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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Doren who wrote (13707)	5/17/1998 5:39:00 PM
From: soup	Read Replies (1) \| Respond to of 213182

Cribbed from Yahoo AAPL. (Regarding AAPL's charging of current ad revenues to prior quarters.) >Well, sort of. It's more like we paid for them a long time ago. From the 10K: "Advertising costs are charged to expense the first time the advertising takes place." I've scanned the 10K and past 10Qs a whole bunch of times, and everytime I do, I notice something new. Last night I focused in in on a line that I hadn't really considered in the past. Accrued marketing and distribution:...3/27/98 = 231......9/26/97 = 278 After consulting with my wife (an accountant), I've reached the conclusion that Apple does not have to count current advertising costs against current earnings. We paid for this year's advertising (and maybe even next year's) before this year by accrueing the costs in advance. Thus, the Seinfeld ads, and the whole "Think Different" campaign, probably won't hurt our Q3 or Q4 earnings. They hurt our earnings in the past, instead. It seems as though we've already worked this angle to boost our pre-tax profit by $47 million this year. We still have a war chest of up to $231 million more that we can use to tout the Powerbook now and the iMac in August, all without putting a dent in 1998 earnings. Morally, this is a little troubling. Our "real" eanings haven't been quite as good as they have seemed. I chose to rationalize it by saying that it's all just part of the restructuring effort. Apple is "rebuilding" it's name, image and place in the market. Once that has been accomplished, Apple will not need to do nearly as much advertising. More stuff from last night's reading of the 10Q... As far as the restructuring effort is concerned: "The Company expects that the remaining $113 million accrued balance as of March 27, 1998 will result in cash expenditures of approximately $71 million over the next six months and $15 million thereafter." Smells like a one time gain of $27 million whenever Apple wants to take it. Of course, it was smelling like a $39 million gain 6 months ago, so who knows what will eventually happen? Then there's the ARM IPO: "The Company sold 18.9% of its shares in the offering for a gain before foreign income taxes of approximately $23.4 million. This amount will be recognized as other income in the third quarter of fiscal 1998." Foreign taxes are expected to be 7.25 mil, so I believe an additional $16 million in income will show up in the next 10Q. I don't think it will be reported as a "one time" gain, but instead show up in an "Interest & other income" entry of about $32 mil partially offset by an additional $7 mil under taxes. Lastly, there's the convertible notes... $661 million in debt will eventually turning into 22.6 million shares of common stock. As the conversion occurs, it will dilute EPS, eventually by about 15%, but will result in interest payment savings of around $45 million each year (I couldn't find the exact interest rate for the notes). The conversion will also improve book value per share (using diluted share totals) from about $9.50 to about $12.15. Apple will then only have about $300 million in long term debt at a relatively low 6.5% interest rate, compared to cash & short term up around $2 billion. Remember that I am an amateur, and the above is based on a good deal of speculation on my part. Don't put absolute fainth in anything I say, ever. I hope it's been educational, though.< Go AAPL Rodg..<

To: Doren who wrote (13707)	5/17/1998 5:43:00 PM
From: soup	Respond to of 213182

From Mitch Mandich's Keynote on the Channel - #1 isocket.gzx.com The point of this presentation is to reassure developers that AAPL is doing all it can do to vis-a-vis the channel to provide a vital and growing hardware market for developers to write for. Channel notes: 1) Are you a friend of AAPL? Do you advocate? Have a stake? Keeping pace? 2) What did the channel not do to cause AAPL's sales to fall? Was overdistributed. 200 million dollars worth of business. 3) SWIS model. 4) Down to 1/2 distributors. Work with them closely, training, advertising. 5) Regional and catalogue benefited as well as CompUSA. 6) Mail order caters to 2nd-3rd time buyers. 7) Aim for CompUSA to have 200 top software SKUs. Seeing "nice uptick" in SW sales. 8) J&R in NYC best AAPL experience with 40-50 million in sales and 2100 SW SKUs. 9) 3600 resale locations. Too many. 10) AAPL Store - $50 million so far. No price (or tax) advantage but BTO. 11) Investigating the distribution of software. 12) Opened to education last week. Market represents 60-70 million in software sales. 13) AAPL Store Europe still more of a marketing idea than actual sales. 14) Looking to expand "Learn to Earn" program in the channel. 15) Channel holding too much inventory too long. Non-competitive products hurting software sales. Now - 250 million vs. 2 billion in inventory in channel. 4-5 weeks of stuff vs. 90 day norm. Lowest in history. Best in industry. Cited HWP product glut for their bad earnings. Held up Dell model. Using price protection to move inventory. Compaq to allow zero returns vs. 5% for AAPL.

To: Doren who wrote (13707)	5/17/1998 5:45:00 PM
From: soup	Read Replies (1) \| Respond to of 213182

From Mitch Mandich's Keynote on the Channel - #2 16) 1/2% in ad dollars vs. 2%. Money used for national ad spots. 17) Looking to increase local "call to action" advocacy of AAPL solutions. 18) Service redesign - Recertification of support centers. New training materials. Repair objectives: 4 hours on site. Two day carry-in. Three-day mail order. 19) Cutting 1100 selling locations -- to be announced on Monday. Represents (only) 11 million of sales. Serious and comprehensive vetting of retailers. 20) Looking to increase software sales through channel. If they can't sell the hardware, how are they going to sell (your) software? Looking to enhance abilities of smaller retailers/VARs to offer a broad range of software solutions. Separate wheat from chaff. 21) iMac a phenomenal SOHO product. Doctors, dentists, lawyers, real estate, etc. 22) Need to do catchup on software on some of the newest graphics areas -- 15% where Macs don't offer a compelling software product. 23) AAPL needs to grow beyond 6 billion/grow market share. Looking for 6-10% market share. Double digit growth. New marketing, products, software (developers.) 24) Make sure AAPL developers are well represented by AAPL marketing. Question/Answer session: 25) Mentioned seminar program to support "Masters in Media" (?) program. 26) Responding to question on Macromedia acquisition. Said 90% of revenues from hardware but AAPL is trying position itself as a cross-platform "solutions" company. QuickTime, ColorSync, etc. 27) Canadian question - Canada has more cable modems and bank cards and 4x AAPL share per capita than US, so how come no Canadian Apple Store? No "Think Different" ads. (Said iMac will do very well in Canada.) Answer is cost: AAPL still focused on major markets in US, Europe and Japan. Lots of in-house advocacy to expand Canadian presence. As profits grow, more will be spent on marketing. 28) Responding, Mandich said AAPL would look to pare back from 7 software catalogue vendors. (Audience supported idea.) Will try to enhance AAPL software site by MacWorld. 29) Responding, Mandich said AAPL Developer Relations has been cut back to its lowest level in 10 years and relies on conferences. Citing cost concerns. If AAPL is profitable, it's the best thing we can do for you. 30) Responding to a request for the ability to port current (non-Yellow Box) Mac OS apps to NT (some applause), Mandich said only by writing in Yellow Box, would developers have write once/run anywhere capability. 31) A Kaiser-Permanente in house tech who couldn't get a copy of a Service Source CD, and complained of lack of resources AAPL was committing to developers. (Asked for a reduction of total software titles.) Mandich reaffirmed AAPL's "prime directive" was to be profitable. (Applause.) 32) Re: Enterprise software, Mandich said he came from enterprise background. At a Minneapolis biz conference he hit on Virtual PC, Unix, NT Client, Oracle, Lotus, a stronger Java. AAPL's current marketing focus will continue to be consumer and education but hopes for a "halo" effect as business users "connect the dots" about what AAPL products can do. Price/performance advantage. Would love to go after enterprise market, but for now, it's a guerilla campaign. Strong push for WebObjects. 33) Responding to a game developer who complained that he developed a hot game on Yellow Box but would likely recode and ship on Windows; Mandich spoke of making games a priority, of bundling of select games and the rollout of iMac to increase market share. soup Back to Pacers/Bulls ...

To: Doren who wrote (13707)	5/17/1998 9:54:00 PM
From: Bill Jackson	Read Replies (1) \| Respond to of 213182

Doren, SInce they cannot act as tax cllectors for interstate sales the only thing they can do is tax them federally and pass that tax to the states as a grant. A funny duck that walks in one state and quacks in another this tax thing has been a problem for years, and the courts have steadfastly refused to make the feds tax collectors for out of state goods shipped into a state since the states cannot control border access that's it. Now however the statesare going after Visa/MC/shipping records to catch those that evade with co-operative treaties. For example NY and NJ have such a treaty and NY can inspect records and see what was shipped taxfree to NJ, and tell NJ about each one. NJ then knocks on their door with a tax invoice to be collected and if they refuse they pounce. Most pay. Now the favoured way is to prepay with a money order and have it shipped to an address like a gas station where you go to pick it up when it is time to get it. Of course the guy at the station knows you and that way you can save the tax on a $4000 fur coat. It does not pay for small stuff. Another way is by US postal service as they are still unable to tell on you. Bill