This Story Posted:
February 9th

 
 

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[1:40 PM]
Apple Files Q1 Results For SEC, The Numbers Look Good
Apple released its Q1 results for 1999 (Apple's 1st fiscal quarter goes from October 1st to December 31st). Most of the findings aren't new as Steve Jobs released the meat of the quarter's results at MacWorld San Francisco in January. Aside from the Y2K issues we wrote about earlier, the following is the most important information from the filing:
  • Net income for the first quarter of 1999 includes a $32 million gain before tax associated with the sale by the Company of 2.9 million shares of its investment in ARM which were recognized as other income. Income tax expense recognized in the first quarter on this gain was approximately $3 million.

  • Net Sales Net sales for the first quarter of 1999 were $1.71 billion, an 8% increase over the same quarter in 1998. The increase in net sales is primarily attributable to a year-over-year 49% increase in Macintosh CPU unit volume.

  • Volumes were favorably affected by sales of iMac, the Company's moderately priced Macintosh system designed for education and consumer markets introduced during the fourth quarter of 1998, which represented 55% or 519,000 of the total Macintosh CPU units sales during the first quarter of During the first quarter of 1999, the Company also experienced year-over-year unit volume growth in both its Power Macintosh G3 and Powerbook G3 product lines of 23% and 39%, respectively.

  • Further contributing to the year- over-year increase in net sales was approximately $33 million of incremental net sales in the first quarter of 1999 related to the introduction MacOS 8.5, the most recent version of the Company's Macintosh operating system.

  • Average revenue per Macintosh system, a function of total net sales related to hardware shipments and total Macintosh CPU unit sales, fell 26% to $1,776 during the first quarter of 1999 as compared to the same quarter in 1998. [Due to lower priced systems]

  • Net sales increased sequentially $154 million or 10% during the first quarter of 1999 as compared to the fourth quarter of 1998. The sequential revenue increase is attributable to a 13% rise in Macintosh unit shipments and incremental net sales from MacOS 8.5 upgrades. The rise in unit sales during the first quarter is attributable to a 21% increase in iMac unit sales compared to the fourth quarter of 1998 and a similar 15% increase in unit shipments of Power Macintosh G3 professional Macintosh systems partially offset by a 17% sequential decline in unit shipments of G3 Powerbooks resulting from the introduction of several new Powerbook models during the fourth quarter of 1998.

  • International sales for the first quarter of 1999 represented 47% of consolidated net sales versus 50% in the first quarter of 1998 and 37% during the fourth quarter of 1998. In total, international net sales during the first quarter of 1999 were relatively unchanged from the same quarter in 1998, but rose $229 million or 40% sequentially from the fourth quarter of 1998.

  • Domestic net sales increased 14% or $114 million during the first quarter of 1999 as compared to 1998 while declining sequentially from the fourth quarter of 1998 $75 million or 8%.

  • Consistent with the historical seasonal pattern, the Company anticipates a sequential decline in net sales during the second quarter of 1999 but expects the second quarter to show year-over-year growth in both net sales and unit shipments.

  • Gross Margin Gross margin for the first quarter of 1999 was 28.2% as compared to 22.4% for the same quarter in 1998 and 26.8% for the fourth quarter of 1998.

The Mac Observer Spin: Good numbers! The gross margins in particular are important as they are among the highest in the industry. Wall Street likes high gross margins as well. Another important aspect of this that seems to get overlooked a lot is that Apple was able to raise their gross margins while lowering prices at the same time! This is due in part by Apple using industry standards such as USB as well as the dumping of the floppy drive in the iMac. Of course changes made in RMA policies as well as tons of other improvements also played a part.

Congrats to Steve Jobs and the entire Apple Team!

Apple