Today in Apple history: Steve Jobs’ Apple turnaround continues

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This is when we should have invested every cent in Apple stock.
Photo: Ste Smith/Cult of Mac

July 15: Today in Apple history: Steve Jobs' Apple turnaround continues with third profitable quarter July 15, 1998: Apple reports its third profitable quarter after the return of Steve Jobs, continuing the company’s remarkable turnaround.

Apple earns $101 million for the quarter, largely thanks to the success of the Power Mac G3. In the same quarter one year earlier, Apple lost $56 million. This marks the first time in three years that Cupertino managed three straight profitable quarters.

Apple returns to profitability

Steve Jobs first announced Apple’s return to profitability at that January’s Macworld Expo, saying the company’s new strategy had “all come together for us.”

Several factors drove Apple’s newfound success. Perhaps the most notable of these was the success of the Power Macintosh G3 computer, which debuted in late 1997. By July 15, 1998, this machine had sold 750,000 units, qualifying it as a big hit for the time.

“Apple had a terrific quarter,” Jobs said at the time. “We sold a record number of Power Macintosh G3 computers, customers love our new PowerBooks, Apple earned its highest profit in years and we ended the quarter with the lowest inventory level among the major PC players.”

Behind the scenes, Apple management cultivated a new leanness that boosted the company’s bottom line. Jobs carried out aggressive cost-cutting — killing failing products, slashing R&D spending, and axing a number of employees he deemed expendable.

The results showed up immediately in Apple’s earnings. Even though the company brought in slightly less revenue than it had a year earlier, profits increased. Quarterly revenue dropped to $1.4 billion, compared to $1.7 billion in 1997, but gross margins rose to 25.7%, a three-year quarterly high. This allowed Apple to return to profitability faster than anyone dared hope.

“It truly is stunning that they should get that far ahead of what all of us expected,” Daniel Kunstler, a technology analyst at JP Morgan, told CNN. “They were really able to do it on the margins.”

One hit product away

While the results proved dazzling, Apple still needed a hit product to take things to the next level. Fortunately, Cupertino had the iMac G3 up its sleeve. Going on sale on August 15, 1998, the brightly colored, translucent Macintosh helped turn around Apple for good.

Add in the iBooks and, a couple years later, the iPod, and Apple would be well on its way to becoming the titan we know today. Pretty amazing how much things can change in 20 years, right?

Were you an Apple fan in 1998? Let us know your memories of this time in the comments below.