By William Fellows Demand for Apple Computer Inc’s products far outstrips the company’s ability to supply them but that still didn’t hurt its fourth quarter as much as it could have done. The backlog is 400,000 systems or at least $750m revenue. All in all it’s a good place for the company to be in, […]
By William Fellows
Demand for Apple Computer Inc’s products far outstrips the company’s ability to supply them but that still didn’t hurt its fourth quarter as much as it could have done. The backlog is 400,000 systems or at least $750m revenue. All in all it’s a good place for the company to be in, as long as it can get those boxes out of the door quickly. Net income was up 4.7% at $111m although revenue slid 14% to $1.33bn. It finished the year as a $6.13bn company with a profit of $601m.
The supply problem was partly offset by the company when it wisely set some fairly lowly expectations. This quarter will be the first when all four of its products lines are shipping in volume. Working against Apple were a number of factors. It got fewer G4 chips than it needed because of Motorola Inc’s manufacturing problems. The Taiwanese earthquake disrupted some operations, the aftermath of which in terms of constraint of graphics chips, memory and other component supplies will cease to be a problem by the end of the month. It also went through significant product transitions.
It has taken orders for 300,000 iBooks since they were announced in July, but has shipped just 6,000 even though the earthquake cost it just one week of production. Manufacturing was slower to ramp than it had planned. It doesn’t expect to be able to catch up with demand even by the end of this quarter.
Motorola Inc couldn’t supply the amount of G4 CPUs needed for the 150,000 orders Apple took for that line of new PowerMac products. It could only ship 64,000 and $200m revenue was lost there. Apple has done two things. First, it has called on IBM Corp to also supply it with G4s (which it will do by mid-next year) that will also help on what is sure to be a backlog of orders for the new G4 iMacs. Second, it has wound down the clock speeds of the various products so that it can meet backlogs, with the 500MHz version now pushed out until the first quarter of next year. It says it will catch up with the backlog this quarter. The G4 PowerMacs are now being offered in 350MHz, 400MHz and 450MHz configurations.
Apple said it took 250,000 orders for the new iMac in a week since their announcement. iMac sales represented the vast majority of the 720,000 units shipped, with PowerMacs next, accounting for 28%, PowerBooks 13%, iBook and servers less than 1% each. 10% of iMacs units went to WinTel owners, 30% to new customers and 55% to existing Apple customers. Not much change there. Increased flat screen and DRAM prices will drive gross margins down this quarter.
Apple reported fourth quarter net income up 4.7% at $111m including a net gain of $21m over $106m last time on revenue which slid 14% to $1.33bn from $1.55bn. Earnings per share were $0.63; before the gain – $37m from sale of ARM shares and a $16m restructuring charge – they would have been $0.51, some six cents better than the consensus of analysts’ estimates. For the year net profit was up 94% at $601m over $309m on revenue up 3.1% at $6.13bn over $5.94bn. International sales were 35% of revenue. Its 16 million remaining ARM shares are worth $300m.