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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Thursday, January 15, 2004

Financial expert discusses Apple financials, quality problems, iPod problems, market share

TheStreet.com: A fascinating report for a number of reasons.

Apple financials and quality problems: "A small slip in margins due to some quality problems, and a somewhat slower-than-expected transition to the fast new G5 Macs, apparently disappointed some investors. As a result shares of Apple dropped Thursday, along with other technology companies ... Sales jumped 36% year over to $2.006 billion, a bit better than the $1.932 billion expected by Wall Street. Gross margins were 26.7%, down from 27.6% in the year-ago quarter, and 40 basis points below prior guidance ... Apple, which has had product-quality problems in the past, took a larger warranty reserve to cover problems with the screens of some notebooks. The problem with the displays has been cured and should not appear in newly manufactured machines, the company said."

And there's no way to sugarcoat the fact that Apple's expensive G5's just aren't selling well. " PowerMac sales were definitely disappointing -- 206,000 units for $398 million, vs. expectations of 250,000 units and $446 million, commented Fil Zucchi, managing member of Zebra Fund, LLC, a long/short equity/options fund, and a contributor toStreetInsight.com ... Another problem: iMac units declined 10% sequentially and 24% year over year."

Despite all the iPod success stories, a sign of weakness: "'For Apple, [the deal with HP] represents the ability to further accelerate unit growth and gain volume -- which it needs to leverage its cost structure -- by tapping into HP's massive distribution capabilities,' commented Joel Wagonfeld, a principal of First Albany. 'However, the fact that Apple has agreed to supply its most successful product to a key competitor on a Wintel platform ... provides an important signal. We think this move reflects Apple's difficulty in driving increased PC penetration via its new non-PC offerings,' he said in a note to clients."

Market share: "In 2003, [Apple] claimed less than 2% of the global market by units, according to estimates from Gartner Dataquest and Merrill Lynch."

[ Posted at 7:30 PM | Permalink ]