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Apple Inc. Message Board

  • samky samky Dec 2, 1997 2:41 PM Flag

    Apple's M&A (Distribution) Klutzy or Dyn

    AAPL with full back cover on Time's tech edition out yesterday raises ? of when can or will AAPL get "inside">

    Distribution policy unclear-dealers, direct sales or both. Note HP's going on web supporting existing "partners" by referring all leads to them rather than direct selling.

    Currently AAPL's consumer marketing sems to be face down in 3 inches of water.

    Am a shareholder @ $19 an on-going user since Apple IIe days.

    Thanks in advance for any current opinions or info on how AAPL's market penetration and sales recovery to profitable volume might come along.

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    • > Thanks in advance for any current opinions or info on how
      > AAPL's market penetration and sales recovery to profitable
      > volume might come along.

      I'm not going to guess on market penetration; Jobs is playing those cards close to his chest right now, and is (rightly, I think) more concerned with profitability than share. One will lead to the other.

      As for profitability, that I can take a stab at. If you look at the last couple of quarters, Apple lost $56 million in the quarter ending June 30, and $25 million (excluding charges) in the quarter ending September 30-- a nice improvement. At that time,
      analysts overreacted to what I though was essentially good news. Both of the special writeoffs were for items that would pay off in the future-- the restructuring charges in reduced ongoing expenses, and the Power buyout in eliminating competition. This on top of an improving bottom line (56 to 25) and improved sales in several segments.

      This quarter is going to be interesting, as well as close. On the plus side, they have hot new models that have a wider profit margin than their older machines (the G3s, esp. the high-end models like the PowerBook, are cash cows compared to the older
      units), less competition (Power is out on most models, Moto seems to be dumping what they have have left), and reduced expenses (layoffs and cutting the fat in general; Jobs has been adamant about this, plus do not forget the on-line store). On the down side, well, though I have heard from friends at Apple that they are spending only as much on advertising as before (just different ;-) ), the amount of TV spots they had cannot be cheap. We will see.....

      One other note I think worth mentioning: Apple has taken flak, a lot of it, for not having an entry in the sub-$1,500 market. Yet this is the same area where they have traditionally been slaughtered when they do try to enter it. Remember last X-mas?
      They bet heavily on Performas, which where left sitting on the shelves while people could not get enough of the (higher margin) PowerMac line. Apple has always been better at selling to the high end, and this seems to where they are concentrating.

      Let me know if this helps!

      --Cliff

      (Sorry if this duplicates. My first response never showed....)

 
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