due to product availability.

Creative Computers, Inc. ("Creative") (Nasdaq:MALL) announced a consolidated third quarter loss of $.24 per share on sales of $172 million. This compares with earnings of $.11 per share for the third quarter last year on sales of $170 million. Excluding Creative's investment in eCOST.com (http://www.ecost.com), Creative lost $.07 per share for the quarter. This year's Q3 sales and results were adversely impacted by Apple product availability difficulties. Last year's Q3 sales and results benefited from new product introductions by Apple. Consolidated Internet revenues for the quarter surpassed $32 million, a 237% increase from last year. Outbound business-to-business sales also experienced strong Q3 growth, increasing 87% from last year. Creative completed the successful distribution of its 80% ownership in uBid (Nasdaq:UBID) on June 7, 1999 by distributing approximately .7 shares of uBid for every share of Creative Computers. uBid is no longer a subsidiary of Creative and will not be reported in Creative's results going forward. Accordingly, Creative's share of uBid's losses through the June 7, 1999 spin-off date of $.60 per share are reported as discontinued operations in Creative's year-to-date results.

The Mac Observer Spin: This is indicative of many Mac retailers around the country, if not the world. Apple's product shortages impacted retailers just as much as it did individual customers. The flip side is that as Apple continues to catch up on the back orders, the 4th quarter (Apple's fiscal 1st quarter), should be a blowout quarter for all concerned.

Creative Computers has been reporting increasingly good results with their Mac sales for the last several quarters. This had been in sharp contrast to years before the iMac and the return of Steve Jobs. Hopefully we will see a big comeback during the current quarter.

Aladdin Systems



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