Apple Inc.

Kevin Hawkinson
Rebecca LeNoue
Julio Quintana
Jessica Schrader
Stefan Sofianos
Laura Beth Williamson

http://www.youtube.com/watch?v=OYecf
V3ubP8

 Established

in Cupertino, California on April

1, 1976 and incorporated January 3, 1977
The original founders were Steve Jobs, Steve
Wozniak, and Ronald Wayne
The first product introduced by the company
was the Apple 1 personal computer kit.

Apple has fought against three main competitors over the

years. Dell Incorporated, Hewlett-Packard Company, and
Microsoft Corporation constantly rival Apple for market
share.
Although all three of Apples main competitors surpass
them in numbers of revenue and net income, Apples
growth rate of quarterly revenue is much higher than
those of its competitors.
Market Share

Apple
Microsoft

1
2
3

Dell
HewlettPackard

 Apple

has had impressive numbers despite

the recent economic conditions due to
increased iPhone and iPod sales.

Increased iPhone sales, strong overseas performance,

iPod sales, and a better than expected profit margin
helped to offset declining Macintosh sales.

 Apple

shareholders have voted to pass Say

on Pay. This Shareholder Proposal number 5
will give investors more control over
executive compensation.
There is talk of a possible partnership
between Apple and Verizon in the future,
according to Business Week.

After re-entering as CEO of Apple, Steve Jobs

revitalized sales growth with the introduction of the
iPod.
The recent medical leave has many investors weary
of the future outlook of the company

2004

2005

2006

2007

2008

Ind.
Avg.

Current 2.66

2.95

2.25

2.37

2.46

1.37

Quick

2.34

2.48

1.97

2.00

1.84

1.29

CFL

1.47

1.73

1.34

1.60

1.52

ACP

34.12

23.45

23.66

24.89

27.22

DIH

6.12

6.09

7.18

7.97

8.71

DPO

87.95

65.66

90.21

114.44

94.44

CCC

-47.70

-36.12

-59.36

-81.58

-58.51

2004

2005

2006

2007

2008

Ind.
Avg.

ART

10.70

15.56

15.43

14.66

13.41

8.42

IT

59.62

59.93

50.80

35.82

41.91

26.00

APT

4.15

5.56

4.05

3.19

3.86

FAT

11.71

17.05

15.08

13.10

13.23

TAT

1.03

1.21

1.12

0.95

0.82

1.45

2004

2005

2006

2007

2008

Debt

0.37

0.35

0.42

0.43

0.47

LTD to
Total
Cap.

0.00

0.00

0.00

0.00

0.00

Debt to
Equity

0.59

0.55

0.72

0.74

0.88

TIE

0.00

0.00

0.00

0.00

0.00

CIC

0.00

0.00

0.00

0.00

0.00

FCC

N/A

N/A

N/A

5.33

5.74

CFA

-5.31

-9.75

-3.38

-5.55

-8.00

Ind.
Avg.

0.35

14.03

2004

2005

2006

2007

2008

Ind.
Avg.

GPM

27.26%

29.01%

28.98%

33.97%

34.31%

40.45%

OPM

3.78%

11.79%

12.70%

18.37%

19.32%

16.22%

NPM

3.21%

9.53%

10.30%

14.56%

14.88%

12.23%

CFM

11.28%

18.20%

11.49%

22.79%

29.55%

ROA

3.30%

11.53%

11.56%

13.79%

12.22%

13.32%

ROE

5.24%

17.88%

19.92%

24.06%

22.99%

41.48%

CRA

11.60%

22.01%

12.90%

21.58%

24.25%

2004

2005

2006

2007

2008

Ind.
Avg.

EPS

0.38

1.64

2.36

4.04

5.48

PE

309.58

71.60

49.93

29.09

21.46

10.71

Div. Pay. 0.00

0.00

0.00

0.00

0.00

0.13

Div. Yld. 0.00

0.00

0.00

0.00

0.00

1.22

Growth

20.00%

9.00%

4.00%

1.20%

0.90%

2008

2009

2010

2011

2012

2013

Sales

$32,479.00

$38,974.80

$42,482.53

$44,181.83

$44,712.02

$45,114.42

Cost of goods Sold (81%)

$26,307.99

$31,569.59

$34,410.85

$35,787.28

$36,216.73

$36,542.68

EBIT (19.32%)

$6,171.01

$7,405.21

$8,071.68

$8,394.55

$8,495.28

$8,571.74

After tax

$4,338.22

$5,205.86

$5,674.39

$5,901.37

$5,972.18

$6,025.93

Dep & Amort. (4%)

$1,292.00

$1,558.99

$1,699.30

$1,767.27

$1,788.48

$1,804.58

$20,598.00

$24,717.82

$26,942.42

$28,020.12

$28,356.36

$28,611.57

$4,119.82

$2,224.60

$1,077.70

$336.24

$255.21

$2,946.11

$3,211.25

$3,339.70

$3,379.78

$3,410.20

$491.11

$265.15

$128.45

$40.08

$30.42

$2,153.93

$4,883.94

$6,462.49

$7,384.35

$7,544.89

Operating Capital (63%)

Change in Operating capital
Capital expenditures (7.559%)

$2,455.00

Change in Capital Expenditures

FCF (in Millions)

Estimated sustainable growth

1.00%

Terminal Value (in millions)

Terminal plus final cash flow
Value of the Firm (in millions)
Total Value of the Firm
(millions)

$80,468.15
$88,013.04

Numbers of Shares Out

(millions)
Estimated price per Share

$1,949.79
$157,213.33

891.91
$176.27

$4,002.04

$4,793.66

$4,958.32

$53,496.48

Multiples approach
Current market price

Apple

Dell

HP

IBM

$121.76

$10.55

$35.43

$102.31

EPS

5.483

1.25

3.21

9.01

P/E

22.6

8.45

11.1

11.4

$123.92

$10.56

$35.63

$102.71

25.73

2.238

16.54

10.06

4.68

4.61

2.1

9.99

$120.42

$10.32

$34.73

$100.50

RPS

37.34

30.86

48.54

76.21

P/S

3.25

0.33

0.7

1.3

PO

$121.36

$10.18

$33.98

$99.07

Average Strock Price

$121.90

$10.35

$34.78

$100.76

Current stock price (market price)

$121.76

$10.55

$35.43

$102.31

P0
Book value
P/B
PO

49.9025% certainty of stock

price from $176.27 to
infinity

100% certainty of stock price

greater than the current market
price

 The

current market price as of April 27, 2009

at close is $125
The intrinsic value derived from the future
cash flow model and supported by crystal
ball simulation is $176.27
Our recommendation is in-line with other
analyst recommendations