Eric, fiscal Q2:
I'm getting good anecdotal reports about sales being good. No surprise that it is the G3s leading the way. I'm also seeing many VARs customizing the G3s with more RAM, the Apple/GVIL modem, etc. in creative ways.
From my off the cuff figurings, I'm guessing that CompUSA can make up for the loss of all the dropped retailers (Herb, how about an acronym for them?) if each of the new ASWAS (that is, not the original 57 modified Comps) sells about one Mac box a day. This is just making up for the revenue--actual profits will be higher because of the ease in supplying Comp vs the other stores, plus the fact that Comp sells higher margin boxes, on average. For comparison sake, I ran the figures and it looks like each Best Buy location was selling less than one Mac a month.
From what little we can gather, it seems that the non-G3 inventory is not excessive. However, there could be some real old stuff coming into the channel from the dropped stores.
And, expenses continue to be cut. The $300 million figure seems very reasonable. And despite Alomex's assertion a few weeks ago that Apple's quarter is in trouble because many factory costs stay steady even when you cut production, I think we're in good shape. The $300-313 million we're at now are the costs of salaries and factories and R&D, so Alomex's fixed costs are already factored into those numbers.
However, the problem with this quarter could be an inventory write-off. And none of us knows the true situation in Apple's warehouses, etc. Now it may be that the amount of inventory is low enough that they can "hide" some losses in each quarter's profits and not have to take a separate one-time charge. I will say that this is the traditional quarter to do so, and that when the company is selling a PB 1400 for $1999 that was retailing for $2999 last month, that Apple is losing money on that puppy.
These are my current thoughts on the subject. As always, I'd love to hear everybody else's, especially from those overseas. I will buy back a trading position if Apple goes back to the eighteens or breaks twenty. However, I'm going to try to avoid holding a trading position into earnings because of the possible charges.
As a side note, when Ric Ford posted the upcoming Apple price cuts earlier this week the G3 233 was going to go to $1699. A bunch will sell at that price--I wonder what the motive is though? Are enough 266 processors being made that that speed will become the low-end in another month or two? Or does Apple just want to stimulate sales at the "low" end? Are they managing inventory well enough that there are only a small number of units that will be affected?
G3 availability still seems strong in Berkeley, except for the 266 MT. I've never seen the other two out of stock since the products were introduced.
Marc
PS--Eric, liked your post a lot.
PPS--Should be yet another positive cash-flow quarter for Apple. |
