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

To: Pravin Kamdar who wrote (16676)	8/14/1998 11:12:00 AM
From: WebDrone	Read Replies (1) \| Respond to of 213177

Pravin, your analysis make far, far to many assumptions. How did you get $200/imac profit? Seems a tad low. You assume Apple is paying the entire campaign themselves, and they are running/paying for it all this year. I think you are also assuming that there are not monies set aside for advertising already. We know there is a lot of ad money lined up. Web

To: Pravin Kamdar who wrote (16676)	8/14/1998 11:28:00 AM
From: Eric Yang	Read Replies (1) \| Respond to of 213177

"I agree. If you assume that Apple makes $200 from each iMac, it will take the sale of 500,000 iMacs just to make up the $100 million ad campaign. In other words, no net iMac profits for this year." First of all, the $100 million spending is spread over the course of Q4 98 and Q1 99. I think about half of that amount will be spent this Q for the intro and the other half for Christmas season. Another point to consider is that in recent years Apple has an annual ad budget of $140-200 million. (It should be pretty high for fiscal 1998.) That comes out to be about $70-$100 mil budget for a 6 months period. Apple simply shifted some of its regular ad budget to fund the iMac campaign and added a few million to be make it an aggressive campaign. Thus I don't think the $100 mil ad cost will have much of a negative impact on the quarter. The benefits far out weight the marginally higher cost. Eric