by Dan Lavin
Bumper crop in the Ukraine
NeXT-watching is like Kremlin-watching in the days before Glasnost. Since it's a private company, NeXT doesn't have to say anything about its finances. However, like the Kremlin, NeXT cannot be completely isolationist and also be a player on the world stage. So NeXT has begun the curious end-of-quarter ritual: It doesn't release all its numbers, just selected ones, leaving the rest of us to interpolate the whole picture from a few snippets. It's like May Day in Red Square, except Steve is still alive so there's no tomb for the executives to stand on.
NeXT released figures for the second quarter, that, on the surface, look excellent. They show a run rate commensurate with a $200 million dollar company and an 86 percent sales growth from the previous quarter. A closer look at the figures tell a slightly different story, however.
NeXT had a $46 million second quarter. The disclosed sales increase shows it did about $25 million in the first quarter. We were told that 8000 CPUs shipped in the first quarter.
Given an average receipt to NeXT of about $5000 per machine (based on a reasonable estimate of NeXT's margins and the mix of machines sold), this is only 4400 new computers and about 3600 upgrade boards. Of these 4400 real computers, only about 3100 stayed in the United States. The rest went overseas. NeXT attributes some of this weakness to customers waiting for color machines. I'll give them that one.
The lesson here is that NeXT did not have a great first quarter, especially in the United States. If annualized , these first-quarter numbers showed a $100 million company with 20,000 units sold. Both these numbers are half what some analysts have said NeXT needs to maintain momentum.
Now on to the second quarter, the mother of all quarters. Yes, there was an impressive increase to a level that can sustain NeXT. But the important numbers are the units and the domestic/international breakdown. Assuming an average selling price of $6500 per system (higher this time because of color availability), sales were 7100 units. Only half stayed in the United States this time 3550 units. This represents a 14 percent increase in units over a poor quarter, 37 percent by dollars.
Internationally, units almost tripled, while dollars more than tripled. These are great results. That's without the effect of having a Kanji operating system, since it began shipping in earnest only at the end of the second quarter.
So the question arises: What are they doing right over there? Or, what are they doing wrong over here? I'll suggest some possible solutions in a future column.
The danger in all of this is not that NeXT won't survive, but that the United States will be little more than a nuisance market. I predict at least a 60 percent share for international in the third quarter.
The domestic sales and marketing people are on the hot seat to make sure it doesn't hit 70 percent. We should know by NeXT May Day. If the news is good, NeXT will report units and dollars, domestic and international. If the news is bad, look for total transistors shipped. Or else a prediction of a bumper wheat crop in the Ukraine.