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Essay on Disclosure Analysis
Apple Computer on January 2001 announced a hefty $247 million fiscal first-quarter loss, excluding investment gains. The deficit was wider than analyst estimates but in the range of what the company had warned Wall Street to expect. The loss amounts to 73 cents per share on total revenue of $1 billion, a 57 percent drop compared with revenue in the same quarter a year ago. Including the investment gains and accounting change, Apple's loss for the quarter was $195 million, or 58 cents per share. "We took our medicine last quarter and brought our channel inventories back down to about five-and-a-half weeks," Jobs said in a statement. In December, Apple said it had 11 weeks worth of inventory sitting on dealers' shelves and would look to rebates and other promotions to clear the stock. (Joe Wilcox, January 2, 2001)
According to my point of view the inventory problems are expected to contribute to a projected fourth-quarter loss of as much as $250 million. Apple apparently rode the upgrade cycle of its core users, which analysts said dropped off around the time the company introduced new models--including the G4 Cube--in July. But slow sales followed, including a disappointing back-to-school selling season, driving Apple's inventory from about 3.1 weeks in June to more than 11 weeks in December, according to ARS.
Slow sales of the stylish G4 Cube apparently blindsided Apple. Apparent cracks in the housing and the stiff $1,799 entry-level price hurt Cube sales, which, Apple acknowledged, contributed significantly to its projected revenue shortfall. The price cuts put Apple's Cube where many analysts said it should have been in the first place: $1,499.
Apple's price cuts come as the company has failed to clear a backlog of inventory from dealers' shelves. The computer manufacturer had used rebates of up to $500 to boost sales, but that effort apparently failed....
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