Apple reports Fourth Quarter profit of $170 million; admits G4 Cube problems (and fixes)

An Apple press release gives details of its financial results for the fiscal 2000 fourth quarter. As predicted, the news was not good. Apple additionally revealed that it expects that the next quarter to be similarly slow, although profitable. They expect a turn-around to begin in 2001. For the quarter, the Company posted a net profit of $170 million, or $.47 per diluted share. These results compare to a net profit of $111 million, or $.31 per diluted share, achieved in the year ago quarter. Revenues for the quarter were $1.87 billion, up 40 percent from the year ago quarter, and gross margins were 25.0 percent, down from 28.7 percent in the year ago quarter. Apple shipped 1,122,000 units during the quarter including over 570,000 iMac systems. In the Financial Results Conference Call, Apple outlined three major causes of the sales slump: Disappointing G4 Cube sales; problems Consumers see the G4 Cube as well-engineered but too expensive. In response, Apple has reduced the price of the Cube by $300 (but only if you buy a monitor with the Cube). Even less expensive versions of the Cube are expected this spring. Of special interest to troubleshooters: Apple noted that the G4 Cube power switch problem has been fixed and that Apple will repair problem units at no charge. They also reasserted that the supposed cracks in the Cube case are really mold lines. However, they claim to have redesigned the case to reduce the appearance of these "cracks." They are replacing cases of those that have particularly noticeable lines. MHz gap Even though 500MHz G4s can outperform 1GHz Pentiums, many consumers view Apple's 500MHz limit as a MHz gap, with Apple on the losing end. Apple expects to remedy this by closing this gap by the end of 2001. Education sales Education sales were less than expected. Apple offered explanations of why this was so and what they are doing to correct the situation. Several things coming in 2001 are expected to help Apple turn this around. These include a new line of hardware, Mac OS X, and more iMovie-like applications.