the first quarter of fiscal 2001 to approximately $1.0 billion. This decline is anticipated because of a continued deterioration in demand experienced by the Company during the first two months of fiscal 2001, rebate programs and price cuts instituted during the first quarter that will cost the Company approximately $135 million, and a plan to reduce substantially by the end of the first quarter the level of inventory in the Company's distribution channels from the amounts at the end of fiscal 2000. In addition, the Company expects to incur approximately $115 million of cancellation charges related to purchase orders for proprietary components due to the reduced sales outlook. As a result of these factors, the Company anticipates reporting a net loss, before the effect of any investment gains, in the range of $225 million to $250 million for the first quarter of 2001.

For all of 2001, the Company anticipates net sales will decline as compared to 2000, falling in the range of $6.0 billion to $6.5 billion. The Company currently expects that it will be profitable, before the effect of any investment gains, during each of the last three quarters of 2001.

The foregoing statements concerning the Company's anticipated operating results during the first quarter of 2001 and the Company's anticipated operating result for all of 2001 are forward-looking. The Company's actual results could differ. The Company's future operating results and financial condition are dependent upon general economic conditions, market conditions within the PC industry, and the Company's ability to successfully develop, manufacture, and market technologically innovative products in order to meet the dynamic conditions within the highly competitive market for personal computers. Some of the potential risks and uncertainties that could affect the Company's future operating results and financial condition are discussed throughout this Item 7, including the discussion under the heading "Factors That May Affect Future Results and Financial Condition."

 

NET SALES

Net sales rose 30% to a total of $7.983 billion in 2000 as compared to 1999. The increase in net sales resulted directly from a 32% increase in Macintosh unit sales. Driving unit sales growth was a 51% increase in combined unit sales of the Company's consumer and education Macintosh systems, iMac and iBook, and a modest increase of 11% in combined units sales of the Company's professionally oriented Macintosh systems. Combined unit sales of iMac and iBook systems accounted for 52% of total Macintosh unit sales in 1999 and 60% in 2000. This trend highlights the increasing importance to the Company of its consumer and education markets. During 2000, the average revenue per Macintosh system, a function of total net sales generated by hardware shipments and total Macintosh CPU unit sales, of $1,715 was relatively unchanged from 1999. This was due to increased unit sales of higher priced Power Mac, PowerBook, iBook, and G4 Cube systems offset by increases in unit sales of lower priced iMac systems. Additional comments regarding net sales for 2000 may be found above under the heading "Fiscal 2000 Overview."

Net sales