Written Report Apple

8/6/2019 Written Report Apple

1/30

APPLE COMPANY

DIANA DELA MERCED

VANNIEROSE LOYOLA

IRISH JOY SOSA

LEOPOLDO DICEN

DON CHESTER PRUDENTE


2/30

INTRODUCTION

APPLE is the worlds largest technology which had a tumultuous journey during its 25years in the computer industry. With a mission of providing easy-to-use computers to everydaypeople, Apple grew to become stronger than IBM in the personal computer segment. In 1984,with the introduction of the Macintosh, Apple revolutionized the personal computer market by providing the first widely available graphical user interface (GUI) operating system(OS).Microsoft offers competition in the form of operating system and software, Dell, Hewlett-Packard, and Gateway compete head-to-head for direct computer system sales, and IBM and SunMicrosystem compete in the server industry. Though Apple earned $1,000,000,000 in the netincome in 2001, it has recently posted net losses for the first time in the last five years.Apple hasalso targeted Windows Users to switch expounding the ease of moving Windows documentsand files to Mac OS. These moves may prevent further declines in Apple market share byattracting new customers instead of merely retaining current customer.

COMAPANYS HISTORY

Year OFFICER INCHARGE

EVENTS

1976 Steve Wozniak / SteveJobs

Apple 1

1981 Steve Wozniak / SteveJobs

Death of Steve Wozniak

1983 John Sculley He became on board as president and CEO

1984 Steve Jobs Macintosh1985 - 1993 John Sculley Laser Writer and Page Maker

MAC II (1987)

Power Book (1991)

1994 1995 Michael Spindler Power Mac Line

1995 Gil Amelio Returned Apple to Profitability, such as changingcorporate

structure to create 7distinct profit center

1996-2000 Steve Jobs Interim CEO, acquisition of the "NeXt"

First OL apple store

Introduction of iMac (1998)

IBook(1999),iTool ( 2000)

2nd

half of

2000Power Mac G4-cube


3/30

SWOT ANALYSIS

INTERNAL ENVIRONMENT

Internal Strengths:

a. Graphics1. Apple produces Macintosh as the first affordable computer with graphical users

interface.

2. Success of Mac II in 1987 and PowerBook in 19913. Success of the first online Apple store which became the third largest E-commerce

site

4. Introduction of PowerMac lines of computers, utilizing the powerPc chip developedby IBM and Motorola

5. Success of licensing to select Macintosh clone vendors6.

Introduction of iMac an affordable computer with an innovative design7. Introduction of IBOOK in 1999

8. Revival of the investor confidence due to the escalation of stock price into 130 pershare in March 2000 because of the success of iTOOLs which introduce to people the

use of internet applications such as emails, website, iDisk online storage and virus

protection.

b. Publishing1. The introduction of laser writer and pagemaker

c. Education1. Success of the first online Apple store which became the third largest E-commerce site

2. Targeted the schools as their market of their products, which is basically used for

education purposes

Weaknesses:

Apple strengths also interfere with its weaknesses, even though the company show the following

as its area of strength, the company also struggled with these areas:

a. Graphicsb. Publishingc. Education


4/30

1. Apple has temporary leaders or chairman. Because the incorporators (stevewozniak andsteve jobs) were not permanently handling the company.

2. Due to these problems, incurrences of significant losses appear and the companysuffered.

3. Flood of cloned pc and Microsoft launched its response to Mac OS who offered similarGUI.

4. Upon the success of licensing to select macintosh clone vendors, a 68M loss wasprompted at the end of 1995.

5. Incurrence of unprofitable year when the PowerMac G4 Cube was introduced. It was acomplete failure to Apple so its production was halted the year later.

6. Apple products are not affordable to common peoples who are the target market of thecompetitors.

EXTERNAL ENVIRONMENT

Opportunities

Apple has seen its opportunities when the computer industry dominated the countries worldwide.Some of their examples are the following:

1. Intel released its 4004 chip which located all the computer components on a tiny chip.2. Apple released machines that were capable of both word processing and spreadsheet

functions.

3. Apple became the industry leader and remained on top until 19814. The number of computers in grew from 5.5 M in 1982 to 65M in 19925. Apple has also seen the success in the consumer electronics market with the popularity of

the iPod for both Apple and Windows user.

Threats

1. Hardware sectora. The DELL

The DELL customers business model adds value in 5 ways:

1. The customers avoid delays and price mark-ups because there are no middlemen.2. The model allows for customization; customer gets exactly what they want.3. The direct model allows the customers to receive outstanding service after the sale

that is tailored to their needs.

4. Dell is able to implement the latest technological advances in the computerhardware and software quickly because the time between the assembly and

delivery is so short.

5. Dells efficiency creates shareholders value


5/30

b. GATEWAYGateway believes that the customers service is the key to success. While

advertising and promotion are a part of their strategy they hope to attract many of its

customers by word of mouth believing that no marketing technique is as effective as

satisfied customers who promote Gateway to their friends and family. Gateway is

notably distinguishable from Dell in that it operates brick and mortar stores.

Customers who wish to use a computer or talk to sales representative in person are

able to do so at this location.

c. HP and COMPAQThe new entity resulting from the acquisition of Compaq by HP promises to

distinguish itself from the pack through innovation. Scientists at laboratories from

both companies in the merged firm are eager to collaborate to expand current

capabilities, particularly in the area of handheld and wireless devices. Although

HP/COMPAQ remains a dominant force in the PC market, the companys primaryfocus is currently on communication technology.

2. Software sectorIn the software market, the industry profile is radically different. Rather than being

defined by rigorous competition, the market is dominated by Microsoft. Its Windows

operating system comes standard on nearly every PC that a computer may purchase.

While Apple offers its own operating system that comes standard on all Apple computers,

the software is not compatible with PCs. The result is that Apple software sales are

limited by the amount of Apple hardware sales.

Sun Microsystems is the other player worth noting in the software market for PCs.Suns CEO, Scott McNealy, holds documented animosity for Microsoft. For McNealy,

taking market share from Microsoft is not just a necessity for surviving in the software

industry; it is a personal quest. Since 1982, Sun has distinguished itself by its vision.

Rather than meeting todays computing needs in homes and workplaces, Sun attempts to

thrust computing into the next generation with innovative products and services.

Sun stands the test of time because the company understands that computing

technology is rapidly evolving.while others protected proprietary, stand-alone

architectures, Sun focused on taking companies into the network age, providing systems

and software with the scalability and reliability needed to drive the electronic

marketplace. Despite its unique strategy, Sun has enjoyed little success in taking

customers from Microsoft.


6/30

3. Realistic evaluation of the possibilities for the successes of education sector4. The battle for the market share

Apples share of the worldwide desktop market in 2000 was just over 6% and in the

portable market, just below 10%. HP/Compaq is the most established player in the

industry. Before the acquisition, Compaq commanded over 10% of the portable market

and nearly 15% of the desktop market, while HP was also a major player. Dell and

Gateway occupy the direct marketing channel. Dell alone captured over 10% of the

market for both desktop and portable computers in 2000. The most alarming fact is that

between 1995 and 2000, Apples share of the market for both products decreased by half.

Apples dominance in the education market throughout the 1990s is being lost to

Dell, who is leading with 35% of the market.

A number of factors may be contributing to this loss in education market share:

Aggressive pricing from Dell

PC price-performance ratios Proliferation of the PC in most sectors

While teachers may prefer Apple for their educational needs, administrators and

parents often question the benefit provided by not using a PC. Apple is struggling to hold

on to its 15.2% market share in this industry, offering its new operating system to all K-

12 teachers free of charge in October 2002.

Finally, Apple appears to be positioning itself to attack Microsoft in the software

market. The companys new Switcher campaign aims directly at converting Microsoft

customers to Apple by promoting the ease of use that Apple products provide. Apple is

also challenging the dominance of Microsoft Office on Mac OS by providing its

AppleWorks office suite with the purchase of Apple hardware. The newest version of

Mac OS X also includes applications that provide improved e-mail, calendar, and

synchronization functionality previously provided by Microsoft Office.


7/30

0%5%

10%15%

20%25%30%

35%

Worldwide Market Share of Portable

Computers

1995

2000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Worldwide Market Share of Desktop

PC's

1995

2000


8/30

0%

10%

20%

30%

40%

50%

60%

Apple IBM Dell Gateway Compaq Others

Share of Education Market

1994

1997

1999

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

Dell IBM Gateway Sun Apple HP

Financial Performance in 2002

Sales Growth

Gross Margin

Operating Margin


9/30

CORPORATE LEVEL STRATEGY

1. Apples hardwareComputers offered by Apple:

For beginners

For advanced users who will pay a higher price for higher performance

Desktop computer segment:o iMac- least expensive, aimed at the general computer usero PowerMac- Apples high-end desktop computer and is generally marketed

within the multimedia industryApples especially designed computer:

eMac - fits on a school desktop and comes with applications for learning. The e stands

foreducation, and this sold to schools and other academic institutions, one of Apples

most important niche markets.

Apples portable computers:

iBookare priced for consumers on budget PowerBook with higher performance , represent Apples most expensive

consumer product line.

Apple also markets customizable severs, keyboards, mice, and others accessories,

all of which are designed to coordinate with the CPUs and monitors. Apple offers a

variety of case design for their monitor and CPUs that give their products a unique and

elegant look.

Apple launched

*iPOD- an audio player, pocket size & portable

2. Apples softwareIt had a licensed its operating system for IBM compatible PCs before Microsofts

Windows took hold; apple has instead created proprietary software that complements its

hardware. Apple has developed innovative applications that encourage digital creativity. The

companys Quick Time Player is one of the leading media players.


10/30

3. Marketing and DistributionApple has marketed its products with creative and dazzling advertising campaign.

The famous commercial that introduced the Macintosh during the Super Bowl and the

five year old Think Different campaign. Apple has won many advertising awards,

including the second annual primetime Emmy Award for best commercial.

A well manage supply chain is essential. Management tried to restructure the whole

chain by implementing cutting-edge SAP R/3 software, but due to lack of top down

commitment the effort was not fruitful. Apple had struggled with both insufficient supply

and excess inventory because of shaky forecasting ability. Timothy D. Cook aim to

reduce inventory stocked in channels and decrease order to delivery time.


11/30

FINANCIAL STATEMENTS(1998-2002)


12/30

APPLE COMPUTER

Annual Income Statement

(In Millions except EPS data)

Fiscal Year End for APPLE COMPUTER (AAPL) falls in the month of September.

30/09/2002 30/09/2001 2/30/2000 30/09/1999 30/09/1998

Sales 1443.00 5363.00 7983.00 6134.00 5941.00

Cost of Goods 1062.00 4128.00 5817.00 4438.00 4462.00

Gross Profit 381.00 1235.00 2166.00 1696.00 1279.00

Selling & Administrative &

Depr.&Amort. Expenses 396.00 1568.00 1546.00 1310.00 1211.00

Income after Depreciation

And Amortization -15.00 -333.00 620.00 386.00 268.00

Non-Operating Income -45.00 281.00 472.00 290.00 61.

Interest Expense N /A 0.00 0.00 0.00 0.00

Pretax Income -60.00 -52.00 1092.00 676.00 329.00

Income Taxes -15.00 -15.00 306.00 75.00 20.00

Minority Interest N /A 0.00 0.00 0.00 0.00

Investment Gains/Losses (`) N /A 0.00 0.00 0.00 0.00

Other Income/Charges N /A 0.00 0.00 0.00 0.00

Income from Cont.

Operations -45.00 -37.00 786.00 601.00 309.00

Extras and Discounted 0.00 12.00 0.00 0.00 0.00

Operations

Net Income -45.00 -25.00 786.00 601.00 309.00

Earnings per share Data

Average Shares 361.79 345.61 360.32 348.33 335.83

Diluted EPS before

Non-Recurring Items 0.32 10.23 2.01 1.28

Diluted Net EPS 0.18 -0.07 2.18 1.80 1.05


13/30

APPLE COMPUTER

Annual Balance Sheet

(in Millions except Book Value per Share)

Fiscal Year End fo APPLE COMPUTER (AAPL) falls in the month of September

30/09/2002 30/09/2001 2/30/2000 30/09/1999 30/09/1998

ASSETS

Cash and Marketable Securities 4337.00 4336.00 4027.00 3226.00 2300.00

Receivables 565.00 446.00 953.00 681.00 955.00

Notes Receivable N/A 0.00 0.00 0.00 0Inventory 45.00 11.00 33.00 20.00 78.00

Total Current Assets 5388.00 5143.00 5427.00 4285.00 3698.00

Net Property, Plant and Equipment 621.00 564.00 313.00 318.00 348.00

Investment and Advances N/A 128.00 786.00 0.00 0.00

Other Non-current Assets 39.00 0.00 0.00 0.00 0.00

Deferred Charges N/A 0.00 0.00 0.00 0.00

Intangibles 119.00 0.00 0.00 0.00 0.00

Deposits and Other Assets 131.00 186.00 277.00 558.00 243.00

Total Assets 6298.00 6021.00 6803.00 5161.00 4289.00

LIABILITIES

Notes Payable N/A 0.00 0.00 0.00 0

Accounts Payable 911.00 801.00 1157.00 812.00 719.00

Current Portion Long-term Debt N/A 0.00 0.00 0.00 0.00

Current Portion of Capital Leases N/A 0.00 0.00 0.00 0.00

Accrued Expenses 747.00 717.00 776.00 737.00 801.00

Income Taxes Payable N/A 0.00 0.00 0.00 0.00

Other Current Liabilities N/A 0.00 0.00 0.00 0.00

Total Current Liabilities 1658.00 1518.00 1933.00 1549.00 1520.00

Mortgages N/A 0.00 0.00 0.00 0.00

Deferred Taxes/Income 229.00 266.00 463.00 208.00 173.00

Convertible Debt N/A 0.00 0.00 0.00 0.00

Long-Term Debt 316.00 317.00 300.00 300.00 954.00

Non-Current Capital Leases N/A 0.00 0.00 0.00 0.00

Other Long-Term Liabilities N/A 0.00 0.00 0.00 0.00

Minority Interest (Liabilities) N/A 0.00 0.00 0.00 0.00

Total Liabilities 2203.00 2101.00 2696.00 2057.00 2647.00

SHAREHOLDER'S EQUITY

Preferred Stocks N/A 0.00 76.00 150.00 150.00

Common Stocks (Net) 1826.00 1693.00 1502.00 1349.00 633.00

Capital Surplus N/A 0.00 0.00 0.00 0.00

Retained Earnings 2325.00 2260.00 2285.00 1499.00 898.00

Other Equity Adjustments -56.00 -33.00 244.00 106.00 -39.00

Treasury Stock (-) N/A 0.00 0.00 0.00 0.00

Total Shareholder's Equity 4095.00 3920.00 4107.00 3104.00 1642.00


14/30

Total Liabilities and Shareholder's

Equity 6298.00 6021.00 6803.00 5161.00 4289.00

Common Equity 4095.00 3920.00 4031.00 2954.00 1492.00

Average Shares 361.79 345.61 360.32 348.33 335.83

Book Value per Share 11.41 11.17 12.40 9.18 5.54


15/30

Fiscal Year End for APPLE COMPUTER (AAPL) falls in the month of September

30/09/2002 30/09/2001 2/30/2000 30/09/1999 30/09/1998

Cash Flow from Operating, Investing,

and Financing Activities

Net Income (Loss) N/A -25.00 786.00 601.00 309.0Depreciation/Amortization andDepletion N/A 102.00 84.00 85.00 111.00

Net Change from Assets/Liabilities N/A 211.00 157.00 377.00 387.00

Net Cash from Discontinued Opertaions N/A -12.00 0.00 0.00 0.00

Other Operating Activities N/A -91.00 -201.00 -265.00 -32.00

Net Cash from Operating Activities N/A 185.00 826.00 798.00 775.00

Property and Equipment N/A -232.00 -96.00 -24.00 43.00

Acquisition/Disposition of Subsidiaries N/A 0.00 0.00 0.00 -10.00

Investments N/A 1160.00 -796.00 -948.00 -566.00

Other Investing Activities N/A -36.00 -38.00 8.00 -10.00

Net Cash from Investing Activities N/A 892.00 -930.00 -964.00 -543.00

Uses of Funds

Issuance (Repurchase) of Capital Stock N/A 42.00 -31.00 11.00 41.00

Issuance (Repayment) of Debt N/A 0.00 0.00 0.00 3.00

Increase (Decrease) Short-term Debt N/A 0.00 0.00 0.00 -25.00

Payment of Dividends and OtherDistributions N/A 0.00 0.00 0.00 0.00

Other Financing Activities N/A 0.00 0.00 0.00 0.00Net Cash from Financing Activities N/A 42.00 -31.00 11.00 19.00

Effect of Exchange Rate Changes N/A 0.00 0.00 0.00 0.00

Net Change in Cash and Equivalents N/A 1119.00 -135.00 -155.00 251.00

Cah and Equivalents

Cash at Beginning of Period N/A 1191.00 1326.00 1481.00 1230.00

Cash at End of Period N/A 2310.00 1191.00 1326.00 1481.00

Dilluted Net EPS 0.18 -0.07 2.18 1.80 1.05


16/30

FINANCIAL RATIOS


17/30

Profitability Ratios

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Gross Profit Margin

Apple Inc.

Competitors

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Operating Profit Margin

Apple Inc.

Competitors


18/30

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%12.00%

14.00%

16.00%

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Net Profit Margin

Apple Inc.

Competitrors

-4.00%

-2.00%

0.00%2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Return on Total Assets

Apple Inc.

Competitors


19/30

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Return on Equity

Apple Inc.

Competitors


20/30

Liquidity Ratios

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Current Ratio

Apple Inc.

Competitors

0

0.5

1

1.5

2

2.5

3

3.5

4

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Quick Ratio

Apple Inc.

Competitors


21/30

-7

-6

-5

-4

-3

-2

-1

0

1

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Inventory to Net Working Capital

Apple Inc.

Competitors


22/30

Leverage Ratios

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Debt to Total Assets

Apple Inc.

Competitors

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Debt to Equity

Apple Inc.

Competitors


23/30

0

0.1

0.2

0.3

0.4

0.50.6

0.7

0.8

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Long-term Debt to Equity

Apple Inc.

Competitors

-100

0

100200

300

400

500

600

700

800

900

1000

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Times Interest Earned

Apple Inc.

Competitors


24/30

Activity (Efiiciency) Ratios

0

100

200

300

400

500

600

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Inventory Turnover

Apple Inc.

Competitors

0

5

10

15

20

25

30

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Fixed Asset Turnover

Apple Inc.

Competitors


25/30

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Total Asset Turnover

Apple Inc.

Competitors

0

2

4

6

8

10

12

14

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Accounts Receivable Turnover

Apple Inc.

Competitors


26/30

0

10

20

30

40

50

60

70

FY 2002 FY 2001 FY 2000 FY 1999 FY 1998

Average Collection Period

Apple Inc.

Competitors


27/30

Key Growth Rates

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

FY 2002 FY 2001 FY 2000 FY 1999

Sales

Apple Inc.

competitors

-2

-1.5

-1

-0.5

0

0.5

1

FY 2002 FY 2001 FY 2000 FY 1999

Operating Profits

Apple Inc.

Competitors


28/30

-2

-1.5

-1

-0.5

0

0.5

1

1.5

FY 2002 FY 2001 FY 2000 FY 1999

Net Income

Apple Inc.

Competitors

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

FY 2002 FY 2001 FY 2000 FY 1999

Current Assets

Apple Inc.

Competitors


29/30

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

FY 2002 FY 2001 FY 2000 FY 1999

Net Fixed Assets

Apple Inc.

Competitors

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

FY 2002 FY 2001 FY 2000 FY 1999

Current Liabilities

Apple Inc.

Competitors


30/30

-80.00%

-70.00%

-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

FY 2002 FY 2001 FY 2000 FY 1999

Long-term Debt

Apple Inc.

Competitors

Documents

Written Report Apple