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January 19th, 2000

[Last Update: 4:57 PM] Blow By Blow Coverage Of Apple's 1st Quarter Financial Press Conference
by Staff

We are bringing live coverage of today's 1st Quarter results from Apple. Apple too is broadcasting live QuickTime coverage of the event at a special web page. For those who can not get the event, or who can not listen, we will be bringing live coverage on this web page.

[4:57 PM] This is the last post to this update. We will have a full analysis on Apple's quarter tomorrow morning as well as full coverage on Steve Jobs's compensation package. Thanks for tuning in to The Mac Observer for our Live Coverage of the event.

[4:55 PM] Mr. Jobs was rewarded options on ten million shares of Apple stock as well as Gulfstream V jet. His salary remains at US$1 per year.

[4:53 PM] International sales accounted for 51% of sales.

[4:52 PM] Apple ended the quarter with more than US$3.6 Billion (!!) in cash, and if one includes their holdings in ARM Technologies and Akamai, their holdings are more than US$5 Billion. This is very significant.

[4:51 PM] Other Numbers: Final unit sales numbers for the quarter were 1.377 million, slightly higher than the 1.35 million figure given by Mr. Jobs during his keynote speech. This number includes 700,000 iMacs, and 235,000 iBooks. Both are excellent numbers.

[4:50 PM] Other Numbers: The quarter's results included 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 a special executive bonus of $90 million. Without non-recurring items, the Company's net profit for the quarter would have been $178 million, up 45 percent from the year-ago-quarter, and earnings per diluted share would have been $1.00, up 28 percent from the year-ago quarter.

[4:44 PM] The conference call is over, but we are going to fill in some of the other numbers we missed at the beginning during the next few minutes. We will also be running a spell check. :-)

[4:41 PM] "We were incredibly pleased with the G4 rebounding so well in the December quarter." So said Mr. Anderson. Apple is happy with the performance of the PowerMac G4 line despite the strength of the iMac in relation to this. The analyst asking this seemed to be suggesting that Apple's strong iMac sales could be indicating a different direction for the company. Mr. Anderson seems to have suggested otherwise.

[4:40 PM] Lou Mazzucchelli asking about what the company will worry about in the future. Mr. Anderson cites good people as one of the prime focuses of the company. Says that dial-up service will not impact Apple but looks to broadband as figuring into the future.

[4:37 PM] Mr. Anderson admits to being coy by saying he is not trying to be coy. Explaining that he doesn't want to give percentages of revenue attributed to Mac OS X or other specific software issues. He knows what the software revenues are, and calls them significant, but won't comment.

[4:36 PM] Being asked about sells of Mac OS X Server, and other software. Mr. Anderson is talking about the "Beyond the box" speech by Mr. Jobs during his keynote. Mr. Anderson is recounting their new offerings. He sees that these revenues will become increasingly important to Apple. Mac OS X has been outlined by Mr. Jobs... In other words, Mr. Anderson is not giving additional details on how Mac OS X is doing now.

[4:35 PM] Another question about the PowerBook line and Mr.,. Anderson again says he won't talk about it. Very pat answer to a question that didn't need to be repeated.

[4:34 PM] BTW, it is nice to see Mr., Anderson being much more circumspect on G4 availability.

[4:34 PM] Mr. Anderson was asked about ongoing executive compensation costs and said that all of the compensation issues (which we will cover in-depth in a separate article) are covered in this quarter.

[4:32 PM] To fill in some of the numbers from our technical difficulties: Apple had a 37% rise in revenue with US$2.34 billion in sales! This is incredible and beats estimates by a good amount.

[4:31 PM] Mr. Anderson is talking about other operating cost issues. Air Freight costs went up, but were balanced by Mac OS 9 sales. Lower costs on DRAM pricing also helped.

[4:30 PM] Almost all the analysts are congratulating Apple and Mr. Anderson. This is a nice change from some conferences in times past. :-)

[4:27 PM] Apple is still selling iMacs at about the same average selling point, despite the new cheap ones.

[4:27 PM] Analyst is asking about breaking down iMac inventories (and PowerBooks). Mr. Anderson won't comment on new PowerBook. :-) Mr. Anderson does not want to give numbers on iMac. The high end "exceeded our expectations on the mix." Apple is pleased about this.

[4:26 PM] Apple is caught up in iBook deliveries.

[4:25 PM] Analyst is asking where Apple is in terms of market share. Mr. Anderson says that the iMac is bringing in new customers to the platform. In terms of graphics and publishing, Mr. Anderson said the PowerBooks nd PowerMac had great quarters. Apple also sees Mac vs. Windows intent-to-buy from customers is running 3:1 in the graphics market (in favor of Mac)

[4:23 PM] Mr. Anderson is going over the numbers for iMac users given at MACWORLD by Steve Jobs during the keynote.

[4:21 PM] Goldman Sachs is asking about deferred tax liability. Mr. Anderson is suggesting that the deferred tax issues come from their shares in Akamai. ALso asking about G4 Availability. Mr. Anderson is not commenting on it, but says Motorola has improved deliveries. The company shipped 350,000 PowerMac G4s during the quarter.

[4:20 PM] Bear Sterns is asking more about Earthlink and Mr. Anderson says that the net impact from the deal with Earthlink will take time to ramp up.

[4:19 PM] Mr. Anderson is passing on the Sherlock II question and says he can't comment further on Earthlink.

[4:17 PM] An analyst is asking if Apple has any other plans to use Earthlink for other than a default option and asking about the impact on Sherlock II.

[4:16 PM] Richard Gardener is also asking about Earthlink. Mr. Anderson said that Apple is under nondisclosure for their deal with the company, but says that Apple is expecting US$25 to US$30 million in additional profits from the deal.

[4:15 PM] Richard Gardener is asking about backlog inventories. Backlog will be returning to normal according to Mr. Anderson. He cites G4 problems and says they ended the quarter with less than 5 weeks of inventory in the channel and that it was consistent with their goals.

[4:14 PM] Apple expects to maintain gross margins over 25% and expects to keep operating expenses to 19%.

[4:13 PM] Apple is expecting lower revenues for the 2nd quarter, but that year over year sales should be higher.

[4:12 PM] Mr. Anderson is talking about Earthlink and says that Apple will profit from each new Earthlink customer.

[4:11 PM] The company has had 11 million page views at iReview, and 100,000 new iTools members

[4:08 PM] The quarter's results included a net gain of US$5 million in non-recurring revenues.

[4:07 PM] Profits come out to US$1.03 per share, beating even the whisper numbers making the rounds.

[4:05 PM] We are having some technical difficulties but are getting back on track

[4:04 PM] The press conference has begun. Apple has profits of US$183 million.

[4:01 PM] The press conference has not yet begun.


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