Apple Computer hit its first sour quarter in three years, when it posted a loss for its first fiscal quarter of 2001. However, geographically, Apple was strongest in Europe, and achieved strong sales in the education market.
For the quarter ending December 30, 2000, the vendor chalked up a net loss, excluding one-time investment gains, of US$247 million or $0.73 per share. The company reported that it sold 659,000 Macs during the quarter.
Analysts surveyed by First Call /Thomson Financial -who had revised their forecasts following a December earnings warning from the company - predicted a loss of $0.65 per share. During the first quarter of fiscal 2000, Apple made $183 million in profit or earnings per share of $0.51.
Revenue for the quarter was $1 billion, down 57 per cent from the year-ago period.
Price cuts bite In December, Apple officials cited lower global sales and previously unplanned price cuts as the main reasons for an expected net loss of between $225 million and $250 million. In a statement yesterday, Apple's CEO Steve Jobs said: "We took our medicine last quarter."
Apple worked hard to reduce excessive inventory throughout the holiday season.
"We spent aggressively on advertising and marketing to reduce our channel inventory," Fred Anderson, Apple's chief financial officer, said on a Wednesday afternoon conference call with press and analysts following the earnings announcement. "In December, we saw a pick-up in demand, particularly with consumer products."
On the brighter side of things, Apple sold 33 per cent of its inventory via its online store. In addition, the European markets held up the best of any geographic region for Apple in first-quarter sales, according to Anderson. International sales accounted for 49 percent of the quarter’s revenues.
Expo product hopes Jobs kicked off the Macworld Expo held in San Francisco last week with a slew of new product offerings. He showed features in the company's new Mac OS X operating system, now due out in March after repeated delays. Apple also released a series of higher-powered desktops and a new line of sleek Titanium G4 PowerBooks at the show.
"We're starting this year with a bang - shipping our new PowerBook G4 in January, our new 733MHz Power Mac G4 in February and Mac OS X in March," said Jobs.
"Our cash position remains very strong at over $4 billion, and we are planning a return to sustained profitability beginning this quarter," Anderson said. "We now expect revenues for fiscal year 2001 to be about $6 billion."
"With these new products, and others in the pipeline, we believe we're well positioned for a return to sustained profitability," Anderson said. "A lot of people are lusting for the PowerBook," he added. He warned that demand for the new systems could initially exceed supply.
Anderson expects Apple to report a small profit in the current quarter, which ends in March, followed by progressively stronger June and September quarters.
Anderson expects to see strong initial sales of Mac OS X as early adopters move to the new OS, but predicted a "longer tail" than in previous OS upgrades as other users move more slowly. "It will have a longer upgrade cycle because of (its) significance," he said.
Analyst says ‘go Intel’ An analyst with Bear Stearns & Co. Inc., however - before Apple results were released - called for a shift in Apple strategy. Andrew Neff, senior managing director and PC hardware analyst at the firm, said the company should make a change in its processors and shift from the PowerPC to those made by Intel Corp.
"Abandon the PowerPC architecture and port the Mac OS X over to Intel architecture," Neff suggested in his report. "This may seem like heresy, but Apple's best option is to play to its strength in industrial design and design the best computers for the Wintel market."
Shares of Apple (AAPL) closed down 2.5 per cent at the close of trading on the Nasdaq exchange to $16.68.
Anderson reiterated that Apple is looking for its new product line to drive sales in the months ahead. While the company expects its second quarter ending in March to be slow, Apple is hoping to demonstrate some strong showings in the following two financial periods.