A week ago, MacCentral and sister site MacWEEK ran an
article providing details about Apple’s sales numbers, comparing Mac sales during fiscal Q1 2001 — the quarter ended December 30, 2000 — with the previous and year-before quarters. Those numbers, provided by Apple, caused a stir because they made it appear that Apple’s financial woes were worse than many had believed, showing a 52 percent decline in unit shipments, and a 57 percent decline in revenue, compared with Q1 2000.
To the analysts quoted in the story, and others who follow Apple for a living, those numbers are real and reflect a substantial decline in Apple’s revenue. However, the article has apparently caused some confusion, because it did not make clear the distinction between sales and sell-through.
As Stephen Baker of
PC Data explains it, the sales that Apple reported indicate the revenue it earned during the quarter. But they don’t necessarily indicate total demand — the number of Macs actually sold in the period — because many of those Macs were on dealers’ shelves when the quarter opened. Apple sold just $1 billion worth of Macs between September and December 2000, but it also reduced inventory by 300,000 units, and customers actually purchased $1.6 billion worth of Apple products. Another factor that affected the numbers was the calendar: fiscal Q1 2001 spanned 13 weeks compared with 14 weeks for Q1 2000, so the company had one week less to sell Macs.
Apple went into the quarter with 11 weeks of inventory, and its effort to reduce that to a more normal five-and-a-half weeks was a big factor in the Q1 sales shortfall. Dealers are not going to buy many Macs when they have extra product on the shelves to sell. It should also be noted that no one is accusing Apple of “stuffing the channel” — deliberately putting more products into distributors’ hands than they can sell. Apple just did not account for its sales shortfall.
The bottom line: The Q1 2001 figures understated Mac demand — as opposed to Apple sales — while the much rosier Q4 2000 numbers no doubt overstated it.
We don’t want to sugarcoat Apple’s situation, which remains serious. But we don’t want to exaggerate Apple’s problems, either. The numbers that Apple reported are meaningful to analysts, but to lay people they could make a difficult situation seem even worse than it really is.