The results are in, and they look great-- Apple made a net profit of $111 million last quarter, up a few million from the same quarter a year ago and once again beating analysts' expectations. A quick glance at the headlines at MacSurfer's Headline News shows that media response is overall very favorable: Apple Earnings Shine, Apple Thumps Expectations, Apple Wins Over Wall Street, Apple Ends Fiscal 1999 On A High Note, etc. Congratulations to Steve and the whole crew for carrying Apple through its eighth consecutive Street-beating profitable quarter.

Of course, if you've been paying attention at all, there are a few things that should make you go "hmmmmm." First of all, yes, Apple beat the analyst consensus by several million dollars even if you factor out the one-time gains from sale of stock, etc. But Apple also beat its own estimates by a conspicuously large margin. Remember that earnings warning a few weeks back? The one in which Apple plainly stated they expected to earn only between $75 and $85 million? Well, what happened there? It's not hard to come up with a couple of unflattering scenarios. The more serious, of course, involves Apple's stated plan to buy back half a billion dollars' worth of its own stock; that earnings warning sent shares tumbling almost twenty-five points in a day-- what a buying opportunity! Yes, it's completely illegal to manipulate one's own stock price with false earnings warnings, and while we're certainly not accusing Apple of doing that, it's hard for a paranoid observer not to notice the, shall we say, coincidence. After all, the warning was issued just five days before the end of the quarter, and we find it tough to believe that Apple suddenly earned another $25 million right at the end, there. What, was everyone holding off on buying Macs until the end of the month? Or perhaps money dude Fred Anderson accidentally spilled coffee on one of the sales reports or something.

The other scenario is a shade less diabolical. Let's say Steve and Fred and the crew all got together and saw that Apple was only going to make about $110 million last quarter. Their earlier public estimates placed the profit at about $134 million, meaning that, for the first time in two years, Apple would not be beating Wall Street's expectations. Consternation! Uproar! So the question here is, just how far would Apple go to continue the Street-beating winning streak? Far enough to issue an overly-pessimistic earnings warning designed to lower analysts' expectations to a beatable level? After all, without the earnings warning, those glowing headlines would read more like "Game Over: Apple Fails To Meet Expectations." Just how good a spin doctor is Steve Jobs, anyway?

But theories of nefarious conspiracies aside, we've got a winner in our own Beat The Analysts contest: Menno Vos, who guessed $111 million right on the button. Congratulations to Menno, who will receive the software of his choice from the Baffling Vault of Antiquity™, and thanks to everyone who entered. Stats, analysis, and commentary are available now at the contest page.

What is it about Apple that makes PR disasters almost par for the course? The most recent debacle was the "Blue Blocker" scandal, in which Apple was accused of having deliberately crippled blue and white G3 systems so that they wouldn't boot if a G4 upgrade was installed. Since the news first leaked out, several of the upgrade manufacturers seem to have found a workaround, but Apple suffered a pretty bad black eye in the process. And now that people are just starting to get over the Blue Blocker thing, Apple announces the Great Megahertz Theft of 1999.

By now you've probably seen the press release: due to Motorola's recent setbacks with correcting "errata" found in G4 processors running at 500 MHz and higher, Apple has decided to change the specifications of the entire Power Mac G4 line. Since the 500 MHz chip is now not expected until "early next year," what would have been the Power Mac G4/500 is now the G4/450. And to keep things consistent, the G4/450 is now the G4/400, and the G4/400 is now the G4/350. Now, it's bad enough that Apple's entire line of desktop supercomputers has just gotten slower. And it looks really bad in the Megahertz Wars that Apple's offerings start at 350 MHz while Intel and AMD are cranking out 400 MHz chips. But the real kicker is this: Apple just slowed down the entire line of G4 systems without lowering the price. That's right; the G4/450 that would have cost you $2499 yesterday now costs exactly the same, but you get a G4/400 instead. How do ya like them Apples? Judging by the reactions noted in a MacWEEK article, odds are, you're not too pleased.

Now, for those of you who bought a G4 nice and early and figure you got 50 MHz more for the same price as the rest of us poor shmoes who waited, from what we understand, you're not off the hook, either. The last thing Apple wants is division within the Mac community due to bad blood over who got a faster G4 for less money, etc. So sources claim that in order to resolve the price discrepancy and restore a sense of unity, Apple will be replacing the processors in existing Power Mac G4 systems with slower units. Yes, if you've got a shiny new Power Mac G4/450 in your home office, Steve Jobs will personally visit your home and downgrade your processor to 400 MHz. Furthermore, to compensate for the extra few weeks during which you had an unfair 50 MHz advantage, Steve will then watch a few pay-per-view movies while making several long-distance calls using your phone, and he won't even use 10-10-220. C'mon, it's only fair that Apple screw all of us, right?

So in addition to iBook scarcity following the Taiwan earthquake, Apple's other monumental supply problem is Motorola's inability to provide enough G4 processors for the new line of professional Power Macs. After blaming Motorola for causing lower-than-expected Q4 earnings, Apple also downgraded the entire G4 line to reflect the fact that 500 MHz G4s won't become available until next year. It's a big stinking mess, but with Motorola as the only source for the new processors, there's really no good solution.

Except, of course, for IBM. IBM's been out of the running to make G4s for Apple from the start, due to differences in opinion over the direction the chip should take. See, Motorola's G4 has AltiVec-- what Apple's calling the "Velocity Engine." It's the vector processing unit that gives the Power Mac G4 such a massive speed boost when running AltiVec-enhanced applications like Photoshop. Otherwise, the G4 isn't all that much faster than a G3 at the same clock speed, at least if recent tests can be believed. IBM, however, wasn't too hot on the whole AltiVec idea; they use PowerPC chips in servers, which wouldn't really benefit from a vector processing unit. That meant Apple was reliant on Motorola as its sole source of AltiVec G4s-- with unfortunate results.

But now, according to a CNET article, Apple's announced that IBM will be making G4s for Power Macs starting early next year. Unfortunately, no one seems to have any details on whether or not those chips will be AltiVec-enabled or not. If they're not, then Apple's going to have a hell of a time retooling their whole G4 marketing spin. Our guess is that Steve did manage to persuade IBM to go AltiVec, but even if that's the case, is "early 2000" early enough for IBM's helping hand to prevent the Power Mac G4 from being a Q1 sales disaster?