Apple’s financial conference call has ended.
Given current environment of PC industry, I think we have limited visibility and don’t want to go beyond guidance given for Sept. quarter. Apple is committed to making investments to growing market share. We didn’t have the quarter we expected, but we are still profitable.
Had about 70,000 unit backlog and over $100 million in value, market with great market value, and expecting strong legs, all regarding flat panel iMacs. Had refreshments on iBook and PowerBook, introduced Xserve, and introduced eMac. But didn’t make original guidance and we’re disappointed. But think it’s an entire market situation, not something unique to Apple.
For the fourth quarter, goal is to take inventory down to 4-5 weeks.
Planning to end current calendar year with about 50 stores. There are 31 now. There are no plans yet for non-US stores.
More aggressive pricing on some products. Expecting stable environment on component costs compared to what they are now.
Relative to margins, we were cautious on gross margins. We’re going to have to make pricing adjustments in Europe due to strengthening of Euro.
As for the September quarter, given current weakness in customer market, prudent for us to be cautious about forecast and not be very optimistic about uplift due to back-to-school sales.
Channel partners and retail stores are reporting lots of Windows users coming into store wanting to switch and check out Macs.
We feel good about our long-term outlook. We feel that “Switchers” campaign, strong products and retail stores will help us. See some of those new products tomorrow.
EarthLink and Akamai investments down. Will continue to evaluate them.
Expenses will be up due to more retail stores and R&D on new acquisitions due to eMagic. Slight profit still expected. Recently reduced manufacturing work force in Sacramento by 7 percent. May continue to fine tune organizations.
Expect sales to be flat in June quarter. Revenues will be down due to price reductions on certain units.
Exited the quarter with strong balance sheet. Ended with $4.3 billion in cash and operational efficiency remains excellent.
Didn’t achieve slight sequential improvements in gross margins we expected. Apple shipped fewer Xserves than expected.
Unit sales and revenues were down in Apple retail stores. Company continues to work toward break-even goal for stores by December quarter.
About 6.5 weeks of channel inventory at current time. But we plan to reduce that to 5 weeks.
Pro sales were flat in Europe. There was no appreciable uplift due to Photoshop 7. And some pro users are waiting for Jaguar.
220,000 units of iMac shipped in previous quarter. Demand slowed in late May and June, counter to our predictions. Enter the quarter with about 19 percent fewer units in quarter than anticipated.
We think our share of education market in June quarter was 20 percent, flat from year-ago quarter.
About half of shortfall in revenues and sales in Europe, the rest between US and Japan. Education sales are still slow.
Apple’s third quarter proved to be challenging because there was no “seasonal uplift” as usual, according to Chief Financial Officer Fred Anderson. Industry data indicates market weakness across all segments. IDG forecast 20 percent in Japan, 16 percent in Europe, and 2 percent in the US. The research group shows a worldwide 15 percent decline in the consumer market and 6 percent in the corporate world.
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