A Year Ago: Apple ecstatic about financials and the iMac

Summary:Originally published Thu, 15 Oct 1998 16:24:00 GMT

Apple Computer Inc. interim CEO Steve Jobs on Wednesday unveiled strong iMac sales, even stronger earnings and gave a hint about who's buying the company's sleek new consumer machine.

Jobs said the company posted its biggest profit yet under his new regime, earning $106m (£1bn), or 68 cents per share, during the first quarter on revenues of $1.56bn (£0.95bn). Those earnings were far better than the 49 cents that analysts had expected. Apple also posted its first profitable year in three years.

Jobs predicted that revenues would continue to grow, saying the company had bottomed out at $1.4bn (£0.85bn) during the prior quarter. This year also marked the first time since 1993 that the company's posted year-over-year unit growth. "Everyone at Apple has been working really hard," Jobs said. "For today at least, we're going to stop and smell the roses."

Jobs gave much of the credit for the boost to Apple's sleek $1,299 (£792) iMac, which sold much better than analysts predicted. Jobs said 278,000 iMacs flew off the shelves during the computer's first six weeks on the market, beating analysts' predictions that the company would sell 100,000 to 150,000.

The interim CEO also offered a glimpse of who's buying the new machine. According to an outside auditor, most of those buying iMac were repeat Apple customers -- 58.1 percent. But nearly a third, or 29.4 percent, are brand new computer users, and 12.5 percent were former "Wintel" (Windows/Intel) customers.

It's those last two figures that are most important to Apple, Jobs said. "Over 40 percent of iMac customers are new for iMac computers and new for Macintosh," he said.

In a conference call later in the day, Apple Chief Financial Officer Fred Anderson said the company could have shipped even more computers. "We ended the quarter with a healthy backlog," he said. Anderson said the company has the capacity this quarter to ship double the number of computers it shipped during the fourth quarter.

In the future, however, Anderson warned that gross margins could drop because iMac costs less than some of the company's other computers. The average price of an Apple machine was $1,840 (£1,122) during the quarter, a number Anderson expects to fall as more iMacs enter the mix. Next year, the company also plans to introduce a "low-end" portable to its product offerings.

In any event, the iMacs soon will be easier to find. Jobs said the company will start selling iMacs at 300 Best Buy stores in the US on Nov. 8 (iMacs are available in Tesco stores in Stirling and Cardiff). Plus the iMacs will be added to the offerings of Apple's own online store immediately.

Jobs also ran down some of the new features of Apple's Mac OS 8.5 upgrade, which ships this Saturday.

The new OS contains a feature called "Sherlock," which lets people search their hard drive and the Web using many different search engines at once.

It also features support for eight foreign languages, smart scrolling features, quick network copying capabilities, and native AppleScript, which makes it easier to automate tasks.

Topics: Tech Industry

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