Apple 2005

Apple Computer Inc.
2005
A Strategic Management
Case Study
Graphics are the property of ® 2007, Tony Gauvin, UMFK

Apple Computer
Overview
• A brief history of Apple Computer • Possible alternative strategies
• EOY 2004 • Our Recommendation
– Mission, Vision, Objectives, Strategies – Strategies
• 2005 – Long range objectives
– New Vision and Mission
– EPS/EBIT
• External Analysis
– Opportunities & Threats • Implementation Issues
– CPM • Proposed annual objectives (goal) and
– EFE polices
• Internal Analysis
– Financial Data
• Proposed procedures for evaluation
– Strengths and weaknesses • Epilogue
– IFE
– Financial ratios
• Current Performance
• Strategic Analysis • Questions
– SWOT Matrix • Resources Utilized
– SPACE
– BCG
– IE matrix
– Grand Strategy Matrix
– Matrix Analysis
– QSPM
® 2007, Tony Gauvin, UMFK

2
History of Apple
• 1976
– Apple started in a garage in Santa Clara, CA by Steve Wozniak and
Steve Jobs
– A easy to use PC for small computer users
• 1980
– $117,000,000 in sales
– IPO
• 1983
– Wozniak quits
– Jobs hires John Sculley From Pepsi Co. to become President of
Apple
• 1984
– Macintosh PC

3
History of Apple
• 1985
– Jobs and Sculley have a “falling out”
– Jobs fired
– Sculley becomes CEO
– Bill Gates wants to buy Mac O/S, Sculley says No, Gates buys DOS
from IBM, Microsoft kicks Apple's butt (90% market share)
• 1993
– Apple release Newton, the first PDA
– Earnings Plunge, Apple restructures, Sculley Resigns
• 1997
– Apple CEO Gilbert Amelio buys NextStep from Steve Jobs
– Earnings Plunge, Apple restructures, Amelio Resigns
• 1998
– Steve Jobs returns as iCEO

4
History of Apple
• 1998
– Jobs restructures Apple along two products lines
• Consumer “i”Mac
– “i” for internet
• Professional “Power”Mac
– “power” for power user
– Sales return, Brand emerges, Innovation rules
• USB, Firewire, Airport
• iPod and iTunes
– Stock price takes off like a rocket!

5
Lesson learned
+ =

6
2004 Vision Statement
Apple ignited the personal computer revolution in
the 1970s with the Apple II and reinvented the
personal computer in the 1980s with the
Macintosh. Apple is committed to bringing the
beast personal computing experience to students,
educators, creative professional, and consumers
around the world through its innovative hardware,
software, and Internet offerings

7
2004 Mission
Apple Computer is committed to protecting the
environment, health and safety of our employees,
customers and the global communities where we
operate. We recognize that by integrating sound
environmental, health and safety management
practices into all aspects of our business, we can
offer technologically innovative products and
services while conserving and enhancing resources
for future generations. Apple strives for continuous
improvement in our environmental, health and safety
management systems and in the environmental
quality of our products, processes and services.

8
2004 Strategies
• Market Penetration
– Branding
– Niche player
• New Product Development
– Speech recognition
– Virtual reality

9
2004 objectives
• Double market Share from 5% to 10%
• Remain as the most profitable computer
company in the industry

10
2004 Issues
• How can apple best capitalize on the needs of
the business world for a safer, virus-free, worm-
free system?
• Should Apple enter the consumer electronics
business like Dell and Gateway did?
• Should Apple remain a lone wolf in Operating
Systems or adopt a cross-platform format
compatible with Windows and Intel
• How much emphasis should Apple place on
developing the next generation of voice
recognition computers?

11
A new vision
To become the global

leader in computer and
digital music products.

12
A New Mission
• The Apple commitment to excellence is its mission to provide
computers and service (2) for people (1) that meet the highest
standards of value and reliability. Apple is one of the leaders in the
computer industry and produces some of the best-selling computers
and digital music products in the world (3). Apple provides the
highest level of quality and value for our customers (7). Those are
timeless fundamentals. We also apply innovative technology to our
core business (4) to make our products irresistible to customers,
beneficial to society, and profitable to our company (5). We strive to
provide additional opportunities for growth and enrichment of
company personnel while maintaining a work environment for all
employees (9) that encourages personal commitment and
participation in support of achieving excellence. We are committed
to being a good corporate citizen, and being openly honest with all
of our stakeholders (6). We support activities that enable people to
improve their lives and reinforce their commitment to society (8).

13
Apple’s New Mission
The new mission answers the following questions
1. Customers: Who are the firm’s customers?
2. Products or services: What are the firm’s major products?
3. Markets: Geographically, where does the firm compete?
4. Technology: Is the firm technologically current?
5. Concern for survival, growth, and profitability: Is the firm committed
to growth and financial soundness?
6. Philosophy: What are the basic beliefs, values, aspirations, and
ethical priorities of the firm?
7. Self-concept: What is the firm’s distinctive competence or major
competitive advantage?
8. Concern for public image: Is the firm responsive to social,
community, and environmental concerns?
9. Concern for employees: Are employees a valuable asset of the
firm?

14
External Audit (Opportunities)
1. Increase in worms and viruses on PCs.
2. Large population (Gen X & Y) which are
extremely individualistic and name brand
conscious.
3. Government crackdown on pirating
music off the Internet.
4. Much of the world is still without
computers.
5. People enjoy small electronic gadgets.
15
External Audit (Threats)
1. Companies not seeing Apple as
compatible with their software.
2. Dell and HP are major competitors.
3. Increasing competition with music
downloads.
4. Competition produces similar products at
often half the price.
5. The population at large unwilling to use
Macintosh.
16
Apple CPM
Apple HP Dell
Critical Success Weight Rating Weighted Rating Weighted Rating Weighted
Factors Score Score Score
Market Share 0.10 2 0.20 3 0.30 4 0.40

Price 0.10 2 0.20 3 0.30 4 0.40
Financial Position 0.15 3 0.45 4 0.60 3 0.45
Product Quality 0.15 4 0.60 3 0.45 3 0.45
Consumer Loyalty 0.15 4 0.60 2 0.30 3 0.45
Advertising 0.04 4 0.16 2 0.08 3 0.12
Management 0.06 4 0.24 3 0.18 3 0.18
Global Expansion 0.06 2 0.12 2 0.12 3 0.18
Innovation 0.14 4 0.56 2 0.28 2 0.28
Web Development 0.05 3 0.15 2 0.10 3 0.15
Total 1.00 3.28 2.71 3.06

17
Apple EFE
Key External Factors Weight Rating Weighted
Score
Opportunities
Increase in worms and virus on PCs. 0.15 4 0.60

Large population (Gen X & Y) which are extremely 0.15 4 0.60
individualistic and name brand conscious.
Government crackdown on pirating music off the Internet. 0.05 4 0.20
Much of the world is still without computers. 0.10 2 0.20

People enjoy small electronic gadgets. 0.10 4 0.40
Threats
Companies not seeing Apple as compatible with their software. 0.10 2 0.20
Dell and HP are major competitors. 0.10 3 0.30

Increasing competition with music downloads. 0.05 4 0.20
Competition produces similar products at often half the price. 0.10 3 0.30
The population at large unwilling to use Macintosh. 0.10 2 0.20
TOTAL 1.00 3.20

18
Consolidated Balance Sheet

19
Consolidated statement of
operations

20
Internal Audit (Strengths)
1. iTunes Music Store is a good source of
revenue, especially with the iPod and its
availability on Windows platform.
2. Developing own software and hardware.
3. Apple’s niche audience provides the company
with some insulation from the direct price
competition.
4. Revamping desktop and notebook lines.
5. Web technology can be used to improve
product awareness and sales.
6. Low debt—more maneuverable.
21
Internal Audit (weaknesses)
1. Weak relationship with Intel and
Microsoft.
2. Weak presence globally.
3. Dependency on new product launches.
4. Weak presence in markets other than
education and publishing.
5. Slow turnaround on high demand
products.
22
Apple IFE
Key Internal Factors Weight Rating Weighted Score
Strengths
iTunes Music Store is a good source of revenue, especially with 0.15 4 0.60
the iPod and the availability on Windows platform.
Apple’s niche audience provides the company with some 0.10 3 0.30
insulation from the direct price competition.
Revamping desktop and notebook lines. 0.10 3 0.30

Low debt—more maneuverable. 0.06 4 0.24
Developing own software and hardware. 0.14 3 0.42
Good brand loyalty. 0.05 3 0.15
Web technology can be used to improve product awareness and 0.10 4 0.40
sales.
Weaknesses
Dependency on new product launches. 0.06 1 0.06

Weak presence globally. 0.07 1 0.07
Slow turnaround on high demand products. 0.03 2 0.06
Weak relationship with Intel and Microsoft. 0.10 1 0.10
Weak presence in markets other than education and publishing. 0.04 2 0.08
Total 1.00 2.78

23
Financial Ratio Analysis
Growth Rates %
(January 2006)
Apple Computer Industry SP-500
Sales (Qtr vs. year ago qtr) 56.50 18.00 14.20

Net Income (YTD vs. YTD) 383.70 78.90 16.30
Net Income (Qtr vs. year ago qtr) 305.70 17.40 17.00
Sales (5-Year Annual Avg.) 12.64 5.00 4.93
Net Income (5-Year Annual Avg.) NA NA 10.40
Dividends (5-Year Annual Avg.) NA NA 4.27
Price Ratios
Current P/E Ratio 46.1 31.6 18.8
P/E Ratio 5-Year High NA NA 64.8
P/E Ratio 5-Year Low NA NA 17.4
Price/Sales Ratio 4.35 1.88 1.48
Price/Book Value 8.11 10.57 2.83
Price/Cash Flow Ratio 39.90 26.80 12.40
Profit Margins
Gross Margin 30.3 20.2 47.2
Pre-Tax Margin 13.0 8.5 11.9
Net Profit Margin 9.6 6.2 8.0
5-Yr Gross Margin (5-Year Avg.) 29.1 20.3 47.3
5-Yr Pre-Tax Margin (5-Year Avg.) 5.9 5.8 9.4
5-Yr Net Profit Margin (5-Year Avg.) ® 2007, Tony4.3Gauvin, UMFK 3.8 5.8
24
Financial Ratio Analysis
(January 2006)
Financial Condition
Debt/Equity Ratio 0.00 0.06 1.06
Current Ratio 3.0 1.5 1.4
Quick Ratio 2.6 1.2 0.9
Interest Coverage NA NA 3.5
Leverage Ratio 1.5 2.9 5.7
Book Value/Share 8.86 3.50 13.26
Investment Returns %
Return on Equity 17.9 34.6 15.3
Return on Assets 11.6 12.0 2.7
Return on Capital 17.9 32.6 7.4
Return on Equity (5-Year Avg.) 6.9 17.0 11.9
Return on Assets (5-Year Avg.) 4.4 7.1 2.0
Return on Capital (5-Year Avg.) 6.7 15.7 5.6
Management Efficiency
Income/Employee 90,000 63,000 29,000
Revenue/Employee 941,000 1 Mil 367,000
Receivable Turnover 16.7 12.2 7.7
Inventory Turnover 73.0 66.8 7.8
Asset Turnover 1.4 2.1 0.4
25
Financial Trends
Date Avg. P/E Price/Sales Price/Book Net Profit Margin (%)
2005 23.5 3.21 6 9.6
2004 40.6 1.83 2.99 3.3
2003 90.1 1.22 1.8 1.1
2002 111 0.91 1.27 1.1
2001 NA 1.02 1.39 -0.7
Date Book Value/ Share Debt/Equity ROE (%) ROA (%) Interest Coverage
2005 $8.94 0 17.9 11.6 NA
2004 $6.48 0 5.4 3.4 NA
2003 $5.76 0 1.6 NA NA
2002 $5.70 0.08 1.6 NA NA
2001 $5.59 0.08 NA -0.6 N

26
Apple Stock Performance

http://moneycentral.msn.com/investor/charts/charting.asp?symbol=AAPL
27
Apple Net Worth
(January 2006 in millions)
1. Stockholders’ Equity + Goodwill = 7,466 + 69 $ 7,535

2. Net Income x 5 = $1,355 x 5= $ 6,775
3. Share price = $72.00/EPS(1.56) = 46.15 x Net Income $1,335 = $ 61,610
4. Number of Shares Outstanding x Share Price = 842 x $72.00 = $ 60,624
Method Average $34,136

28
Strategic Analysis
Swot Matrix
Strengths Weaknesses
1.iTunes Music Store is a good source of revenue, especially with the iPod 1.Weak relationship with Intel and Microsoft.
and the availability on Windows platform. 2.Weak presence in business arena.
2.Developing own software and hardware. 3.Dependency on new product launches.
3.Apple’s niche audience provides the company with some insulation from 4.Weak presence in markets other than education and
the direct price competition. publishing.
4.Revamping desktop and notebook lines. 5.Slow turnaround on high demand products.
5.Web technology can be used to improve product awareness and sales.
6.Low debt—more maneuverable.
7.Good brand loyalty.
Opportunities S-O Strategies W-O Strategies
1.Increase in worms and viruses on PCs. 1.Increase awareness through the Web of the immunity of Mac products 1.Increase ties with Microsoft and Intel and their
2.Large population (Gen X & Y) which are extremely to worms and viruses. products.(W1, W2, W4 O2, O3)
individualistic and name brand conscious. (S5, O1) 2.Promote to business the safety of having a worm
3.Government crackdown on pirating music off the Internet. 1.Advertise using individuals that will link Generation X & Y to the and virus free computer by using Mac. (W2, W4, O1,
4.Much of the world is still without computers. iTunes and other related products. (S1, O2, O4, O5) O5).
5.People enjoy small electronic gadgets. 2.Use movies and music groups that are geared towards Gen X 3.Expand production into Asia (W2, O4).
and Y to promote computers and laptops. (S3, S5, O2, O5)
Threats S-T Strategies W-T Strategies
1.Companies not seeing Apple as compatible with their 1.Increase and promote the compatibility to Windows operating system. 1.Improve relationship with Microsoft and Intel so
software. (S5,T1) that companies will see them as compatible. (W1, W2
2.Dell and HP are major competitors. 2.Promote the originality of Apple computers and the different style and T1)
3.Increasing competition with music downloads. stable system that is worth the price difference in style, stability and speed. 2.Produce Wintel Compatible products (W1, T1).
4.Competition produces similar products at often half the (S2, S5, T2, T4, T5)
price.
5.The population at large unwilling to use Macintosh.

29
Strategic Analysis
Space Matrix
Financial Strength rating is 1 (worst) to 6 (best) Ratings
1 Leverage 3.0
2 Working Capital 3.0
3 Liquidity 4.0
4 Return on Investment 5.0
5 3 Year NEW income 5.0
Industry Strength rating is 1 (worst) to 6 (best) FS Total 20.0
1 Growth Potential 4.0
2 Profit Potential 4.0
3 Financial Stability 5.0
4 Ease of Entry into Market 2.0
5 Labor Cost 3.0
Environmental Stability rating is -1 (best) to -6 (worst) IS Total 18.0
1 Rate of Inflation -2.0
2 Technological Changes -5.0
3 Price elasticity of Demand -2.0
4 Competitive Pressure -6.0
5 Barriers to Entry into Market -2.0
Competitive advantage rating is -1 (best) to -6 (worst) ES Total -17.0
1 Market Share -5.0
2 Product Quality -1.0
3 Customer Laylaity -1.0
4 Technological Know-How -1.0
5 Control over Suppliers and Ditribuors -2.0
CS total -10.0

30
Strategic Analysis
Space Matrix
Conservative

31
Strategic Analysis
Grand Strategy Matrix

32
Apple IE Matrix
Grow and Build
IFE Scores
Hold and Maintain
Strong Average Weak
Harvest or Divest 3-4 2-2.99 1-1.99
High I II III
3-4
Domestic
International
EFE Scores
IV V VI
Medium
2-2.99
VII VIII IX
Low
1-1.99
Segments RevenueProfit EFE IFE

Domestic ® 2007, Tony
54%Gauvin, UMFK 52% 3.5 2.6
33
International 46% 48% 3.0 3.0
Apple BCG Matrix
High Medium Low
1.0 .50 0.0
High
+20 Domestic
Stars Question Marks
II IInternational
Medium
0
Cash Cows Dogs
III IV
Low
-20
Segments Revenue Profit Growth Rate Relative Market Share

Domestic 54% 52% 17 0.3
International 46% 48% 5 0.2
34
Matrix Analysis
Alternative Strategies BCG IE SPACE GRAND COUNT
Forward Integration X X 2
Backward Integration X X 2
Horizontal Integration X X 2
Market Penetration X X X 3
Market Development X X X 3
Product Development X X X X 4
Concentric Diversification X X 2
Conglomerate Diversification X X 2
Horizontal Diversification X X 2
Joint Venture X 1
Retrenchment
Divestiture X 1
Liquidation

35
Apple QSPM
Strategic Alternatives
Key Internal Factors Weight Produce Wintel Expand production into Asia
compatible products
Strengths AS TAS AS TAS

iTunes Music Store is a good source of revenue, especially with the iPod and 0.15 4.00 0.60 3.00 0.45
the availability on Windows platform.
Apple’s niche audience provides the company with some insulation from the 0.10 --- --- --- ---
direct price competition.
Revamping desktop and notebook lines. 0.10 --- --- --- ---
Low debt—more maneuverable. 0.06 1.00 0.06 4.00 0.24
Developing own software and hardware. 0.14 --- --- --- ---
Good brand loyalty. 0.05 4.00 0.20 3.00 0.15
Web technology can be used to improve product awareness and sales. 0.10 4.00 0.40 3.00 0.30
Weaknesses
Dependency on new product launches. 0.06 --- --- --- ---

Weak presence in business arena. 0.07 1.00 0.07 3.00 0.21
Slow turnaround on high demand products. 0.03 --- --- --- ---
Weak relationship with Intel and Microsoft. 0.10 4.00 0.40 1.00 0.10
Weak presence in markets other than education and publishing. 0.04 2.00 0.14 4.00 0.28
SUBTOTAL 1.00 1.87 1.73

36
Apple QSPM
Key External Factors Weight Produce Wintel Expand production into Asia
compatible products
Opportunities TAS AS TAS
Increase in worms and virus on PCs. 0.15 1.00 0.15 3.00 0.45
Large population (Gen X & Y) which are extremely individualistic and name brand 0.15 1.00 0.15 4.00 0.60
conscious.
Government crackdown on pirating music off the Internet. 0.05 1.00 0.05 4.00 0.20
Much of the world is still without computers. 0.10 1.00 0.10 4.00 0.40
People enjoy small electronic gadgets. 0.10 --- --- --- ---
Threats
Companies not seeing Apple as compatible with their software. 0.10 4.00 0.40 2.00 0.20
Dell and HP are major competitors. 0.10 1.00 0.10 3.00 0.30
Increasing competition with music downloads. 0.05 --- --- --- ---
Competition produces similar products at often half the price. 0.10 --- --- --- ---
The population at large unwilling to use Macintosh. 0.10
SUBTOTAL 1.00 0.95 2.15
SUM TOTAL ATTRACTIVENESS SCORE 2.83 3.88

37
Possible alternative Strategies
• Market Penetration
– Go after Dell, HP and Microsoft (the Wintel alliance) markets
Shares
• Market Development
– Asia & Europe
• New Product development
– New consumer electronics products
• Related Diversification
– Peripherals
• Retrenchment
– Reengineer to lower cost of goods sold in reaction to
commoditization pricing of PC market

38
Recommendations
• Strategy 1
– Open twenty computer retail stores (not just peripherals and
accessories). Apple currently operates stores throughout the
United States with only peripherals and accessories for their
computers. Adding the hardware should generate more hands-
on awareness and use already established locations.
– This will increase product accessibility for those who wish to
view items other than just accessories and increase awareness
of the originality of Apple’s products.
– Two percent increase in sales representatives for the computer
hardware.
– Estimated cost of $ 5 million per store = $100 Million Total.

39
Recommendations
• Strategy 2
– Expand into the Asian market over a five-year period by building
a manufacturing facility and headquarters in Hong Kong and
expanding sales throughout Asia. Estimated cost $5 billion.
• Strategy 3
– Add more features to current products including new iPod,
Shuffle, and Macintosh enhancements and power.
– $50 million is the estimated cost for Research and Development.
• While it is usually prudent to embark on just one strategy
at a time, Apple cash reserves (~$8 billion) and
managerial talents (Steve Jobs) makes embarking on 3
strategies at one time is not only possible but
recommended.
40
EPS/EBIT
• $ Amount Needed: $5,100 M
– Strategy 1 & 2
• Stock Price: $75
• Tax Rate: 26%
• Interest Rate: 5% (2006)
• # Shares Outstanding: 842M

41
EPS/EBIT
Re
EBIT $500
Interest
® 2007, Tony Gauvin, UMFK Re
42
Implementation Issues
• Moving production overseas
– Unsettling for current workforce
– MIS Integration problems
– Change in culture
– May damage brand (Made in USA)
– Environmental outlook
• New marketing strategies
– Paradox of marketing to deficiencies of Wintel platform while
becoming cross platform capable
• Forward integration issues
– Do we have the talent to become direct sellers
– Cross selling competitors peripherals >> Brand Dilution?

43
Proposed annual objectives (goal)
and polices
• Double sales revenue in 3 years
– 1st year 50%, 2 year 25, 3 year 25%
– Write division polices stating exact gains and marketing approaches to achieve
gains
• Reduce unit cost of goods sold by 10% annually for next 3 years
– Leverage low cost labor overseas
• Introduce one new consumer product each year
– Provide adequate funding to R&D
– Provide funding for market research
– Insure strong communication ties between marketing and R&D
• Either provide functional enhancements to existing products each year or
obsolesce product
– Assign R&D project teams to each existing product
– Have market research produce product maturity curves for existing products
• Create Chief scientist position on Corporate Board to reflect the importance
of R&D to Apple Computer

44
Proposed procedures for evaluation
• Qtr & Yearly financial reports
• Track Industry & market Reponses to new
product development
• Balanced Scorecard
• Yearly strategic meeting of division
management and corporate management

45
Epilogue
• 2006
– iPods add Video
– Content from Disney, ABC, ESPN, SOAPnet
– Stock soars by 120%
– iPod morphs to
• Shuffle
• Nano
– Goes to Intel Architecture
– Sales increase by 45%
– Gross margin increase by 8%
• 2007
– iPhone
– Sales predicted to increase by 35%
– Gross profit margin predicted to increase by 8%

46
Current Stock Performance
http://moneycentral.msn.com/investor/charts/charting.asp?symbol=AAPL
47
Resources
• Case Notes
– Forest David; Francis Marion University
• Form 10-K SEC Filing, Sept. 25, 2005
• Datamonitor
– SWOT Apple 2004 & 2005
– PCs in the United States 2005
– Consumer Electronics in the United States 2005
– Market Watch
• Apple: Unix for the people, Unix for the masses 2005
• Value line Investment survey
– Apple 2007
– Computer Peripherals 2007

48
Questions
http://seriouslygood.kdweeks.com/images/apple-question.gif
49

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Apple Computer Inc.

Graphics are the property of ® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

To become the global

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

Market Share 0.10 2 0.20 3 0.30 4 0.40

Total 1.00 3.28 2.71 3.06

® 2007, Tony Gauvin, UMFK

Increase in worms and virus on PCs. 0.15 4 0.60

Government crackdown on pirating music off the Internet. 0.05 4 0.20

Much of the world is still without computers. 0.10 2 0.20

Dell and HP are major competitors. 0.10 3 0.30

The population at large unwilling to use Macintosh. 0.10 2 0.20

TOTAL 1.00 3.20

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

Revamping desktop and notebook lines. 0.10 3 0.30

Dependency on new product launches. 0.06 1 0.06

Total 1.00 2.78

® 2007, Tony Gauvin, UMFK

Sales (Qtr vs. year ago qtr) 56.50 18.00 14.20

2005 23.5 3.21 6 9.6

2004 40.6 1.83 2.99 3.3

2003 90.1 1.22 1.8 1.1

2002 111 0.91 1.27 1.1

2001 NA 1.02 1.39 -0.7

2005 $8.94 0 17.9 11.6 NA

2004 $6.48 0 5.4 3.4 NA

2003 $5.76 0 1.6 NA NA

2002 $5.70 0.08 1.6 NA NA

2001 $5.59 0.08 NA -0.6 N

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

1. Stockholders’ Equity + Goodwill = 7,466 + 69 $ 7,535

4. Number of Shares Outstanding x Share Price = 842 x $72.00 = $ 60,624

Method Average $34,136

® 2007, Tony Gauvin, UMFK

Opportunities S-O Strategies W-O Strategies

Threats S-T Strategies W-T Strategies

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

® 2007, Tony Gauvin, UMFK

Segments RevenueProfit EFE IFE

Segments Revenue Profit Growth Rate Relative Market Share

® 2007, Tony Gauvin, UMFK

Strengths AS TAS AS TAS

Dependency on new product launches. 0.06 --- --- --- ---

® 2007, Tony Gauvin, UMFK

Opportunities TAS AS TAS