Analysis of Apple

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TABLE OF CONTENTS
3Apple – An Introduction
3Macroeconomic Trends
4Technical Analysis
5Fundamental Analysis
8Analysis of Financing Activities
8Investments and Capital Budgeting Decisions
10Industry Analysis
11Performance Analysis

APPLE
INTRODUCTION
Established in 1976, Apple ignited the personal computer revolution with the Apple II and the Macintosh. Today, Apple designs, manufactures and markets personal computers, portable digital music players and mobile communication devices as well as related software, services, peripherals and network solutions. Apple sells its products worldwide through its online stores, retail stores, direct sales forces and third party distributors to its core customers—consumers, educational institutions, enterprise, government and creative professionals. Headquartered at Cupertino, California, Apple’s primary markets are the USA, Europe and Japan. CORPORATE GOALS & STRATEGY

Apple aims to provide the best computing, music and mobile communication experience to its customers through its primary products—the Mac, iPod and iPhone respectively. Apple’s unique strategy is to design and develop its own software, hardware and services to provide its customers with innovative solutions that are easy to use, well designed and seamlessly integrated. Apple aims to continually invest in research and development for products that best serve the needs of the market. Apple also aims to expand its worldwtide distribution, sales and support networks.

MACROECONOMIC TRENDS
OUTSOURCING TO THE GLOBAL WORKFORCE
In the highly competitive environments of Apple’s primary industries, companies ‘aggressively cut prices and lowered their product margins to gain or maintain market share’. One excellent strategy to maintain this competitiveness is to outsource manufacturing services to cheaper labour markets. Apple currently manufactures its products in its own facility in Cork, Ireland, and external vendors in California, South Korea, China and the Czech Republic. Apple should maintain high standards in its supply chain management and only outsource to financially stable and profitable manufacturing companies. This will further boost Apple’s reputation for superior high-quality products. EVOLVING CONSUMER NEEDS

Today, the modern consumer is demanding multi-purpose convergence devices and an integrated solution for all our digital lifestyle needs. Apple aims to ‘capitalise on the convergence of the personal computer, digital consumer electronics and mobile communications by creating and refining innovations such as the iPod [and the] iPhone’. Apple manages the design and development of the Mac, from hardware to software. Along with its products’ creative industrial design and intuitive ease-of-use, Apple takes the lead in offering innovative and integrated digital lifestyle solutions. APPLE AND THE ENVIRONMENT

More and more companies are moving towards ‘greener’ and more environmentally friendly products and operations. Apple focuses on: product and packaging design, materials, energy efficiency, and recycling. The 2008 MacBook uses arsenic-free glass, highly recyclable aluminium and glass enclosures, is mercury-free and uses 41% smaller packaging. Not only is this excellent corporate social responsibility, but such ‘green’ products appeal to new customers who are environmentally conscious. Apple’s products will continue this trend into the future.

TECHNICAL ANALYSIS
SHORT TERM ANALYSIS

Analysising ChartNexus’ prediction of Apple’s stock price movements, the Moving Average Convergence Divergence (MACD) indicator falls below the signal line during early November, indicating a sell signal and that the stock price will possibly fall in the short run. This sell signal is short lived as ChartNexus predicts that the MACD will rise above the signal line in late November. A low Relative Strength Indicator (RSI) in early November (~30%) suggests that Apple stock is oversold and may be an...
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