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

To: Andrew Danielson who wrote (17610)	9/6/1998 12:45:00 PM
From: Ryan Finley	Read Replies (2) \| Respond to of 213176

I was reading on NoBeige.com on Thursday that Apple was offering an employee price of $699 for the iMac. This price was described as "near cost". Now if resellers are paying $1180 per iMac, that would translate to (1180-699)/1180 = 40.7% margin. That sounds like a healthy margin to me! I do not find this unreasonable, since the iMac is extremely stripped down. Even at $999 (with let's say a reseller cost of $900), we have (900-699)/900 = 22.3%. This is too conservative however, since by Christmas the cost of the components will have dropped as well. I don't think Apple is (or will be) competing in the commodity market. Jobs, the consummate spinmeister, has merely convinced us that margin-lowering technologies (such as SCSI, ADB, serial ports, PCI slots, floppy drives) are irrevelant in the consumer market. He has succeeded, and as a result he has a high-margin consumer machine, unlike sub-$1000 PCs. source: www.NoBeige.com (I couldn't find the link for Thursday yet...)

To: Andrew Danielson who wrote (17610)	9/7/1998 12:28:00 AM
From: Andrew Danielson	Read Replies (2) \| Respond to of 213176

12:25 EST Toyko up 600 points Looks like a strong broad-based rally in the international markets. AAPL is up 8.5% on the Toyko exchange--much higher than the move it had in the US on Friday. 8.5% from Thursday's close puts us at 37 1/2. Direct currency translation of the 5150 price puts us in the overall range of 36 3/4-38, depending on how fast one thinks the overseas stock price adjusts for currency fluctuations (using the current 135 as low end and 140 as high end) Maybe we'll finally get a concerted rally out of AAPL stock. Andrew

To: Andrew Danielson who wrote (17610)	9/7/1998 9:21:00 PM
From: rhet0ric	Respond to of 213176

To single-handedly drive up the margin that way would require the iMac to have something like 47+% margin. Not possible. That's about right. Using mostly Eric's numbers, my spreadsheet says that 400k iMacs would need 46% margin to get the average up to 30%. So the cost of the iMac to Apple would have to be $567, assuming a cost to resellers of $1,050, which isn't out of the question. I have no idea about the 400k units, though, or what effect iMac sales are having on G3 DT/MT sales. However it turns out, my gut feeling is that the iMac margins are very high. I doubt the resellers would stand for that if they knew AAPL was getting a massive profit on each sold iMac. My impression is that resellers are only too happy to have iMacs flying off their shelves. I believe AAPL would only drop the iMac's price that far when the product is near to end-of-life and a faster iMac is ready to take center stage. There's often an interim price cut in an Apple product's life between intro and phase-out. This is the $999 I'm talking about. And I think they'll do the interim price cut in time for Xmas in order to gain market share and drive up revenue. I can't speak for other rumors. This is my own personal belief, based on my observation and understanding of Apple, and one that I put forward on SI a day or two after the iMac launched. rhet0ric