“Apple Comuter stock was lower as Credit Suisse First Boston detected a “worry” that the computer maker’s fiscal first-quarter PowerMac sales of 206,000 units were below the fourth-quarter level of 221,000 units,” Forbes reports.
“CSFB also noted that some positive aspects of the company’s first-quarter earnings report were already known to investors, as Apple had preannounced ‘blowout’ iPod quarterly unit sales of 733,000 that were well above CSFB’s estimate of 650,000. ‘The PowerMac and cousin iMac desktops account for a third of the company’s revenue, versus 13% for the iPod,’ CSFB said,” Forbes reports.
“‘The battle for the household will become fierce, and Apple needs to maintain high investment rates in research and development, marketing and store rollouts to stay visible,’ CSFB said. ‘Because of this, we believe it will take several years of flawless execution for Apple to return to its historical peak profit margins,'” Forbes reports.
Full article here.
Years of flawless execution to get to historical peak profit margins? Hmmm… seems like we’re really avoiding the fact that the company is doing exceedingly well right now. So what if they’re off from historical highs? It doesn’t negate the fact they’ve been one of the most successful companies in their market of late, and that they’ve got a very solid future ahead of them. There are very few grey areas with Apple right now.
Consider that AAPL shares are priced below their historical average, let alone, “peak,” and the valuation based on the company’s performance—the good and the bad—seems extremely fair.
This character was just looking for something to complain about.
It’s already been mentioned elsewhere that the reason the 4th quarter sales were so high was because they started shipping PM G5’s in the last month of the 4th quarter.
The pent up demand for those machines contributed to an initial burst of sales followed by a steady stream. It’ll be hard to predict what’s going to happen this quarter with the XServes and potential upgrades to the PM G5s. I suppose there are a lot of people like me who feel that their current machines are good enough to take them to next summer when speeds in excess of 3 Ghz should be available.
“Apple needs to maintain high investment rates in research and development, marketing and store rollouts to stay visible�”
How do you stay visible when you don’t advertise? I cannot sit through an evening of TV viewing without having to face several ads from Dull Computer, yet nary an Apple ad is to be seen.
CSFB needs several quarters of “flawless execution” to keep their execs out of jail as the Wall St inquiry of NY State AG proceeds. So What?
I know it is off topis, but has anyone else noticed that the “Opinion Achive” on the left side of this page is way out of date?
“Years of flawless execution to get to historical peak profit margins?”
Too bad they don’t demand the same from Microsoft, Dell and the other mediocrity machines. Perhaps if they did, Windows and the entire Wintel world wouldn’t be so pathetically mundane.
Yeah the opinion column is out of date because they lost some stuff in the recent server shutdown mishap. The webmaster said they were working to recover as much as they could, I believe.
Sure if Apple keeps performing like this in a few yours they will reach peak, and and be back up at $68/share again. But then again for that to truly happen we need another dot com explosion, or Apple might try to pay dividends to stir up interest in their stock.
… and I’m looking for several years of flawless predictions from analysts, before I stop believing them to be mis-informed.
Lokiz:
No dividends are the price of having such a massive R&D effort, and sadly that R&D – unless patented – falls into the hands of people like Dull and – when patented – gets criticised by people like CSFB for being ‘proprietary’.
Go figure!
“The PowerMac and cousin iMac desktops account for a third of the company’s revenue, versus 13% for the iPod”…….lets throw in the emac and call it 50% for all of that…..does that mean that powerbooks and software are the other 50%? Somehow that doesn’t add up.
Anyway, the sweeping headline is bs. No one looks years down the road anymore. Apple is going to do fine, and “peak profit margins”, like market share, aren’t always the point.
For those who criticize this report lets remember that CSFB is dealing with Apple’s stock price. Stock price is not based on the quality of the products produced by a company, it is based on the willingness of one group of people to purchase that stock based on their belief that the value of the stock will change based on other peoples impression of the value of the company. Stock price and company are only marginally related.
The problem is that Apple’s margins are no where near their “normal” margins. Apple is going to have a problem into the future selling the iMac model because of pricing pressures. They have already announced that they are pushing the powerbooks as their PC model of choice and are expanding into other areas such as with devices like the Ipod.
I think that Apple, financially understands that the PC industry is *not* a growth industry but a mature industry where market share is a zero-sum game.
I think that the analyst’s concerns are correct and it’s up to AAPL to really prove that it can keep delivering hits. This is were you put your money where your mouth is. If you think AAPL has the juice, now is the time to get in. I personally like think that they will have some success in gaining market share with their line of PCs.
I jumped out of AAPL last week just prior to the Keynote. Historically, the stock price has always dropped after almost every major announcement. I was anticipating the drop, which was delayed for a week. I’ll probably jump back in next week
Joe, he’s right. PowerMac and iMac/eMac desktops account for about a third of the company’s revenues (32.5% or so). The iBook/PowerBook account for another 31%. iPods are 13%.
I would assume that the remaining 23.5% is shared by software (Final Cut, Panther, Logic, etc.), peripherals (iSight, Airport, etc.), and the Xserve/Xserve RAID (although those may be counted as PowerMac sales).