Apple Expects Heavy Gains

Apple’s financial results for the final quarter of the company’s last fiscal year should be released tonight. Reliable sources indicate that the results are "wildly better" than most predictions.

Apple sold more in its fourth quarter (ended 30-Sep-94) than predicted, and dropped costs further than they said they would. Moreover, their inventory is down dramatically (or so it’s rumored), which sets them up to make rapid product transitions.

And, believe it or not, early reports are that Apple’s market share is up significantly too. What does that mean? Well, if Apple were Coke, 0.5% would be significant. Apple is not Coke, of course, and there’s a great deal of variability with market share numbers in the computer world. I’d take that aspect with a grain of salt (even if you hear me crowing about the share gains later).

So, Apple’s stock price will shoot through the roof, right? Not exactly. First, Apple made a preliminary announcement to help the stock adjust for the results. Also, for the past month or so, there have been a number of rumors about IBM, AT&T, Motorola, or a conglomerate of little green men from Alpha Centuri either buying Apple outright, or taking an equity stake.

Inside rumors, however, say IBM is not talking to Apple about investing, but merely intensifying ongoing talks about a universal PowerPC platform. Sources do say, however, that Motorola is exploring buying Apple. The IBM talks are significant because they could mark a sea change in IBM’s vision of what they can and cannot impose on this market. Originally, IBM sought to impose its PREP (PowerPC Reference Platform) standard on all comers. PREP was to define a compatible PowerPC system. In this original "standard," IBM excluded Apple systems. That is, the original design prevented Apple from easily making its systems "compatible."

Now, did this make sense? From IBM’s standpoint, sure. They work with Apple, true, but within the PowerPC world, Apple is its biggest competitor. On the other hand, it’s crazy… Apple is by far the single biggest manufacturer of PowerPC-based systems. In the face of that, how can IBM impose a standard? In fact, there are roughly four times as many Apple-labeled PowerPC systems in existence as there are Pentium-based systems. (It’s hard to believe, with all the hype!). Oh, and you know how many mainstream native Pentium applications there are? Count ’em. (hint: let me know if you find one.)

In the end, because IBM does not have a mainstream operating system ready for the PowerPC chip, they must work with Apple so they can claim (on the eventual release of IBM-labeled PowerPC-based desktop systems next year) they had bunches of applications ready (if you buy the Mac OS, of course) from the start.

The upshot of all this is that Apple’s stock price has already risen because of the takeover rumors, and the good financial results probably won’t affect the price as much as they would have otherwise.

Information from:
Apple Computer
Pythaeus