PART TWO
Where's the growth?
Apple's sales peaked at slightly over $11 billion in 1995
and have been declining ever since. Last fiscal year,
Apple sold about $7.1 billion worth of computers and
software--almost exactly the same amount that it was
selling five years ago. And despite the "turnaround,"
sales continue to decline. Apple's most recent quarterly results
report $1.4 billion in revenues, a 12% decrease over a year
ago.
And this in an industry that is not exactly starving for growth.
By comparison Dell Computer's (DELL) revenues grew from
$2.9 billion in 1993 to over $12.3 billion last year. On the
software side, Microsoft (MSFT) grew from $3.8 billion in
sales in the year ending June 1993 to over $11.3 billion by last
summer.
Excepting the first quarter of this
year, Apple's market share has
decreased every quarter since
the end of 1994.
To be fair, Apple has shown a smidgen of market share growth
as of late. First-quarter data, gathered by market researcher
International Data Corp., shows Apple with 4% of the market,
up from 3.6% a year ago. But, realistically, that is a tiny bump
in a long, sometimes steep, downhill slide. Excepting the first
quarter of this year, Apple's market share has decreased every
quarter since the end of 1994. As recently as 1996, Apple had a
6.6% share of the domestic market.
Then there is the little matter of profits. Last quarter, Apple
turned a net profit of $55 million on $1.4 billion in sales. That
is certainly a vast improvement over a year ago--when Apple
somehow managed to lose $708 million in a single three-month
period--but it is hardly cause to be breaking out the Dom
Perignon. In fact, Apple's net margin of 3.9% is more
comparable to metal-benders like General Motors (4% last
quarter) than to the computer industry. Dell's net margin was
more than 7.6% last quarter and Microsoft turned in a stunning
35.4%. Even nonmonopolists in the software industry
routinely break 10% on the bottom line.
And in the computer industry, where success depends partly on
support from third-party software developers and compatibility
with other machines, low profits and low market share are as
final as a pair of death knells.
Justifying the price |
