Apple computer time line

This month sees a $38bn rise in the value of the Rethink 50, up almost 3% to $1.35 trillion. The big gainers were led, as they often have been of late, by Research in Motion, rising almost 40% on another colossal improvement not only in revenue terms this quarter, but also in net income terms (see table overleaf).

Citrix and Veritas were the next highest movers, with Veritas getting a more gradual climb after its excellent figures from last month.

Brocade rounded out the stocks that rose over 20%, with Oracle rising just a fraction less than this, up due to its resounding win in the US Justice Department case over buying Peoplesoft.

AMD jumped once again by close to 20%, one of the biggest comebacks in technology, history. There are about nine other strong share moves from companies not reporting this month, with more than 10% gains, ending with Cognos and Apple, who did report this month.

The biggest share drops of the month were Accenture and LSI, both falling over 10%, with Accenture missing its guidance.

Going back to Apple, there are few Apple lovers out there in enterprise land, bur it may be time to rethink your approach to the company that remains the only viable PC architecture outside of Windows and Linux.

It was perhaps eight or nine years ago that Apple was last great and considered relevant to the enterprise IT marketplace, and this position was shattered when it was virtually pushed out of Japan by a resurgent bunch of local PC suppliers, in a cut price, cut throat war, which humbled the company and sent it back to the American shores.

What followed was like a McCarthy Witch hunt, as the word Apple was eradicated from the approved list of virtually every IT department of the western world.

Its PCs were non-standard, they were too closed, they were hard to support, expensive and there was too little in the way of software for them. Communications were tricky with an Apple and they didn't fit well onto Lans or Wans. For companies that were forced to keep Apple PCs, they, were like as not held in the thrall of some kind of design team that lived or died by their ability to use Quark Express, Adobe Illustrator and Photoshop.

These customers were magazines, advertising agencies, creative departments, some marketing businesses. It was scant fare for a company that was shooting to retain $10bn revenue status.

CIOs everywhere sent our orders that no more Macs were to be bought without his or her specific written permission, and Apple Computers began a long, lonely period operating in the underworld of home computing and its one stronghold of design-based computing, and looking once more for its breakthrough.

Apple turned over leader and management reams during that period, more than any other (apart from perhaps Compaq later) and its perceived technical weakness was matched only by its financial weakness, as it almost ran out of money, and got down to its last $1bn in the bank.

For those who remember that story, its quarterly results are a revelation as its rides a rising spiral back to rude health under its original charismatic leader Steve Jobs.

Not only did the company report its highest revenue in a fourth quarter for nine years at $2.35bn, it also reported its strongest net income for eight years at $106m, with a strong message that the good times are back.

For the year it has just completed, that's revenue of $8.3bn and net income of $276m, around four times last year's net income.

But is this all just the gyrations of a company that is turning from a failed PC business into a consumer electronics master? It sold a colossal 2m iPods in the quarter after all, a statistic that barely bears thinking about. Prior to this quarter the iPod had sold under 3m devices in the three years that it had been out, and to do 2m in one quarter is a remarkably achievement. Apple says that if its supply of components had held up, it could have shipped more.

But no, not according to Apple. The iPod wins have instead cast a halo effect over the Mac range and portables especially, and the new GS-based iMacs--while only 6% up over last year again--would have sold more but for component issues. "We would have sold a lot more if delivery of the G5 chip had nor been constrained," said an Apple spokesman this week.

The iMAC G5 is based on an IBM designed 1.8GHz PowerPC G5 processor and was launched just in August this year. The two things always to remember about Apple devices is that under the hood it runs an IBM chip, and the Berkeley Standard Distribution Unix. Now it has to be admitted that both are more than proven.

In all, Apple shipped 836,000 PCs in the quarter, 385,000 of which were desktops, which is still a drop in the PC ocean. One analyst on the investment call asked if the desktop penetration of roughly 3% of US PCs would follow the notebook penetration of roughly 5% to 6%, or the other way around.

"In our Apple stores (which did $370m in 81 stores during the quarter up 95%), 50% of the people buying a Mac were either buying a PC for the first time, or were first time Mac users." This reply from Peter Oppenheimer, Apple's CFO, when added to the G5 chip constraints, implies that Apple could sell substantially more of both desktops and notebooks in the coming quarter.

If it is true that enterprises ditched Apple due to inferior applications, a company perceived to be in trouble and an expensive product line, then there are plenty of reasons to reconsider. The discipline of the iPod and its price sensitive nature has made Apple a prudent buyer of cheaper components and a desirable customer to have for component companies to have. Its machines are powered by a drip that is beginning to get the upper hand in the chip wars over both Intel and AMD.

IBM has always had an obsessive focus on great processor to processor communication and the resultant push to put more than one processor core onto each chip, has given it a power lead against all comers. Apple is now the only PC company that translates that lead into a desktop and laptop device.

In software it has the ease of development of an open environment like BSD, one of the most trusted and stable Unix distributions out there. And in software applications it has the might of the Microsoft applications platform pretty much universally available on all Macs.

To add to that Apple has a substantial business in multiple processor servers and storage components, and was a very early entrant into the Wi-Fi phenomenon.

Perhaps it's time to take down the sign outside the IT department that says "The Apple Mac shall not enter here."

The overall outcome for Apple was a 37% revenue increase and an operating margin above 5% for the first time anyone can remember. Peter Oppenheimer, Apple's CFO added, "This will move up to 6% as we pass $10bn in revenues and 7% as we pass $11bn," as he predicted revenues for the next quarter up some $500m, at $2.8bn to $2.9bn and another surge in profit that will shift income up another $50m or so next quarter.

The Apple share price shook off a slump in the Nasdaq due to oil concerns and instead of dropping, as most stock do on profit taking just after successful results, it put on another 3.8% to leave market capitalization at $15.4bn, a wild and crazy two month ride up from $11.5bn, with no end to the climb in sight.

While we are harping on about the powerful chip lead that IBM has built up which Apple benefits from, it is worth noting that both Intel and AMD reported as we went to press with vastly varying results.

Intel continues in be judged by the financial markers as if it only makes chips for PCs, whereas it now makes server chips, has a strong flash memory division, of course makes Centrino Wi-Fi chips and also is chasing the three way communications d ream of driving broadband wireless through WiMAX, cell phone architectures through its xScale range and Ultra Wide Band components for the digital home market.

Intel's blip of overpromising for the third quarter has put a damper on any result it could deliver and so it ended up at the high end of its revised revenues estimates at $8.5bn, but underneath its revised gross margin estimate, delivering 55.7%, instead of the promised 58%, no one knew how to interpret it.

None of the financial groups were really sure whether growing by 8% in revenue terms is a good result for Intel or represents failure, and likewise bringing in net income up 15% over last year to $1.9bn, was it a good performance or a bad one?

By comparison AMD reported sales of $1.239bn up 30% and net income of $44m against a loss last time, a financial result that a year ago most people would have given you money against.