Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Richard Habib who wrote (23557)	3/17/1999 4:31:00 PM
From: HerbVic	Read Replies (3) \| Respond to of 213176

>>Know the P1 will be a new revenue stream but we have no idea how successful it will be. Rich << Consider this: For every 2,000 OS X copies sold, $1,000,000~ is added to gross revenues. This is a high margin revenue stream, too. How many do you think might make ot onto the books before quarter's end? HerbVic

To: Richard Habib who wrote (23557)	3/17/1999 5:23:00 PM
From: Andrew Danielson	Respond to of 213176

<<Street keeps giving us PE in 12-14 range but even that may be difficult to hold.>> Let's not get too far ahead of ourselves, here. Apple was valued at 47 (short-time) in January and 40's for extended periods of time in December and January, and is valued at 34 now. We are UNDER our 200-day moving average, which means that we've been valued at a higher level than this more than we've been valued under this for the past 200 days. The issue you raise, Richard, (single-digit top-line growth) is something that should be brought up when Apple is ramming its head against 47 (or whatever) and can't seem to go any higher. In the meantime, Apple has dropped more than 1/4 of its value over a month that we have not seen a single bit of concrete information that makes the steady-but-slow-revenue-growth picture any clearer. Rather, the concerns reflected in the stock right now is whether Apple is growing at all, whether the fledgling turnaround of this fruit company is coming just as its industry is becoming over-ripe. What has happened over the past month we've hashed over. The computer industry as a whole may be slowing, primarily due to margin/ASP pressures. iMac barely breaks the top 5 in January, with the iCandy nowhere to be found. Mass droves of Apple insiders seem to stampede out the door shortly after the last earnings release--a release that also brought up the topic of channel stuffing that has yet to be resolved (with MacMall still apparently holding 9,000 Bondi units). When THESE issues get resolved, we can see the 40's again. And it's then that we can start pining over issues about just how FAST Apple is growing, not whether it is growing at all. Andrew

To: Richard Habib who wrote (23557)	3/19/1999 12:18:00 AM
From: Marc Newman	Respond to of 213176

Rich, Jim, everyone-- What is the PC revenue growth like at the rest of the second-tier players? Micron, NEC, Sony, Acer, etc.? How about revenues in the IBM PC division? How about at H-P? I assume it is tough for just about all the non-DELL/GTW's of the world and find it hard to believe that revenue is as important as profit growth or unit growth. Everyone knows that revenues are under serious pressure due to lower ASPs and it doesn't seem like people see CPQ going to a PE of 10, much less 12-14. When you toss in AAPL's book value, you see how silly this current price is. Having said that, I'm worried about iMac sales this month. Availability seemed to be very good the first weeks of the quarter but now it's pretty grim unless one wants Tangerine. And one must do at least a little work on average to find Lime or Strawberry. Of course if they refresh the sucker at 300 mhz and keep the price at $1199 or less, I bet you see Purples and Blues flying out the doors next quarter, so maybe most of these "lost" sales are being deferred one quarter. And historically, in a quarter where Apple introduces high-end machines and can keep them in stock, the company does fine. Speaking of P1 as a new revenue stream, in essence the iMac missed a lot of the last education buying season. So we've got that too this year. Marc

To: Richard Habib who wrote (23557)	3/19/1999 1:14:00 AM
From: Eric Yang	Read Replies (1) \| Respond to of 213176

"While our unit and bottom line growth are good, top line growth is single digit. Street keeps giving us PE in 12-14 range but even that may be difficult to hold. Tech companies with single digit growth are not in demand." Richard, I think one needs to take a closer look in order to uncover the truth. The reason why revenue growth appears to be in the single digit is because Apple has been moving away from peripheral products (imaging, display, palmtop..etc) Using Q1 98 vs Q1 99 for example, revenue from peripheral products decreased by $101 million while revenue from CPU sales increased by $237 million. The decrease in peripheral product sales offset the year on year increase from CPU sales resulting in a net year on year revenue growth of about 8%. However the growth from CPU sales was actually around 20% year on year. Unit shipment growth was a whopping 48.6% year on year. The move away from peripheral products was a conscious decision on Apple's part. The aim was to focus its efforts on core business. In my humble opinion it was a wise decision and contributed significantly to Apple's ability to lower operational cost and increase margin. Sure it was a short term sacrifice but as long as Apple's core business remains strong there will always be demand for Apple branded peripheral products. Apple can always re-enter the peripheral market when its core business no longer requires its full attention. That market is there for Apple's picking. The good news is that peripheral product revenue has already bottomed out at around $200 million per quarter and is now on the rise again. Last quarter OS 8.5 pushed revenue from peripheral/software from under $200 mil in Q4 98 to approximately $262 million in Q1 99. While we won't see much benefit from OS 8.5 sales this quarter, revenue from Apple branded displays is expected to make a modest gain. I believe we'll see more significant growth in that area in Q3 and Q4 when institutional purchase pick up steam when Apple ships the 15" LCD and 21" CRT displays in greater quantity. My point is, if one were to simply look at the superficial figures as many investors and even some analysts tend to do, it's far too easy to miss important details... details that can makes difference between an accurate analysis and a flawed one. Eric