If you want to talk about borderline illegal, I think what Apple did in the financial statements and channel in 1995 and 1996 or so would apply. They really overstated results and then took a big inventory charge later.
As I understand it, Apple is allowed to count as sales, anything that is shipped to the channel. I believe they might have to then set aside some kind of reserve for possible returns and bad debts. At least, this is how they do it in the software industry, especially the video game industry. My favorite company, THQ(I), counts as sold every copy it ships, then reserves about 10-13% of that for returns and allowances to retailers for mark-downs.
If Apple says to CompUSA, look, we've got an extra 10,000 iMacs we want to move and we will sell them to you for $100 below the usual wholesale, and CompUSA says, sure, send them, then Apple can count them as sales. This is how Sunbeam got in trouble, by way overshipping to the channel. But when you are talking 10,000 or 20,000 units out of 520,000, that's not much.
My speculation is that Apple is being conservative. That it could've counted a batch of boxes (as you point out, a very small pct. of sales and only worth a penny or two) this quarter since they are in the channel and thus officially "sold" to the retailer. But that it chose not to. It's just speculation as to why Apple might not have hit the .80 number that I thought was very attainable.
What's great about the inventory is not that it is at a rarely attained two days, but that it shows how well Apple has handled the transition from G3 "beige" to G3 "blue." I am very impressed at how quickly Apple was able to get real numbers of units available of the refresh.
We had another post on the AOL Fool board from someone who had called into the Apple Store and heard glowing things about orders. Just more good anecdotal evidence.
S&P futures are up nicely. I think we'll get some nice upward bias in the market the next two days, due to options expiration.
Marc |
