October 4, 2011
Apple Inc. Business Analysis
Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh computers, iPod, iPhone and iPad. As of August 2010, the company operates 301 retail stores in ten countries, and an online store. In September of 2010, Apple had 46,600 full time employees and 2,800 temporary full time employees worldwide and had worldwide annual sales of $65.23 billion. Fortune magazine named Apple the most admired company in the United States in 2008 and in the world in 2008, 2009, and 2010 (Yarow, J., & Frommer, D., 2011). Apple has established a unique reputation in the consumer electronics industry. This includes a customer base that is devoted to the company and its brand. When Apple went public, it made more capital than any IPO since the Ford Motor Company in 1956 and created more millionaires than any company in history. Between 2003 and 2006, the price of Apple's stock increased from $6 per share to over $80. In May 2010, Apple's share price passed the $100 mark and with that their market cap exceeded Microsoft for the first time since 1989 (Business Insider Inc., 2011). Apple was one of several highly successful companies founded in the 1970s. Apple was not considered a traditional company by any means. CEO, Steve Jobs often walked around the office barefoot even after Apple was a Fortune 500 company. Apple has a reputation for fostering individuality and excellence. To recognize the best of its employees, Apple created the Apple Fellows program, awarding individuals who made extraordinary technical or leadership contributions to personal computing while at the company (Business Insider Inc., 2011). With this broad overview, the following SWOT analysis displays the pros and cons of Apple Inc. to best see as a mutual fund manager if this corporation would be a good investment. Strengths
* Product development, does not invent the market rather raises the bar. * Design is sleek, innovative and attractive.
* Products are easy to use.
* Good marketing strategies.
* Brand name.
* CEO Steve Jobs has been an essential piece of the puzzle. A good leader. Weaknesses
* Profits are dependent on the global economy. If the economy is not in a place where there are funds to spend on entertainment, this will surely impact Apple’s market. * Apple is only dedicated to Apple which prevents mass adaption of the hardware. * CEO Steve Jobs has recently resigned.
* Not shareholder-friendly. Refuses to pay a dividend despite a huge cash level and no debt.
* Apple is expected to introduce a new mobile advertising platform for the iPhone, iPod touch, and iPad, which could be an opportunity for new revenue sources. * Very loyal customer base, which has expanded with the iPod and the iPhone. The iPad has had a very successful launch. This seems to be leading to more sales of computers. * High-quality products that work smoothly. New products are generally well received. * Continue to re-define the standards for current products. Threats
* Apple is involved in several legal actions, including lawsuits alleging patent infringement and antitrust violations. These lawsuits present a threat because of the possibility of ongoing legal costs. * Big ideas are easy to copy. The touch-screen is being used in other phones .Apps are being developed for other smart phones and devices. * High-priced products. Other smart-phones that are very similar to the iPhone cost less. (Mueller, J., 2010)
The following financial statements from Apple are a very good display of why investing in the Apple Corporation is a good decision. Year over year their revenue has increased by over 80 percent. July 19, 2011—Apple® announced financial results for its fiscal 2011 third...