Apple pays off old debts of US$300m as profits grow

19 Feb 2004

When Steve Jobs returned to Apple in 1997, the company was burdened with US$1bn in debt. According to an internal memo written by Jobs to employees of the company, Apple is now debt-free after having cleared its last US$300m of debt in an all-cash payment out of a war chest that has burgeoned to US$4.8bn.

A dizzy several years since the Apple founders’ return to the fold have seen the personal computing pioneer embark on a bold series of product firsts, ranging from the bright and brash iMacs and the super fast G4 microprocessor-driven desktop machines to the iPod digital music player, a series of notable Wi-Fi firsts and the iTunes music download service that may lead to the salvation of the floundering music industry.

Latest achievements include the Airport Extreme base station that acts as a broadband router that can support up to 50 computers, as well as a mini version of the popular iPod device that has commenced shipping. As well as this, Apple has grabbed 20.2pc of the global market for network interface cards and wireless access points offering the 802.11g flavour of Wi-Fi.

In recent weeks Apple, which employs over 1,200 people in Ireland, posted a net profit of US$63m in its Q1 results, after a year that saw its iTunes music service log more than 30m downloads as well as widespread adoption of Mac OS X and sales of its computers and iPod music player increasing exponentially. Revenue for the quarter reached a four-year high of US$2bn, up 36pc from the year-ago quarter. Gross margin was 26.7pc, down from 27.6pc in the year-ago quarter. International sales accounted for 44pc of the quarter’s revenue. Apple shipped 829,000 Macintosh units during the quarter, up 12pc from the year-ago quarter, as well as 733,000 iPod units, up 235pc from the year-ago quarter.

When Jobs (pictured) returned to Apple in 1997, he declared that he would accept only US$1 a year as salary in order to qualify for health benefits.

In an internal memo to Apple staff yesterday, Jobs said: “When I arrived back at Apple in mid-1997, the company was burdened with US$1bn of debt. Through everyone’s hard work we turned Apple around, paid off the majority of our debt and began to amass a war chest of cash in the bank which has grown to about US$4.8bn!

“But there was still US$300m of remaining debt, which we decided to hold to maturity. Today we used US$300 of our cash to pay off this remaining debt. Apple is now a debt-free company – for the first time in over a decade! It sure feels good”, Jobs concluded.

By John Kennedy