Apple Computer Inc.'s interim CEO Steve Jobs rallied the Macintosh user community today, showing off new software products, heaping compliments on Apple employees, promising new products and predicting a US$45 million first-quarter profit.
Jobs, sporting a graying, black beard saved the big news for the last minute of his keynote address at the annual Macworld Expo which opened here today, announcing the expected profit on revenues of $1.575 billion for the first quarter ended Dec. 31, 1997. Apple will reveal final financial figures for the quarter on Jan. 14.
Jobs, however, cautioned that the second quarter ending March 30, 1998 has traditionally been Apple's weakest quarter, indicating that the profitability may not be sustained.
Regardless, the news of the expected earnings was received with thundering applause by the 4,000 Macintosh users in attendance and also welcomed by Wall Street where Apple's stock shot up more than 20 percent closing at $18.93, up $3.06 from yesterday's price of $15.80. A consensus estimate by First Call prior to today expected Apple to post a loss of 6 cents a share for the quarter.
Last year, Apple reported a US$120 million loss for the first quarter, or a loss of 96 cents per share, on revenues of $2.1 billion and unit sales of 923,000.
"It's all starting to come together for Apple now," said Jobs.
During a question and answer session after the keynote, Apple executives said the profit resulted from continued cost cutting begun last year and a general stabilization of Apple's revenues in recent quarters.
In addition, shipments of the Power Macintosh G3 surpassed expectations, according to Fred Anderson, Apple chief financial officer. Since November, when the system was announced, Apple has sold 133,000 G3 units, surpassing Apple's initial forecast by 53,000 units, he said.
"We're out of the business of predicting profitability and in the business of making profitability," Anderson said.
A partnership with computer retailer CompUSA announced last year also is producing better than expected results, Jobs said. During the first quarter CompUSA installed "Apple stores within a store" at 57 of its outlets in the U.S. While total Macintosh sales accounted for only 3 percent of all computers sold at the retail outlets during the month of October, Mac sales soared to 14 percent in December, Jobs said. CompuUSA has previously promised to outfit all of its stores with the dedicated Apple section by the end of February.
For all the good sales news in the U.S., Apple's revenues in both the economically troubled Asia Pacific region as a whole and Japan specifically were below plan by between 13 percent and 14 percent. Asia, including Japan, contributes just over 20 percent of Apple's total revenues, they said.
"We hope, along with the rest of the global companies that there is going to be a stabilization in Asia-Pacific," Anderson said.
However, aside from the profit news, the majority of Jobs' keynote was devoted to product demonstrations, mostly by third parties, including Microsoft Corp., which showed off Office 98 for the Macintosh, a version of the applications suite that leapfrogs the Windows version in terms of features and functions, Jobs said.
Microsoft is more committed to developing feature rich applications for the Macintosh platform than ever before, said Ben Waldman, general manager of the Macintosh business unit at Microsoft. He added that Office 98 for the Mac is not a port of the Windows version but build from the ground up for the Mac platform. "We understand now that Macintosh users are different and have different needs," he said.
Some of the features only available on the Mac version of Office 98, according to Waldman, include drag and drop installation, support for QuickTime virtual reality, a natural language learning assistant, rich text formatting capabilities and the ability to draw tables and charts using the mouse and an on screen pencil.
Oracle Corp., meanwhile, pledged to port all of its more than 40 business and financial client/server applications to the Macintosh platform, a move which Apple executives called a very significant announcement. Release 11 of Oracle Applications due out in the second quarter will support the Mac OS, said John Wookey, vice president of financial applications at Oracle.
Also on stage during the keynote were representatives from Macromedia Inc. which demonstrated its new Dreamweaver Web content authoring tool.
Apple's product demonstration during the keynote included the new 3.0 release of QuickTime digital imaging and editing software, which offers new features including streaming video and support for DVD and virtual reality and drag and drop video editing capabilities.
Jobs also said more than 50 new software titles for the Macintosh would be released at the Macworld Expo, some of which will be games. "I guess the past management team at Apple didn't like games," Jobs said. "The current management team really likes games."
Also, Apple's "Think Different" marketing campaign has been so successful that it's been copied by several other companies, Jobs said.
He also promised that the new 275MHz PowerPC G3 processor made by Motorola Corp. and IBM will be a "screamer" that will easily outperform comparable Pentium II processors made by Intel Corp.
Neither Jobs nor other Apple executives here today offered any update on candidates for the still vacant CEO position. But Anderson said the company needs to find a person that endorses the strategy set in motion by Jobs over the past few months.
"One thing Apple does not need is another 180 degree shift in strategy." Anderson said. "We don't need another strategy du jour."
Initial user reaction to Jobs' keynote appeared positive.
"It's exciting to hear about the profits," said Sam Hay, multimedia developer at Cal Poly University in Ponoma, California. "There are a lot more products here than I expected."
Clare Bartlet, technical user support manager at the computer laboratory at University of Cambridge, U.K., said it was amazing to see how Jobs can still really the crowd.
"They showed off some good products, no new machines but it's nice to see the enthusiams for the Mac," Bartlet said. She added that the University of Cambridge, which maintains thousands of Macintosh machines, remains devoted to the Macintosh platform.
Apple, based in Cupertino, California, can be reached at +1-408-996-1010 and at http://www.apple.com/.
(Rob Guth contributed to this story.)