Apple Stays in the Race

 
 
By Matthew Rothenberg  |  Posted 2001-10-18 Email Print this article Print
 
 
 
 
 
 
 

In a truly dismal year for the PC industry, Apple demonstrated the staying power it's developed after years under fire by the Wintel hegemony.

Score another one for the dark horse! When Apple Computer - the perennial longshot in the PC race - took the saddle blanket off its fiscal fourth-quarter results Wednesday, the Mac maker proved to have beaten analyst predictions and its own third-quarter performance.
And in a truly dismal year for the PC industry, Apple demonstrated the staying power its developed after years under fire by the Wintel hegemony.
For those who didnt catch the stats, the company posted a profit of $66 million, or 19 cents per diluted share, for the quarter ended Sept. 29. Thats a slight uptick from its third-quarter profit of $61 million, and it outperformed the gloomy prognosis of Thomson Financials First Call analysts by 3 cents per diluted share. Thats not to say Apple is rolling in clover. The companys profit was slender indeed compared with the $170 million it posted for the same quarter of fiscal 2000. Its revenue dropped 22 percent from the $1.45 billion it posted in Q4 2000; and it showed a net loss of $25 million on revenue of $5.36 billion, down from a net profit of $786 million on revenue of $7.98 billion for the year before. Still, when looking at the truly abysmal performance of the overall PC market, Im comfortable declaring a limited victory for my favorite computing platform. Apples belt may be tight, but the company is faring far better than most of its major-league rivals. Its 2001 losses were petite compared with the red ink spilled by beleaguered Compaq Computer, Gateway and Hewlett-Packard, to name a few, and its managed to avoid major layoffs or reorganizations in a year when corporate privation has been the rule, not the exception.
In many ways, Apple weathered its own winter of discontent years before the current recession, when the companys own early 90s sprawl compelled it, mid-decade, to swallow billions of dollars in losses, close entire operations - such as those producing imaging peripherals and personal digital assistants - and lay off thousands. The company survived by dint of its compelling core of products, unmatched marketing savvy and a fantastically loyal cadre of users; it thrived thanks to the unprecedented consumer inroads scored by the iMac. This company has already looked extinction in the face and spit in its eye. And that near-death experience should continue to serve Apple well as the economy in general and the tech sector in particular head into what looks to be a notably grim holiday season. Apple is well aware of the pitfalls it faces. Consumer confidence has plummeted over the past month, and Apple - which has been steadfast in wooing consumers since the iMacs debut in 1998 - has its work cut out for it when it comes to moving product during these all-important shopping months. Chief Financial Officer Fred Anderson warned that the current malaise would limit any holiday bonus Apple and its shareholders can hope to accrue. Noting that "visibility is limited" in these tough times, Anderson lowered investors expectations for Apples profit, margins and the performance of its new retail chain during the current quarter. Nevertheless, Mac backers can draw some comfort from Apples latest product moves. The company just introduced tweaks to its pro PowerBook and consumer iBook laptop lines, both of which have proven invaluable in driving sales over the past year. (Apple claimed a threefold increase in iBook sales to educators market over the past quarter as a key ingredient in the companys gains in this crucial market.) Whats more, Apple piqued observers curiosity with the announcement that next week it will unveil a mysterious new consumer hardware product outside the current foursquare Mac matrix. Like other Apple watchers, my best intelligence indicates that this gizmo has something to do with recording and playing digital music and ties in with CEO Steve Jobs vision of the Mac as the "hub" of a "digital lifestyle." Whatever the new device proves to be, Apples decision to pick this particularly icky holiday season to extend its consumer hardware beyond the Mac hard core takes some serious chutzpah. However, the gamble isnt an ignorant one; as GERARD KLAUER MATTISON & CO. analyst David Bailey presciently told eWEEK reporter Daniel Drew Turner this week, "faster and cheaper arent enough right now" to guarantee success with consumers. And as Anderson himself said, "To have a decent December quarter, you have to have a strong consumer quarter." By that token, introducing a truly novel new product bearing the Apple logo could burnish this potent consumer brand and give it the lift it needs to break away from the pack. And considering the companys track record, Im hopeful Apple will be able to accomplish just that against considerable odds. Mac veteran Matthew Rothenberg is best practices editor for Ziff Davis Medias forthcoming Baseline magazine.
 
 
 
 
Online News Editor
matthew_rothenberg@ziffdavisenterprise.com
Matthew has been associated with Ziff Davis' news efforts for more than a decade, including an eight-year run with the print and online versions of MacWEEK. He also helped run the news and opinion operations at ZDNet and CNet. Matthew holds a B.A. from the University of California, San Diego.

 
 
 
 
 
 
 

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