Individual Case Study: Apple Inc.
Apple, arguably the most valuable company in the world, from the perspective of market capitalization, has a unique business model and compelling strategy that allows the company to flourish regardless of competition, economic hard times, and changing societal trends. A top pick among consumers, Apple is undoubtedly a powerhouse in the electronic, software, and entertainment industries all of which are venues by which Apple has grown, developed, and prospered over the years. Looking into Apple as a brand there are obvious factors that help Apple to stand out amongst the crowd and even lead it, let’s take a look. Apple Inc. (NASDAQ: AAPL) is one of the Top 20 Innovators of The Innovation Index, and the number one Innovator in the world. Innovation Index Group, Inc. has a BUY recommendation for Apple with Q4, 2008 price target of $235 to $250.
Analysts were expecting Apple to earn $1.07 on revenue of $6.96 billion - earnings growth of 23% and revenue growth of 32% year over year.
How many iPods will Apple sell in the quarter? How many iPhones? Will Apple announce the new iPhone availability today? How about the growth of Mac sales?
Last quarter which is normally Apple's best quarter owing to the holiday season, "Apple shipped 2,319,000 Macintosh® computers, representing 44 percent unit growth and 47 percent revenue growth over the year-ago quarter. The Company sold 22,121,000 iPods during the quarter, representing five percent unit growth and 17 percent revenue growth over the year-ago quarter. Quarterly iPhone™ sales were 2,315,000."
For the first quarter of 2007 (one year ago quarter), Apple "shipped 1,517,000 Macintosh® computers and 10,549,000 iPods during the quarter, representing 36 percent growth in Macs and 24 percent growth in iPods over the year-ago quarter." Apple iPhone was not shipping yet.
If Apple were to grow at least 15% year over year, Apple should ship at least 1,744,000 new Macintosh computers and 12,131,000 new iPods; and if Apple iPhone were to hit 12 million unit sales in 2008, Apple should ship at least 2 million iPhones in the first quarter.
All eyes will be on Apple as the quarterly earnings are announced.
Apple Inc. "announced financial results for its fiscal 2008 second quarter ended March 29, 2008. The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. Apple revenue increased by 43%, and net profit increased by 36%. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter's revenue.
Apple shipped 2,289,000 Macintosh(R) computers during the quarter, representing 51 percent unit growth and 54 percent revenue growth over the year-ago quarter. The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 1,703,000"
Great Earnings Report from Apple. Although Apple had provided a very conservative quarterly forecast in January, 2008, Apple beat the high end estimates on revenue, and came on the high end estimates on earnings for the quarter. Apple once again gave a conservative outlook for the future. The street should get an idea now. Mac business is solid. iPod volume business is stalling, however Apple is selling higher priced iPods. iPhone business is strong, and Apple is on track to sell 10 million or higher iPhones in 2008.
Is Apple winning marketshare against Windows Vista? Apple had a strong surge in Mac business. Can Apple reclaim the position, slowly but surely, in the PC business? Apple has a really long way to go.... but if Apple can get to the 10% marketshare of the overall PC business...
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