Apple 2000 Annual Report Download - page 16

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of the G4 Cube, a new Macintosh system announced and introduced by the Company during the fourth quarter, did not meet the Company's
expectations. In combination with related displays, G4 Cube sales were approximately $90 million short of expectations. Second, net sales in
the Company's education market fell short of expectations by approximately $60 million. Third, although total fourth quarter Power Mac unit
sales were close to expectations, the Company experienced an unanticipated mix shift towards lower priced Power Mac configurations
resulting in lower than anticipated net sales for the quarter of approximately $30 million. The Company ended 2000 with substantially more
inventory in its distribution channels than planned due to the lower than expected sell-through of the Company's products during the fourth
quarter.
OUTLOOK
The Company currently anticipates a significant sequential decline in quarterly net sales during the first quarter of fiscal 2001 to approximately
$1.0 billion. This decline is anticipated because of a continued deterioration in demand experienced by the Company during the first two
and a plan to reduce substantially by the end of the first quarter the level of inventory in the Company's distribution channels from the amounts
at the end of fiscal 2000. In addition, the Company expects to incur approximately $115 million of cancellation charges related to purchase
orders for proprietary components due to the reduced sales outlook. As a result of these factors, the Company anticipates reporting a net loss,
before the effect of any investment gains, in the range of $225 million to $250 million for the first quarter of 2001.
For all of 2001, the Company anticipates net sales will decline as compared to 2000, falling in the range of $6.0 billion to $6.5 billion. The
Company currently expects that it will be profitable, before the effect of any investment gains, during each of the last three quarters of 2001.
The foregoing statements concerning the Company's anticipated operating results during the first quarter of 2001 and the Company's
anticipated operating result for all of 2001 are forward-looking. The Company's actual results could differ. The Company's future operating
results and financial condition are dependent upon general economic conditions, market conditions within the PC industry, and the Company's
ability to successfully develop, manufacture, and market technologically innovative products in order to meet the dynamic conditions within
the highly competitive market for personal computers. Some of the potential risks and uncertainties that could affect the Company's future
operating results and financial condition are discussed throughout this Item 7, including the discussion under the heading "Factors That May
Affect Future Results and Financial Condition."
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