According to its annual report filed with the Securities and Exchange Commission (SEC), Apple’s net sales decreased $2.6 billion - or 33 per cent - during 2001 compared to 2000, while Macintosh unit sales fell 32 per cent from 2000.
However, with $4.336 billion in the bank, Apple ended 2001 with $309 million more cash (and cash equivalents) than it started the year with.
Demand down in 2001 Demand for all of Apple’s products was negatively impacted throughout 2001 by unfavourable global economic conditions. On a year-over-year basis, net sales and Macintosh unit sales were down in all of the company's geographic operating segments, and net sales and unit sales by product were down for each product category except the consumer portable iBook.
First quarter 2001 net sales decreased 57% to $1.007 billion compared to the same quarter in 2000 and decreased 46% from the fourth quarter of 2000. Both the year-over-year and sequential declines in net sales during the first quarter of 2001 were – according to Apple - attributable to several factors, including continued deterioration in worldwide demand for PCs, and rebate programs and price cuts instituted by Apple during the quarter - which cost the company approximately $138 million.
In addition to general economic conditions, two other primary factors contributed to the decline in net sales during 2001, according to Apple’s SEC filing.
First, the company executed a plan during the first three quarters of 2001 to reduce substantially the level of inventory in its distribution channels. As a result, the Macintosh channel inventory fell by approximately 450,000 units during the first nine months of 2001.
Second, Apple believes that many of its professional users are delaying upgrades of their Power Macs due to the ongoing transition to Mac OS X, and in anticipation of software vendors transitioning their Mac applications to run natively in OS X.
Mitigating circumstances According to Apple, several positive factors combined to “partially mitigate” the overall decline in net sales during 2001.The average revenue per Mac system, a function of total net sales generated by hardware shipments and total CPU unit sales, was relatively flat during 2001 at $1,695 compared to $1,715 in 2000.
The flat revenue per Mac system reflects “somewhat lower pricing” year-over-year on comparative systems, offset by a shift in overall sales mix towards higher-priced portable systems.
Combined unit sales of portable systems, iBook and PowerBook, actually rose 2 per cent during 2001 despite the negative economic climate and the overall decline in unit sales.
US education unit sales rose 7 per cent during 2001, compared to 2000 - reflecting Apple’s renewed focus on this core market within its US operating segment.
Net sales rose 30 per cent to a total of $7.983 billion in 2000, as compared to 1999. The increase in net sales resulted directly from a 32 per cent increase in Mac unit sales. Driving unit sales growth was a 51 per cent increase in combined unit sales of the Apple's consumer and education iMac and iBooks, and a modest increase of 11 per cent in combined units sales of the company's professional Macs.
Europe suffers too Apple’s net sales in Europe fell $568 million - or 31 per cent - during 2001, compared to 2000, while Europe's unit sales fell 32 per cent. Europe's results reflect “the worsening economic climate in Europe in the latter half of 2001 and reductions in channel inventories as experienced in the company's other geographic operating segments”.
Combined unit sales of the Company's consumer oriented products in Europe were particularly impacted during 2001, falling 40 per cent from 2000.
Apple cash richer As of September 29, 2001, Apple had $4.336 billion in cash, cash equivalents, and short-term investments - an increase of $309 million or 8 per cent over the same balances at the end of 2000.