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The Balloon Just Popped (9/20/99)
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We have just one thing to say to those of you who were complaining that Apple hasn't been surprising us enough lately: Surprise! How's lower-than-expected quarterly earnings grab ya? And if an earnings warning after two straight years of better-than-predicted results isn't enough to shock that jaded expression off your face, how about Apple's stock dropping eleven points in after-hours trading? See? The fun never stops when Apple's involved. Faithful viewer Tim Rzeznik was the first to send us the bad news, in the form of a Bloomberg article detailing Apple's warning that the company would miss estimates for the quarter ending September 30th by a long shot, due to problems getting enough G4 chips from Motorola.
If you find that explanation a little suspect, we're right behind you. After all, the G4 was a surprise product, unveiled only a month before the end of the quarter and the analysts weren't expecting it to show up until next year. So why would constrained supply of G4 processors be affecting estimates formed long before the G4 was even announced? We think it comes down to the fact that the G4 basically sent demand for the Power Mac G3 into a death spiral. After all, the pricing on the G3s has barely budged; sure, you can get free extra RAM or a free printer, but we imagine most people would rather have the latest and greatest. The supercomputer on the desktop. Graphite-grey instead of Blueberry. Gigaflops. All that. So people are waiting for G4s, and Apple's waiting for Motorola.
In the big picture, though, we've got to say-- if we had a few grand stuffed in the mattress, now would be an excellent time to pick up some AAPL. After all, the shortfall isn't due to an overstock of inventory and a lack of demand; it's due to 150,000 people ordering Power Mac G4s that Apple can't build because they can't get the chips. That demand should carry over into the December quarter quite nicely, and assuming that Motorola gets its butt in gear (which they've promised to do), Apple might have a lot to be thankful for: G4s that are actually shipping, iBooks in the channel, and a new iMac to refresh the revolution. It could be a very merry Christmas indeed.
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And Now For A Word From Our Sponsors |
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 | | The above scene was taken from the 9/20/99 episode: September 20, 1999: Ouch! After seven Street-beating profitable quarters, Apple issues an earnings warning due to low G4 processor availability. Meanwhile, slowpoke Motorola continues to be Apple's only PowerPC source as IBM continues to waffle on the AltiVec issue, and a Japanese court grants a preliminary injunction to Apple, barring Sotec from selling its iMac clones...
Other scenes from that episode: 1792: The Single-Source Blues (9/20/99) We know what a lot of you are probably thinking: "If Apple could get PowerPC chips from someone other than Motorola, they wouldn't be in this mess right now." Well, yeah, that's probably true, but sadly, Apple's got a million-horsepower hype engine cranking away, customers with cash in hand ready to buy G4s by the dozen, a ton of positive press on its side-- and a chip supplier squeezing out processors at a rate so slow you need a time-lapse camera to record it... 1793: iMac Clone Smackdown (9/20/99) Of course, before Apple's earnings warning surprise and the subsequent stock collapse, we figured the big news would be the latest doings in Apple's lawsuit against Japanese iMac cloners K. K. Sotec. While it certainly can't claim top billing anymore, the Sotec case is still dirt worth dishing, especially since it represents a bright spot in what otherwise turned out to be a fairly dark day for our favorite computer company...
Or view the entire episode as originally broadcast... | |  |
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