Written by John Smith
Table of Contents
Current Financial Health
APPENDIX I: APPLE’S SELECTED FINANCIAL DATA
APPENDIX II: APPLE’S CONSOLIDATED STATEMENTS OF OPERATIONS
Apple Inc. (Apple) is an American corporation that specializes in consumer electronics and software. Founded in 1976, it is difficult not to see their products anywhere in the world; they have revolutionized customer purchasing with chic products, outstanding customer service and phenomenal marketing. In August 2011, Apple surpassed Exxon Mobile as the largest company in the U.S. As a leader in its industry, Apple has had many successes that present excellent investment opportunities in the short, medium and long term. While impossible to predict future pop culture and trends, Apple has been leading the way for the past decade and shows no immediate signs of slowing down.
Keywords: Apple, electronics, financial analysis, stocks
Founded in Cupertino, CA in 1976, and incorporated in 1977, Apple has a storied history in the computer industry. Though founded by three entrepreneurs, Steve Jobs stands out as the most famous and currently asks as CEO. In the first fours years, Apple’s goal was to break into the personal computer market; though successful, it was difficult to compete with nationally known brands as a start up. In December of 1980, Apple went public which provided the company millions of dollars in capital to expand operations. Through 1985, Apple struggled to determine which product path to take; after failed models, low sales and a power struggle, Steve Jobs was pushed out of Apple. A steady rise followed by a steep declined characterized the next 12 years as management tried to create new products in a world that was becoming more and more dependent on technology. One important product, The Newton, was Apple’s first attempt at a handheld tablet device, which would pave the way to the creation of the iPhone and iPod (Wikipedia, Apple Inc., 2011). In 1997, Steve Jobs was elected to interim CEO to save the company after three straight years of crippling losses. Jobs would lead Apple from that point on with a focus on user-friendly software and chic, practical products. While other brands were primarily focusing on business applications, Apple was trying to break through with a product that interact and connect with people (Linzmayer, 1999). Though Apple was profitable since Jobs’ second term, many people agree that 2001 was a watershed year; the year that the iPod was invented. Over the next six years, 100 millions units would be sold. In 2006, Apple’s market cap surpassed Dell; nine years prior, Dell’s CEO said that Apple should “shut down and give the money back to the shareholders” (Singh, 1997). Another product was released in 2007 that changed the telecommunications market: the iPhone. This would lead to the creation of the iPad in 2010. As of the writing of this paper, Apple is one of the most successful companies operating in the world: it has more cash reserves than the U.S. Federal Government (Griggs, 2011) and surpassed Exxon Mobile as the U.S.’s largest company (Ortutay, 2011). Current Financial Health
It can easily be argued that Apple is in great financial health and the strongest company in its sector, if not on the entire stock market. Below, an analysis of certain performance benchmarks will show Apple’s dominance. As an aside, no one measure can capture the health of any one company; this requires an overview view of several factors to get a clear picture (Loth).
Price to Earnings Ratio (P/E)
Table 1 shows the P/E ratios of Apple and two of its bigger competitors, Dell and Microsoft. Table 2 shows the P/E ratios for the same three companies normalized over the past 12 months. Table 1. Current P/E Ratios (Forbes...
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Apple Inc (NMS: AAPL)
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Loth, R. (n.d.). Investment Valuation Ratios: Price/Earnings Ratio. Retrieved 08 2, 2011, from Investopedia: http://www.investopedia.com/university/ratios/investment-valuation/ratio4.asp
Ortutay, B. (2011, August 14). Apple becomes most valuable U.S. company . Retrieved August 14, 2011, from Fosters: http://www.fosters.com/apps/pbcs.dll/article?AID=/20110814/GJBUSINESS_01/708149942/-1/FOSBUSINESS
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Wikipedia. (2011, August 12). Apple Inc. Retrieved August 12, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Apple_Inc.
Wikipedia. (2011, August 13). Foxconn. Retrieved August 14, 2011, from Wikipedia: http://en.wikipedia.org/wiki/Foxconn
(Apple Inc., 2011)
(Apple Inc., 2011)
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