A few things come out of the quarterly report that are important:
1) Overall results are not bad - the loss came mainly from restructuring and non-recurring items, which is understandable and justified.
2) Unit sales, far more important, IMO, were 'healthy' in the quarter. I wouldn't say 'fantastic', but they were flat with last year.
3) Diversification: it appears that the attempt to draw revenue from non-traditional sources (applications, services, and new harwdare matrices) is moving toward good profitability for the company.
4) iPod and Windows: I was very impressed to see that 50% of iPod sales were of the Windows variant and that sales were so strong of the product after a year on the market. This bodes well for future well designed, well priced Apple consumer products.
This should help point out to Apple's executive management and board that there is room to diversify successfully into a more 'Sonyesque' company (as was suggested to The Board many times in the 1980s, and rejected).
4) Server sales: Once again proves my point that one should never herald "success!" after a few months of an Apple product launch. The initial success of the XServe comes primarily from the pent-up demand and 'low hanging fruit'.
Market conditions are more of a driving factor here: as few companies are expanding, there is little need to increase server capacity at the moment, especially not from Apple.
This is perhaps the hardest market for Apple to crack and it will take significant time and signficant resources to do so. Patience.
5) Education: Remains a significant point of concern for me. Apple's position there is eroding quickly despire some very decent efforts on behalf of the company.
6) iMac sales: While there was no official breakdown as to WHO bought those computers (schools versus regular consumers) I would be very interested in those numbers. Very telling was that the LCD iMacs made up less than 50% of the product sales. Demonstrating that the pricing is still not in-line with current market trends.
7) PowerMac: Should come as no surprise that sales were horrid during the quarter, and they have been for more than a year. Interesting how Anderson faults the economy and Quark...when we all know what the *real* reason for the sales fall-off is: Your friend and mine, Motorola.
The PowerMac and iMac LCD sales both demonstrate that there is a problem with Apple's price/performance ratio at the moment. In an industry where performance figures clock up near exponentially and prices fall accordingly, Apple has not been able to follow suit. This is hurting market-share growth dramatically, no question about it.
8) PowerBook: Again, no surprise. Pent up demand for the Autumn 'Book revisions helped fuel this, along with significant price cuts to bring this product line back into reality. But the question is, can Apple keep the momentum on PowerBooks going through the year? Chances are - yes, at the moment.
Overall, not terribly bad considering the state of the economy and the extra overhead that Apple has incurred over the last year. I would anticipate that the reaction from Wall Street tomorrow should be neutral to slightly negative, depending on the mood of the markets tomorrow.
It does demonstrate that Apple appears on a clear path at the moment, the Christmas quarter wasn't horrific, and the diversification strategy and retail strategies are beginning to pay off.
The real question will be for Apple going into the 2nd Quarter of the year. As it's the slowest traditionally, it will be imperative that Apple have solid products and beefier margins going toward the March results. My guess is that the new PowerBook 17" is in the matrix now to drive that profit margin (and from the 'lines' at Apple's online store it appears so). I will put $1000 on us seeing significant PowerBook 15" and iMac updates within the next 30 days to help drive solid sales in the 2nd quarter as well.
I think this is how we're going to see Apple shifting its product strategy: release a high-margin product along with a low-margin, high volume product (the PowerBook 17" and 12") to drive growth and help keep margins consistent.
I will also bet that Apple has better learned how its product sales "spike and bottom out" and how it is increasingly impacted by similar spurts in the Wintel world. As a result, products are going to be refreshed more often to keep things moving - particularly in the mobile front for the time being.
Looks to be a good year for Apple if the plan can be executed properly. Best of luck!
