Apple: Less Profits, More Stores, New Windows-Compatible.

     iPods & New iTunes 3 
     Suffering through the swoon in PC sales like everyone else, Apple reported that the 808,000 Macs it shipped in its third quarter ending June 29 were 2% fewer than the same quarter a year ago. Apple earned only $32 million, down from $61 million year-over-year on revenues that dropped 3% to $1.43 billion. Product margins were also down to 27.4% from 29.4%. Fewer sales plus smaller margins usually results in diminished profits. International sales were 42% of the quarter's revenue. Apple expects revenue for this quarter to be flat just like Intel, AMD and HP also figure. It said it doesn't see an early rebound in sales. Apple laid off 7% of its work force earlier in the quarter, mainly at a manufacturing plant in Sacramento, California. 
     More Stores. With $4.3 billion in cash and cash reserves, however, Apple marches on and will open 19 more stores in the US by year's end including two in pricey lower Manhattan and Garden City, Long Island's Roosevelt Field mall. That will give Apple 50 stores compared to Gateway's 275 shops. Apple and Gateway have led the way in opening company-owned stores as a means of demonstrating more complex digital media-enabled computers to directly home buyers. Dell has stuck its toe in "company-owned retail point" marketing by opening limited display kiosks in a few areas in the Southern and Southwestern US this week. 
     New Windows-Loving iPods. Three new Apple iPods will be Windows-compatible. Apple caught flak from some analysts for not including the feature in the original iPods and missing out on sales to Windows PC users, the overwhelmingly largest part of the market. The new units come in 5GB ($299), 10GB ($399) and 20GB ($499) flavors. The 20GB unit holds up to 4,000 songs and both the 10GB and 20GB boxes have a new solid- state touch wheel for browsing through songs by artist or genre and through playlists and a wired remote control.     iPods use a FireWire connection to the Mac and the Windows PC and Apple says that 4,000 songs can be copied from the computer to the iPod in just over 30 minutes compared to over 13 hours on a USB connection. iPod for Windows will ship with MusicMatch Jukebox software, said to be the best-selling Windows music software. The Windows iPod will ship late August. 
     New iTunes 3. Apple's iTunes upgrade includes Sound Check for consistent volume playback of tunes that were recorded at differing volumes, built-in support for Audible.com and Smart Playlists that update a particular artist's playlist when a song by that artist is added or creates a playlist of the 25 songs most listened to on the PC. ITunes 3 is available as a free upgrade. Apple says that more than 14 million copies of iTunes have been distributed. 
     More Granularity from Apple Execs. At a separate Wall Street analyst meeting, Apple CFO Fred Anderson and Apple's retail boss Ron Johnson also said: 
     * Apple sold 52,000 iPods in its third quarter compared to 57,000 in its second quarter, down 5,000. 
     * IMac sales totaled 378,000, split as follows: 173,000 LCD, 126,000 classic CRT and 79,000 eMac (the 17-inch one). * Apple's retail stores have sold 66,000 CPUs in the last 14 months.  
     * Apple believes that 50% of the PCs sold in its stores are incremental sales and that those customers would not have bought an Apple otherwise and thinks that 40% of the store buyers didn't previously own an Apple. 
     * Each Apple store averages 3,700 visits a week, which Apple believes is 14 times as many as Gateway's Country Stores.
     * Apples carries about three week's worth of inventory in each store. 
     * Apple will open smaller stores in an effort to get the retail operations to break even. The smaller stores will have 60% of the space with 90% of the features of the larger stores resulting in a 30% lower breakeven cost. Fifteen of the 19 new stores will be smaller. 
     * All PC purchases by consumers have fallen globally by 15% and small office systems are down 6%. 
     * Jaguar, Apple's next version of its OSX operating system will ship August 24 for $129. Jaguar is not thought to have enough significant new features to cause users to upgrade on a large scale.