Apple 1st Fiscal Quarter Results - 1/16/02

  • Posted: 18 January 2002 05:59 PM

    Please note: A similar post has been made in the Apple Daily Stock Updates thread in the TMO Apple Finance Board forum. Please see that thread for continuing updates

    Apple stock closed today (1/16) prior to the company’s earning report at $20.78 in a down day on Wall Street. The share price rebounded in after hours trading following the release of its financial report for the first fiscal quarter of 2002 (the 4th calendar quarter of 2001).

    For the quarter Apple posted net earnings of $38 million or $.11 per share, in line with Wall Street’s expectations.

    During the quarter Apple shipped 746,000 Macs and garnered revenue of $1.38 billion dollars, slightly lower than expected. The company cited promotional pricing during the quarter as one reason revenue came in a little below forecast.

    For the current quarter Apple expects to earn an identical $.11 per share on revenue of $1.5 billion. Apple expects higher costs from the rollout of the new iMac and higher component costs to keep earnings for the quarter at $.11 per share, despite the anticipated rise in revenue.

    Gross margins for the December-ending quarter were 30.7%. Apple closed the quarter with almost $4.4 billion in cash.

    During the conference call with analysts Apple indicated that it would continue production on the old-style iMac for buyers interested in sub-$1,000 PCs. Apple cautioned that education sales moving forward might be impacted by the effects of the recession. Apple has factored softness in the education into its forecasts.

    Apple said that rising component costs might pressure margins in the current quarter but that demand for the new iMac, since its introduction at MacWorld last week, is greater than the demand for any Apple product since the original iMac debuted over 3 1/2 years ago. It will take the full three months of this quarter for Apple to ramp-up manufacturing on the new iMac to meet demand.

    All things considered, Apple performed well under difficult economic circumstances. I believe the company will be challenged to meet the full demand for the iMac in the current quarter. With the focus on the iMac, it may be some time before Apple introduces major changes to its pro-line computers.

    Interesting to note Apple’s earning in light of the precipitous drop in interest rates over the past year. In prior quarters interest and earning on the company’s cash and investments provided a more significant boost to the company’s overall earnings. Apple met its earning estimate despite the continued drop in interest and lower return on its cash and investments.

    In my view, the quarter’s results reflect excellent management of the company’s resources and solid evidence that Apple continues on track to increase its market share and improve the quality of its earnings.

    Apple stated that 40% of Mac buyers at the new Apple Stores are new to the Mac platform. Apple expects the retail stores to be key to its strategy to increase market share.

    Over 10 million shares of Apple stock traded hands today. I expect high volume again tomorrow and for several Wall Street analysts to review their rating on Apple following the release of the December quarter’s results.

    DawnTreader

         
  • Posted: 17 January 2002 02:23 AM #1

    Beautiful post !!!

         
  • Posted: 17 January 2002 09:52 AM #2

    Yes. Nice summary, and good point about interest rates.
    However, I can’t agree with your comment:
      “With the focus on the iMac, it may be some time before Apple introduces major changes to its pro-line computers. “
    I think the production of the pro-line computers is pretty much independent of the iMac, except that the aggressive specs of the iMac means that Apple will be introducing a significantly faster pro-line desktop very soon.

         
  • Posted: 17 January 2002 10:11 AM #3

    Heard a mention on BBC 1 this morning about Apple shares having a good day yesterday.  The conversation was in relation to a rebound in the tech/computer arena.


    I don’t know if the new iMac is the saviuor of Apple.  It is not something I would give much thought to personaly. I am not an investor.  Though the minute I saw the new iMac I liked it. Plus it is G4 700/800Mhrz etc.  The design is so simple.  It reminds me of an angle poise lamp I was obsesed with as a chid.  So versatile.  Thumbs up to Mr Ives again.

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  • Posted: 17 January 2002 10:13 AM #4

    On 2002-01-17 13:52, StephenW wrote:
    Yes. Nice summary, and good point about interest rates.
    However, I can’t agree with your comment:
      “With the focus on the iMac, it may be some time before Apple introduces major changes to its pro-line computers. “
    I think the production of the pro-line computers is pretty much independent of the iMac, except that the aggressive specs of the iMac means that Apple will be introducing a significantly faster pro-line desktop very soon.

    I also believe Apple will release faster pro-line machines relatively soon . However, inventory controls, manufacturing efficiencies and component costs are very important to Apple (from what execs have said publicly). Apple appears to watch its margins quite closely. A significant revision to the pro line will take time (IMHO).

    I do expect faster machines (faster processors and system bus), perhaps in the next several weeks. I don’t expect a major change in the line until iMac production is in full swing and more resources can be focued on the pro line.

    Perhaps a signficant revision to the pro line by MacWorld New York?

     

         
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    Posted: 17 January 2002 08:54 PM #5

    On 2002-01-17 14:13, DawnTreader wrote:

    On 2002-01-17 13:52, StephenW wrote:
    I think the production of the pro-line computers is pretty much independent of the iMac, except that the aggressive specs of the iMac means that Apple will be introducing a significantly faster pro-line desktop very soon.

    I also believe Apple will release faster pro-line machines relatively soon . However, inventory controls, manufacturing efficiencies and component costs are very important to Apple (from what execs have said publicly). Apple appears to watch its margins quite closely. A significant revision to the pro line will take time (IMHO).

    I do expect faster machines (faster processors and system bus), perhaps in the next several weeks. I don’t expect a major change in the line until iMac production is in full swing and more resources can be focued on the pro line.

    I’d go so far as to say the next Pro revision won’t be until the release of Photoshop. One of the statements made by Apple in the earnings call was that the “Pro market has been negatively impacted by Mac OS X transition and according lack of “pro” tools like Photoshop. Apple expects by spring to see Pro market bounce back after apps like Photoshop are released for OS X. ” (From Maccentral’s excerpts)

    I wouldn’t be surprised if Apple didn’t ship the Pro models until Photoshop ships. That way they can maximize the release of the new PowerMac systems, regardless of the processor type.

     

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  • Posted: 17 January 2002 11:07 PM #6

    I’d go so far as to say the next Pro revision won’t be until the release of Photoshop. One of the statements made by Apple in the earnings call was that the “Pro market has been negatively impacted by Mac OS X transition and according lack of “pro” tools like Photoshop. Apple expects by spring to see Pro market bounce back after apps like Photoshop are released for OS X. ” (From Maccentral’s excerpts)

    I wouldn’t be surprised if Apple didn’t ship the Pro models until Photoshop ships. That way they can maximize the release of the new PowerMac systems, regardless of the processor type.

    That makes a lot of sense. Apple can only push so far in terms of OS X migration until commercial houses can adopt it. And, unitl commercial houses are poised to make the switch, other developers of commercial graphics software will be hard pressed to make a return on their OS X products.

    I do know that Apple is focused on margin and may be apt to ( I won’t say happy) to sit tight for the moment until the major commercial applications have OS X versions before a major roll-out of new high-end hardware. Major manufacturing changeovers are expensive and making the change too early only increases costs without a corresponding increase in sales.

    I do expect a meaningful but incremental speed bump to the existing pro-product line as soon as the faster chips are handily available. However,  I don’t expect a major change in the pro models for some time, at least 6 or 7 months.

         
  • Posted: 18 January 2002 12:19 PM #7

    I expected more units to be shiped than that.

    thats a drop from the last quarter, and dosen’t Apple usually sell more around the Holidays?

    They also didn’t say how many units of each product they shipped. It would be nice to know how many iPods were sold.

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  • Posted: 18 January 2002 01:53 PM #8

    On 2002-01-18 16:19, georgepinchock wrote:
    I expected more units to be shiped than that.

    thats a drop from the last quarter, and dosen’t Apple usually sell more around the Holidays?

    They also didn’t say how many units of each product they shipped. It would be nice to know how many iPods were sold.

    Shipments by product information is available on the Apple site as part of the quarterly report. Steve Jobs announced at MacWorld that Apple shipped 125,000 iPods in the first 60 days of release.

    Apple sold significantly more units this year in the calendar 4th quarter than last year and the retail stores were a big aid in increasing the level of holiday sales.

         
  • Posted: 18 January 2002 02:27 PM #9

    Hi DT,

    Any comment about the G-news post in

    http://forums.appleinsider.com/cgi-bin/ultimatebb.cgi?ubb=get_topic&f=1&t=001018&p=1

    ???
    Dr. L

         
  • Posted: 18 January 2002 02:50 PM #10

    On 2002-01-18 18:27, hledgard wrote:
    Hi DT,

    Any comment about the G-news post in

    http://forums.appleinsider.com/cgi-bin/ultimatebb.cgi?ubb=get_topic&f=1&t=001018&p=1

    ???
    Dr. L

    Hmmm…

    It’s possible there will be speed bumped G4s as early as Monday.  I don’t know. I don’t expect a major change in the line until MWNY.

     


    <font size=-1>[ This Message was edited by: DawnTreader on 2002-01-18 18:50 ]</font>

         
  • Posted: 18 January 2002 04:26 PM #11

    No, I mean his comments about Apple stock taking a dive, in part because of no G5, only speed bump.

         
  • Posted: 18 January 2002 04:58 PM #12

    On 2002-01-18 20:26, hledgard wrote:
    No, I mean his comments about Apple stock taking a dive, in part because of no G5, only speed bump.

    This is funny. Apple stock has not taken a dive. As a matter of fact, the stock has outperformed most stocks in its sector over the past 6 months. The only ones disappointed that there is no G5 are those who have not listened to the carefully worded statements of Apple execs over the past 18 months.

    People are free to have their own expectations, but when expectations are contrary to the guidance given by senior Apple executives, Apple is certainly not to blame

    I’ll write more in a few minutes…

    DawnTreader

         
  • Posted: 18 January 2002 05:59 PM #13

    I’ve been writing about Apple and Apple finances since early 1996. I’ve closely followed Apple from the transition from Michael Spindler to Gil Amelio and from Dr. Amelio to the return of Steve Jobs to the helm of the company.

    The only holdover from the Amelio era in the ranks of senior Apple executives is Fred Anderson, Apple’s CFO. Prior to working at Apple, Mr. Anderson was the CFO of ADP. Inside Apple, one could argue he is the most powerful person at 1 Infinite Loop outside of Steve Jobs himself.

    I listen to what Mr. Anderson says about Apple and since his tenure at Apple began, I have listened to his statements quite carefully.

    I don’t recall anyone at Apple ever giving a concrete timeline for the release of G5 Macs. I don’t recall anyone ever providing a definitive forward timetable for the release of new products. I don’t recall anyone stating that at MacWorld Expos certain new products will be released.

    What I do recall Fred Anderson saying back in late 1997 is that the company had the following overall plan for Apple Computer:


    1. Stabilizing the company
    2. Returning to profitability
    3. Filling the gaps in the Apple product line
    4. Releasing a modern operating system
    5. Gaining market share

    From what I can tell (and I’ve followed Apple on a daily basis since early 1996), Apple is continuing to execute its overall plan, piece-by-piece and quite consistently since Mr. Jobs returned to head the company.

    Over this time Apple has made some mistakes. But the management team has reacted to those mistakes and has learned quickly from the mistakes that were made.

    During the time that Apple’s new management team has been in place, the PC market has changed dramatically. Companies such as eMachines have come and gone. IBM essentially withdrew from the consumer PC business. Gateway is on the ropes and Compaq and HP are struggling to complete their announced merger.

    The only major PC manufacturer other than Apple that has consistently been profitable in its consumer division over this time period is Dell. At this time Apple has virtually no debt and almost $4.4 billion in cash. That didn’t happen without successful planning.

    Inventory control has been key to Apple’s ability to return to profitability and its ability to effectively mange its business. Apple must plan conservatively to maintain its operations and compete with much larger rivals.

    Apple carefully negotiates its supplier contracts and often has provisions guaranteeing minimum orders to suppliers in exchange for lower component prices. Apple keeps to its contracts and quite effectively manages its supplier relationships. Supplier contracts are often signed months before products that contain those components reach store shelves.

    Apple can’t micro-manage its suppliers or force them into costly or untimely manufacturing changes based on whim or the unrealistic desires of a group of Mac enthusiasts.

    Apple has chosen to develop an Open Source strategy and release a modern, UNIX-based operating system. One reason for this was to entice UNIX developers to develop products for the Mac and provide a commercially viable platform for thousands of engineers and developers who desire to work with an Open Source model. Apple cannot rush the release of OS X native applications. Apple doesn’t make most of them. But rest assured that Apple’s developer relations are on much better footing than when Steve Jobs and his management team took the reigns at Apple.

    Every step Apple has taken over the past 4 1/2 years has been planned and deliberate. Sure, there are some decisions that in hindsight might have been made better or should not have been made at all. But what successful company hasn’t made mistakes?

    During the past 12 months, Apple has released a new, modern operating system, opened 27 retail stores and released a redesigned iMac that was 2 years in the making.

    Sure. I’d love to see a G6 running at 6 gigahertz in my living room. But desires need to be balanced against the demands of time, technological feasibility and economic viability.

    At this time it may not be economically viable to release G5s. When the time is right, they will be on store shelves.

    I’m quite pleased with the way Apple’s management has remained faithful to the overall plan outlined 4 1/2 years ago. I’m happy with the results they have achieved to-date and I have confidence in the management team’s decision making ability. When OS X software is available that provides an attractive financial reason (gains in productivity and ease-of-workflow) for major commercial customers to embrace the platform and/or upgrade their hardware, the right hardware products will be available. So far time has been on Apple’s side when one compares Apple’s fate to the fate of most of its competitors.

    Apple now needs to gain the confidence of Wall Street analysts and the institutions that create demand for the company’s stock. Releasing new G5s tomorrow won’t necessarily do that. Rather, reading the comments of analysts, a successful rollout of the new iMac will go a long way toward instilling confidence in Apple and its future.

    DawnTreader


    <font size=-1>[ This Message was edited by: DawnTreader on 2002-01-19 01:33 ]</font>