Apple Inc

Team 5
Kristen Hodge
Monica Longer
Katelyn Reed
Venessa Rodriguez

History
Stephen Wozniak was a member of Homebrew Computer
Club
Tech savvy people exchanging ideas

Joined with Steve Jobs and built the Apple I

Then built Apple II
Had fewer ships, high resolution graphics
Became popular, was used in schools

Apple Computer founded in 1976

Jobs had to convince Wozniak to turn Apple into
a company

Ronald Wayne was 3rd founder of Apple Computer

and

designed first logo-resigned a year later

Apple became incorporated in 1977, agency designed colorful logo

History Continued
In 1985 Wozniak left Apple and
pursued other interests
1997 Jobs officially returned to the
CEO position
Also serves as a director of Disney
Co-Founded Pixar Animation Studios

History Continued
In 2002 Apple formed an alliance with Ericsson and Sun
Microsystems to develop a way to deliver multimedia
content to wireless devices like smart phones and PDAs.
Apples QuickTime video creation software, Suns distribution
software & hardware, & Ericssons mobile infrastructure

In 2003 iTunes launched

iPod introduced in 2004
In 2005-2006 made agreements with car manufacturers
to incorporate iPod accessibility into their new models.
Acura, Audi, Chrysler, Honda, Volkswagen, Ford, General Motors,
and Mazda

In 2007 Apple Computer was renamed Apple Inc.

The iPhone was also introduced to the market

History Continued
In 2008 Apple introduced Time Capsule,
Mac Pro, MacBook Air, MobileMe, iPod
touch, iTunes 8, the new iPod nano, and
the new iPod touch
In 2009 iWork '09 and iLife '09, and
upgrades of iPhoto, iMovie, GarageBand,
iDVD, and iWeb were launched.
Apple also revealed the new 17-inch
MacBook Pro

Mission
" Apple ignited the personal computer revolution
in the 1970s with the Apple II and reinvented
the personal computer in the 1980s with the
Macintosh. Today, Apple continues to lead the
industry in innovation with its award-winning
computers, OS X operating system and iLife
and professional applications. Apple is also
spearheading the digital media revolution with
its iPod portable music and video players and
iTunes online store, and has entered the mobile
phone market with its revolutionary iPhone."

Employees
The success of the company rests
largely on the service, loyalty, and
availability of key personnel.
As of September 2009, Apple has
approximately 34,300 full-time
employees, and 25,000 temporary
employees and contractors.

Products
Personal Computers

MacBook Pro
MacBook
MacBook Air
Mac Pro
iMac
Mac mini
Xserve

Mobile Devices
iPhone
iPhone3G
iPhone 3GS

Portable Digital Music and

Video Players

iPod
iPod
iPod
iPod

shuffle
nano
classic
touch

Other Products & Services

iTunes 9
Apple TV
iLife 09
iWork 09
Final Cut Studio
Logic Studio
FileMaker Pro
Safari:
QuickTime
MobileMe
AppleCare

Share Profile
Trades common shares on NAS with tag
AAPL
Current Price 199.92 per share
Apple has 900,678,473 shares
outstanding, 7,183,823 closely held shares
Profit margin is 15.60%
Return on Equity of 20.50
Return on Assets of 10.60
Return on Investment of 20.50

Organizational Life Style

Apple believes its unique ability to create its own
state-of-the art products gives it leverage on the
competition. To do this continued investment in
research and development of these products is
crucial.
Apple spent $1.3 billion in research and development
expenditures in 2009
Apple supports third-party products that compliment
its offerings through developer programs.
Apple's strategy includes growing its distribution
network to reach more customers and to provide them
with high-quality products and post sale support.

Organizational Life Style

Apple manages its business mainly on a
geographic basis.
Segments in the Americas (North & South
Americas), Europe (European countries, the
Middle East, and Africa), Japan, and Retail.
The U.S. is Apple's largest geographic
marketplace, approximately 54% net sales to
customers in 2009

Apple distributes its products by

wholesalers, resellers, national and regional
retailers and catalogers.

Organizational Life Style

Apple has noticed that historically sales in the first and
fourth quarters are substantially higher than the other two
quarters in the fiscal year.
Compliance with federal, state, local, and foreign laws for
the protection of the environment has no material effect on
Apple's capital expenditures, competitive position, or
earnings. However, in the future it could become material.
An instance of how this may become material is customers
having the ability to return the product at the end of its useful
life, making Apple responsible for environmentally safe disposal
or recycling of the products.
Some laws of this nature have been passed in countries in Europe
and Asia, and certain states and provinces in North America.

Organizational Life Style

Apples business markets are
characterized by rapid technological
advances, and as of recent years
price competition has gained
momentum. It understands that it is
in a highly unstable

Financial Analysis
To breakdown the companys financial statements
into numbers that can be easily understood
The goal of the financial analysis is to be able to
evaluate the performance of a company through
these ratios and then put side by side with its
competitors
These ratios are used to accurately evaluate a
companys overall financial health, profitability and
growth
Ratios can be separated into three sections:
liquidity, profitability, and capital structure

Liquidity Ratio Analysis

The liquidity ratio analysis is the measure of a
companys capability to meet short term
financial obligations.
Includes: current ratio, quick ratio, accounts
receivable turnover, inventory turnover, and
cash to cash cycle.
When analyzing liquidity ratios it is ideal to
have as high of a number as possible because
that will demonstrate that the company has the
adequate resources to pay all of their financial
responsibilities

Current Ratio
3.5
3
Apple
HP
Dell
Microsoft

2.5
2
1.5
1
0.5
0
2005

2006

2007

2008

2009

Quick Asset Ratio

3
2.5

Apple
HP
Dell
Microsoft

2
1.5
1
0.5
0
2005

2006

2007

2008

2009

Accounts Receiveable Turnover

18
16
14

Apple
HP
Dell
Microsoft

12
10
8
6
4
2
0
2005

2006

2007

2008

2009

Inventory Turnover
100
90
80
Apple
HP
Dell
Microsoft

70
60
50
40
30
20
10
0
2005

2006

2007

2008

2009

Cash to Cash Cycle

120
100
Apple
HP
Dell
Microsoft

80
60
40
20
0
2005

2006

2007

2008

2009

Profitability Ratio Analysis

The profitability ratio analysis shows
the effectiveness of a firms ability to
produce profits.
Include: net profit margin, return on
assets, and return on equity.

Net Profit Margin

0.35
0.3
0.25

Apple
HP
Dell
Microsoft

0.2
0.15
0.1
0.05
0
2005

2006

2007

2008

2009

Return on Assets
0.3
0.25
Apple
HP
Dell
Microsoft

0.2
0.15
0.1
0.05
0
2005

2006

2007

2008

2009

Return on Equity
1
0.9
0.8
Apple
HP
Dell
Microsoft

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2005

2006

2007

2008

2009

Capital Structure
Analysis
A capital structure analysis is used to
show how well a company can
finance itself through the use of their
own assets which are show by the
debt and equity of the firm
The most important capital structure
ratio is the debt to equity ratio which
is shown below

Debt to Equity
3
2.5
Apple
HP
Dell
Microsoft

2
1.5
1
0.5
0
2005

2006

2007

2008

2009

Industry Analysis
Personal computer, mobile device,
computer software and portable MP3
player industries
Rapid Changes
Improving technology
Customer demand

Highly profitable

Five Forces Model

Threat of New Entrants
Not a significant threat in personal computer industry,
the others it is more likely
Enormous amounts of capital required to be able to
compete
Struggle to keep up with the ever-changing technology
Overcome economies of scale that the larger
companies have
Brand equity
Patents protecting design and technological processes
Complementary products

Five Forces Model Continued

Bargaining power of customers
Very little power
Products differ from competitors
Business customers have some but it is minimized
because of retail stores and online sales.

Bargaining power of suppliers

Supplier Diversity Program
Apple has multiple suppliers for most products
bought
10K lists 48 suppliers that could affect their
profitability.

Five Forces Model Continued

Substitute Products and Services
Personal Computers
Dell, HP and Sony along with many others
Operating system and computer software differentiates Apple

iPod

Rio, iRiver, Sandisk, Sony, Phillips and many others

Louder
Hard-drive based
Complementary products

iPhone

Blackberry, LG, Samsung, Motorola, Palm, etc.

Full browser
iPod
Only AT&T

Five Forces Model Continued

Rivalry among participants

Fierce competition
Apples marketshare is growing
Dell, HP and Microsoft

Other Forces
Complementary products
Whole package

Computer hardware
Computer software
Digital media distribution
MP3 player
Phone
Apple TV

iPod docks and stereo adapters

Applications

Environmental Factors
Focus on processes
Removed toxic materials from new
products and reduced amount of
materials
Smart Power Management
Recycling programs

Political Factors
Patents
Designs
Technological processes

Trademarks
Apple logo
Brand recognition

Piracy prevention on iTunes

Counterfeit products
Reputation

Government sales and foreign trade policies

Government cell phone regulations
Political events, natural disasters, terrorism, public health
issues could affect Apple, its suppliers or its customers

Economic Factors
Despite the economic downturn in
2008 Apple reported an increase of
35.3% over 2007s revenues. And,
$36,537 million for net income in
2009.
Higher revenues in first and fourth
quarters
Christmas
Back to school

Social Factors
34,300 full-time employees and 2,500 temporary employees and contractors as
of September 2009
Top executives that range in ages of 40-70 years old. With an average of 54
years old.
Retail Stores
USA
Japan
Canada
UK
Operations
USA
Asia
Africa
Middle East
Australia
Europe
Canada
South America

Apple Strategies
Controlling Software
Software only compatible with Apple
products
Other companies are not allowed to make
Apple compatible computers
Example: Franklin computers

Cannot copy software and it is difficult for

hackers to make viruses or other malicious
software for software

Controlling software creates loyal

customers

Apple Strategies
Innovative products
Macintosh was first computer with a
mouse
iPod, iPhone

Donated computers to schools/ made

computers easy for students to use
The Apple II computer had many
applications
The Mac was student friendly

Strengths

SWOT Analysis
Weaknesses

Strong brand image

Product recalls

Robust financial performance

Patent infringement

Focus on research and development

Not much free or inexpensive software

Very few viruses and other malicious

on the market

software
Opportunities

Threats

Smartphones

Intense competition

New retail stores

Uncertain global economic conditions

Declining PC sales
Dependence on specific suppliers

SWOT Analysis
The high brand recognition make
Retail stores possible and they are
now a competitive advantage
Smartphones cannot compete with
the iPhone
The focus on R & D has given Apple
the edge in innovation

Top Three Competitors

Microsoft
Controls about 94% of Operating Systems
Makes products that last a long time, although not hip
OS is compatible with everything

Hewlett-Packard
Top competitor in PC sales
Controls large segment of business market
Does not offer other products other than PCs and accessories

Dell
Weakest competitor of top 3
Provides computers for businesses, schools
Behind HP in PC sales
Does not offer other products other than PCs and accessories

Do the strategies work?

The strategy of controlling the software has
worked well in retaining loyal customers as
well as protecting the software.
Relying on new hit products has given
Apple a competitive advantage. However, if
the company is ever in the follower position
a new strategy would need to be formed.
Apple could lower prices on products. Ex.
PCs are expensive. Apple could gain
noncustomers by offering an $800 PC.

The End.