NEWS • OCTOBER 18, 2000
Jobs: Faster G4s Coming in Next 6 Months
Apple hopes to bring sales up to snuff in 2000 with stronger product lineup

by David Nagel
Executive Producer
dnagel@digitalmedianet.com

Apple today said it plans to see another disappointing (albeit profitable) quarter before it starts getting back on track in January. CFO Fred Anderson said in a conference call with investors that the company will see a "slight profit" in the quarter ending in December. Apple's revenues for the quarter ended Sept. 30 came in at $170 million, far shorter than earlier predictions.

CEO Steve Jobs, in the same conference call, identified a few reasons for the shortfall, including weaker than expected sales of the G4 Cube and users' desires for computers with higher megaHertz than what Motorola has been providing.

To fix this, Jobs said, Apple is "working closely with Motorola" to release G4 machines with faster megaHertz in the next six months. He also said the company has worked to help reduce the appearance of what users call "cracks" in the G4 Cube. Finally, without getting specific, Jobs said that Apple's product lineup for next year is "the strongest [he's] seen in [his] career."

He gave no indication that prices would come down in order to spur sales, though he did say some lower-priced Cube models would be introduced next year. Rather, he pointed to more powerful, feature-rich pro models and more consumer-level products along the lines of iMovie. (Apple will release two new software products for consumers in the coming months, Jobs said.) Previous reports indicated that a 750 MHz G4 wouldn't be available until summer 2001.

In terms of financial results for the most recent quarter, Apple posted the following press release today:

Apple today announced financial results for its fiscal 2000 fourth quarter ending September 30, 2000. For the quarter, the Company posted a net profit of $170 million, or $.47 per diluted share. These results compare to a net profit of $111 million, or $.31 per diluted share, achieved in the year ago quarter. Revenues for the quarter were $1.87 billion, up 40 percent from the year ago quarter, and gross margins were 25.0 percent, down from 28.7 percent in the year ago quarter. International sales accounted for 44 percent of the quarter’s revenues.

The quarter’s results included a $62 million after-tax gain from the sale of 7.1 million shares of ARM Holdings plc., which contributed $.17 to earnings per diluted share. Excluding investment gains, the Company’s net profit would have been $108 million, an increase of 20 percent from the year ago quarter, and earnings per diluted share would have been $.30, up 20 percent from the year ago quarter.

Apple shipped 1,122,000 units during the quarter including over 570,000 iMac™ systems.

“We have identified several factors which we believe contributed to our sales shortfall last quarter, and we are taking strong steps to remedy them going forward,” said Steve Jobs, Apple’s CEO. “Our Sellthrough for September was way below plan, leaving us with an overhang of channel inventory. Rather than reducing it gradually over the next several quarters, we have decided to reduce it to a normal level by the end of this quarter. This will result in a second disappointing financial quarter, even though our Sellthrough sales should be moderately strong. Our plan is to be back on track for the January quarter, and we remain very excited about our products and programs for 2001.”

“In light of September’s disappointing sales and higher-than-planned ending channel inventories, we are resetting our revenue estimates for the December quarter to about $1.6 billion and are targeting a slight profit,” said Fred Anderson, Apple’s CFO. “We are also resetting our revenue target for fiscal year 2001 to the $7.5 to $8 billion range and our target for EPS to the $1.10 to $1.25 range.”

For the year, the Company generated revenues of $7.98 billion and net earnings of $786 million, or $2.18 per diluted share. These results compare to fiscal 1999 revenues of $6.1 billion and net earnings of $601 million, or $1.81 per diluted share.

For more information, visit http://www.apple.com.

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