The CTL EURO COLLEGE
Title: Research project on Apple Inc
Student name: Yogesh arande
Registration no! "#$#%"#
Course: &'A
Super(isor: Dr.Andreas Constantinou
)ate: August #%* #%"+
"
Table of Contents
Title Page
Introduction %,
-istor. Apple Inc: %/
0ision Statement o1 Apple: %/
E2planation o1 0ision Statement: %/
&ission Statement o1 Apple: %3
Re(ie4 o1 Literature %3
The 5C Industr. ""
The Online &usic Industr. "#
The 6uture o1 Apple "#
Strategic Alliances and Entertainment ",
E2ternal Aanal.sis "/
Industr. Anal.sis Using 5orter7s 6i(e 6orces &odel "8
9hich E2ternal Threats are &ost Signi1icant #+
Additional E2ternal Threats #,
0ertical Integration o1 Competitors #/
0alue Chain Anal.sis #3
S9OT Anal.sis o1 Apple Inc: #8
'CG &odel: +"
9hat is dri(ing &acintosh acceptance: ++
Remo(ing 'arriers 1or Users ++
Application 5re1erences +,
Apple pro1it ma;es huge rise due to i5od success +,
Apple 'eats Competitors at In(entor. Turn O(er +<
I5od: The &ar;eting o1 an Idea 5roject +8
6inancial Anal.sis ,"
-istorical 5er1ormance ,#
5ro1ita=ilit. &easures ,+
Li>uidit. and Le(erage &easures ,,
5roduct Unit Sales ,/
Operating Segments ,3
&ar;et 0alue Anal.sis ,3
Apple #%"# "? 1inancial anal.sis ,<
Share (alue /%
5ro$6orma Income Statement /<
5rojected 6ree Cash 6lo4 and E>uit. 0aluation /8
Strateg. /@
#
5roduct )i11erentiation /@
Strategic Alliances 3+
Recommendations 33
Conclusion 3<
+
Introduction
Apple Computer7s +%$.ear histor. is 1ull o1 highs and lo4s* 4hich is 4hat 4e
4ould e2pect in a highl. inno(ati(e compan.! The. e(ol(ed throughout the .ears
into an organiAation that is (er. much a representation o1 its leader* Ste(en Bo=s!
Apple made se(eral hugel. success1ul product introductions o(er the .ears! The.
ha(e also completel. 1allen on their 1ace on se(eral occasions! The. struggled
mightil. 4hile Bo=s 4as not a part o1 the organiAation! Apple reached a point
4here man. thought the. 4ould not sur(i(e! 9hen as;ed in late "@@< 4hat Bo=s
should do as head o1 Apple* )ell Inc!Cs D)ELLE then$CEO &ichael S! )ell said at
an in(estor con1erence: FICd shut it do4n and gi(e the mone. =ac; to the
shareholders!G D'urro4s* Gro(er* and GreenE!
9ell* times changed! Less than "% .ears later* 'usiness 9ee; ran;ed Apple as the
top per1ormer in its 2012 'usiness 9ee; /%! Apple attri=utes their recent success
to ro=ust sales o1 i5od music pla.ers Duic;l. enough! Apple =ought out Amelio7s contract a1ter just " P .ears on the
jo=! Bo=s e(entuall. claimed the CEO position! Then* he cleaned house =.
re(amping the =oard o1 directors and e(en replacing &i;e &ar;;ula!Bo=s
simultaneousl. put an end to the 1ledgling clone licensing agreements D4hich
created a 1e4 &ac clonesE and entered into cross$licensing agreements 4ith
&icroso1t! On &a. 3* "@@8* Apple introduced the ne4 i&ac* a product so secret
that most Apple emplo.ees had ne(er heard o1 it! The ne4 i&ac 4as a runa4a.
success 4ith its translucent case* all$in$one architecture* and ease o1 use! It
=rought Apple to a ne4 mar;et o1 users L those 4ho had ne(er o4ned a computer
=e1ore! Bo=s 1urther simpli1ied the product lines into 1our >uadrants along t4o
a2es: )es;top and 5orta=le on one* 5ro1essional and Consumer on the other!
Apple completed the matri2 4ith the introduction o1 the consumer$=ased i'oo; in
"@@@!
The .ear #%%" 4as an important .ear 1or consumers o1 Apple products! Apple
opened their 1irst #/ retail stores Dtotaling "3+ stores in , countries as o1 &a.
2001E! In Septem=er #%%"* Apple introduced the ne4 i&ac 1eaturing a screen on
a s4i(el!The ne4 i5ods Dporta=le music pla.ersE 4ere a tremendous success!
Apple sold so man. that Apple7s dependence on &ac sales 4as signi1icantl. less!
This 4as no small 1eat considering that the #%%" i&ac =ecame Apple7s =est$selling
product H=. a long shotG!
Apple o11ered iTunes Da 1ree applicationE to help their
consumers organiAe music on i5ods and &acs!
@
In #%%+* Apple e2panded iTunes =. "E opening the iTunes music store to allo4
&ac users to purchase music online and #E e2panding iTunes to 9indo4s users!
Sales o1 i5ods s;.roc;eted and currentl. pro(ide the =ul; o1 product sales to
Apple! In 2012* Apple announced that it 4ould start using Intel$=ased chips to run
&acintosh computers! In April 2005* Apple announced 'oot Camp* 4hich
allo4s users o1 Intel$=ased &acs to =oot either &ac or 9indo4s OS! This
1unctionalit. allo4s users 4ho ma. need =oth OSs to o4n just one machine to run
=oth* al=eit not simultaneousl.!
"%
T/e PC Industry
9e can glean Insight into the histor. and composition o1 the 5C Industr. 1rom its
epon.mous title! In the late "@uired a majorit. interest in
the .oung mo(ie compan. 5i2ar in 6e=ruar. "@83! Bo=s 4ent on to in(est R o1 his
personal 4ealth into 5i2ar!
In "@@/* 5i2ar solidi1ied its position 4ithin animated mo(ies 4ith the de=ut o1 To.
Stor.! Grossing J+/8 million 4orld4ide* it =ecame the +
rd
$largest grossing
animated mo(ie in histor.! A1ter this success* Bo=s too; 5i2ar pu=lic and
negotiated 1ar =etter terms 4ith )isne.! Later successes included Toy Story 2*
&onsters Inc!* and 6inding Iemo. The alliance =et4een 5i2ar and )isne. has
tremendous potential 1or economies o1 scope! As CEO o1 Apple and )isne.7s
largest shareholder* Bo=s is the strategic lin; =et4een )isne.* Apple* and 5i2ar!
Opportunities include com=ining the animated mo(ie e2pertise o1 )isne. and
5i2ar* as 4ell as sharing the content o1 )isne.7s A'C or ES5I net4or;s o(er
Apple7s digital o11erings! D'urro4s* Gro(er* and GreenE
A current e2ample o1 the 1usion =et4een )isne.* Bo=s* Apple* and technolog. is
(ideo on the i5od! )isne.7s )esperate -ouse4i(es 4as one o1 the 1irst tele(ision
programs a(aila=le 1or purchase and do4nload to the ne4er (ideo$ena=led i5od!
There are concerns a=out 4hether these s.nergies 4ill come to 1ruition! There are
1ears that the personalit. and st.le o1 Bo=s ma. con1lict 4ith )isne.* and that
)isne. CEO Iger could =e HAmelioedG $$ dri(en out o1 o11ice =. Bo=s in a manner
similar to ho4 Bo=s dro(e Amelio out o1 the CEO post at Apple! D'urro4s* Gro(er*
and GreenE!
()ternal Aanalysis
",
Tec/nological (n,iron'ent
'rand A4areness L St.le at a 5remium
Apple7s products are trend. and st.lish! A1ter Bo=s returned in "@@uisition (ersus internal de(elopment strategies 1or such
products as Garage'and and i&usic ha(e pro(en highl. (alua=le!
&70T Analysis of Apple Inc:
Although participation in such acti(ities ma. add (alue* the. ma. not =e a source
o1 competiti(e ad(antage! Ultimatel.* the (alue* rarit.* inimita=ilit.* andSor
organiAation D0RIOE o1 an acti(it. or resource determine its sustaina=ilit. as a
source o1 competiti(e ad(antage! 9ithin this conte2t* 4e can identi1. a 1irm7s
strengths* 4ea;nesses* opportunities* and threats DS9OTE!
In S9OT anal.sis Strength and 9ea;nesses are depends on Internal 1actors and
Opportunities and Threats )epends on E2ternal 6actors o1 and OrganiAation!
S9OT anal.sis is use1ul in decision ma;ing a=out the organiAation going 1or an.
ne4 or e2isting project!
Apple &70T Analysis
&trengt/:
#<
• iTunes &usic Store is a e2cellent source o1 re(enue* especiall. 4ith the i5od
and the accessi=ilit. on 9indo4s plat1orm!
• Apple Computer are e2pert in )e(eloping o4n so1t4are and hard4are!
• Apple7s niche audience pro(ides the compan. 4ith some lagging 1rom the
direct price competition!
• Gi(ing a 1ace$li1t to des;top and note=oo; lines!
• technolog. can =e used to impro(e product a4areness and sales!
• Lo4 de=tTmore maneu(era=le!
• Apple Computers ha(e good =rand lo.alt.!
• Strong Research O )e(elopment )epartment!
7ea8nesses:
• 9ea; relationship 4ith Intel and &icroso1t!
• 9ea; presence in =usiness arena!
• The product li1e c.cle o1 Apple products are (er. small 1or that reasons
re(enues are more depend on launch o1 ne4 products and ser(ices!
• 9ea; presence in mar;ets other than education and pu=lishing!
• Slo4 turn around on high demand products!
• Apples mar;et share is 1ar =ehind 1rom major competitor &icroso1t!
• In past the relationship =et4een Ste(e jo=s and emplo.ee 4ere not good
4hich result in reputation loss!
0pportunities:
#8
• Increase in 4orms and (iruses on 5Cs so the anti(irus solution can =e
de(eloped =. Apple
• Large population DGen MOYE 4hich are e2tremel. indi(idualistic and name
=rand conscious!
• The ties o1 apple other companies are 4ea;* Apple can de(elop good
relationship 1or joint (entures
• )o4nloada=le music and &5+ pla.ers are highl. mar;eta=le!
• The online sales o1 computer are increasing 4ith rapid speed!
• The laptop mar;et gro4th is highK Apple Computers should 1ocus to de(elop
ne4 models to cater the need o1 customers!
T/reats:
• Companies not seeing Apple as compati=le 4ith their so1t4are!
• Apple 1acing strong competition 1rom )ell* -5* Son. and Toshi=a in laptop
segment!
• )o4nloading 1ree music 1rom other online source 4ithout pa.ing cost is
common it ma. impact the iTunes sales!
• Apple so1t4are* Cell phone and hard4are are e2pensi(e as compared to
other competitors such as )ell!
• The long lasting recession ma. impact the sales o1 the compan. due to
higher prices o1 the products and ser(ices
• &icroso1t launched &icroso1t 0ista* 9indo4s < 4hich is gaining mar;et
share!
• The s4itching in technolog. is (er. 1ast
#@
6C9 *odel of Apple Inc.
+%
'oston Consulting Group D'CGE model is a techni>ue de(eloped =. 'RUCE
-EI)ERSOI o1 the 'oston Consulting Group in earl. "@ue =usinesses or products are classi1ied as lo4 or high per1ormers
depending upon their mar;et gro4th rate and relati(e mar;et share! It is (er.
use1ul tool to identi1. the product line o1 an organiAation!
6C9 'odel classified in four 'ain categories are
1.: &tar ;.: Cas/ Co- .: uit.
(alue o1 Apple! To complete this anal.sis* 4e de(eloped a pro$1orma income
statement and e2tracted 1ree cash 1lo4! 9e then discounted these cash 1lo4s using
a calculated 9eighted A(erage Cost o1 Capital D9ACCE! Apple7s 9ACC e>ualed
their cost o1 e>uit. since the. carr. no long$term de=t! 9e used the Capital Asset
5ricing &odel DCA5&E to calculate the cost o1 e>uit.!
CA5& consists o1 a ris;$1ree rate* a mar;et ris; premium* and a compan. 'eta!
The .ield on the "%$.ear Treasur. is the standard 1or a ris;$1ree rate! To determine
the mar;et ris; premium* 4e used the a(erage return that an in(estor 4ould re>uire
1or an in(estment 4ith a(erage ris;! 9e used data a(aila=le online to determine
Apple7s 'eta* projected to =e "!,3! The =elo4 chart summariAes Apple7s cost o1
e>uit.!
Cost of (BuityC7ACC Dote %alue
+is8 1ree +ate "% Yr Treasur. /!"#
*ar8et +is8 Pre'iu' DAnal.sisE ,
6eta 6rom Google "!,3
Ad>usted Apple +is8
Pre'iu'
/!8,
Cost of (BuityC7ACC "%!@3
,,
1inancial Analysis
Apple7s 1inancial per1ormance continued to strengthen o(er the last se(eral
>uarters! In the most recent earnings announcement* Apple reported signi1icant
gro4th in net re(enues dri(en =. the strong per1ormance o1 its i5od product line!
Iet sales 1or the #
nd
>uarter gre4 to J,!+3 =illion* 4hich is a +,Q increase o(er #
nd
quarter 2012 results! Iet income increased =. ,"Q to J,"% million!
The i5od product line continues to dri(e the 1inancial per1ormance o1 the compan.!
In the #
nd
>uarter alone* Apple sold 8!/ million i5ods* representing a 3"Q increase
o(er the /!+ million units sold in the #
nd
>uarter o1 the prior .ear! &ac sales
sho4ed slight gro4th o1 onl. ,Q!
Apple7s .ear$to$date re(enues total just o(er J"% =illion and earnings total just
under J" =illion! 6or the +
rd
>uarter* C6O 5eter Oppenheimer stated* HU4e e2pect
re(enue o1 a=out J,!# to J,!, =illionG 4hich 4ill push total sales a=o(e last term7s
annual num=ers!
,/
Apple ;$1; 1< financial analysis
#%"# April #/ 5osted =. admin under #%"# "? * Apple * Technolog. * USA
Apple #%"# "? results continues to impress! Re(enue has jumped 1rom #,*< =n!J
to +@*# =n!J or =. /@Q compared to #%"" ?"! -igh re(enue increase lead to e(en
more rapid Iet Income =e1ore depreciation increase! 9hich has risen 1rom 3*, =n!
J to "#*, =n!J or almost du==ed! This 4as lead =. slo4er re(enue cost DV,+QE and
operating cost increase DV+3QE then re(enue!
Companies sales =. geograph. is good! "S+ o1 sales are 1rom US and "S+ is 1rom
Asia 4hich are the regions 4ith highest estimated gro4th! Europe ta;es ##Q o1
sales! Asia sales has du==ed compared to last .ear so this mar;et has gro4n the
most! &ost o1 companies re(enue is generated =. i5hone /8Q 4hich sales has
increased =. V8/Q! &ost rise 4as in i5ad 4here re(enue has increased =. V"+#Q
and no4 contains "
Title: Research project on Apple Inc
Student name: Yogesh arande
Registration no! "#$#%"#
Course: &'A
Super(isor: Dr.Andreas Constantinou
)ate: August #%* #%"+
"
Table of Contents
Title Page
Introduction %,
-istor. Apple Inc: %/
0ision Statement o1 Apple: %/
E2planation o1 0ision Statement: %/
&ission Statement o1 Apple: %3
Re(ie4 o1 Literature %3
The 5C Industr. ""
The Online &usic Industr. "#
The 6uture o1 Apple "#
Strategic Alliances and Entertainment ",
E2ternal Aanal.sis "/
Industr. Anal.sis Using 5orter7s 6i(e 6orces &odel "8
9hich E2ternal Threats are &ost Signi1icant #+
Additional E2ternal Threats #,
0ertical Integration o1 Competitors #/
0alue Chain Anal.sis #3
S9OT Anal.sis o1 Apple Inc: #8
'CG &odel: +"
9hat is dri(ing &acintosh acceptance: ++
Remo(ing 'arriers 1or Users ++
Application 5re1erences +,
Apple pro1it ma;es huge rise due to i5od success +,
Apple 'eats Competitors at In(entor. Turn O(er +<
I5od: The &ar;eting o1 an Idea 5roject +8
6inancial Anal.sis ,"
-istorical 5er1ormance ,#
5ro1ita=ilit. &easures ,+
Li>uidit. and Le(erage &easures ,,
5roduct Unit Sales ,/
Operating Segments ,3
&ar;et 0alue Anal.sis ,3
Apple #%"# "? 1inancial anal.sis ,<
Share (alue /%
5ro$6orma Income Statement /<
5rojected 6ree Cash 6lo4 and E>uit. 0aluation /8
Strateg. /@
#
5roduct )i11erentiation /@
Strategic Alliances 3+
Recommendations 33
Conclusion 3<
+
Introduction
Apple Computer7s +%$.ear histor. is 1ull o1 highs and lo4s* 4hich is 4hat 4e
4ould e2pect in a highl. inno(ati(e compan.! The. e(ol(ed throughout the .ears
into an organiAation that is (er. much a representation o1 its leader* Ste(en Bo=s!
Apple made se(eral hugel. success1ul product introductions o(er the .ears! The.
ha(e also completel. 1allen on their 1ace on se(eral occasions! The. struggled
mightil. 4hile Bo=s 4as not a part o1 the organiAation! Apple reached a point
4here man. thought the. 4ould not sur(i(e! 9hen as;ed in late "@@< 4hat Bo=s
should do as head o1 Apple* )ell Inc!Cs D)ELLE then$CEO &ichael S! )ell said at
an in(estor con1erence: FICd shut it do4n and gi(e the mone. =ac; to the
shareholders!G D'urro4s* Gro(er* and GreenE!
9ell* times changed! Less than "% .ears later* 'usiness 9ee; ran;ed Apple as the
top per1ormer in its 2012 'usiness 9ee; /%! Apple attri=utes their recent success
to ro=ust sales o1 i5od music pla.ers Duic;l. enough! Apple =ought out Amelio7s contract a1ter just " P .ears on the
jo=! Bo=s e(entuall. claimed the CEO position! Then* he cleaned house =.
re(amping the =oard o1 directors and e(en replacing &i;e &ar;;ula!Bo=s
simultaneousl. put an end to the 1ledgling clone licensing agreements D4hich
created a 1e4 &ac clonesE and entered into cross$licensing agreements 4ith
&icroso1t! On &a. 3* "@@8* Apple introduced the ne4 i&ac* a product so secret
that most Apple emplo.ees had ne(er heard o1 it! The ne4 i&ac 4as a runa4a.
success 4ith its translucent case* all$in$one architecture* and ease o1 use! It
=rought Apple to a ne4 mar;et o1 users L those 4ho had ne(er o4ned a computer
=e1ore! Bo=s 1urther simpli1ied the product lines into 1our >uadrants along t4o
a2es: )es;top and 5orta=le on one* 5ro1essional and Consumer on the other!
Apple completed the matri2 4ith the introduction o1 the consumer$=ased i'oo; in
"@@@!
The .ear #%%" 4as an important .ear 1or consumers o1 Apple products! Apple
opened their 1irst #/ retail stores Dtotaling "3+ stores in , countries as o1 &a.
2001E! In Septem=er #%%"* Apple introduced the ne4 i&ac 1eaturing a screen on
a s4i(el!The ne4 i5ods Dporta=le music pla.ersE 4ere a tremendous success!
Apple sold so man. that Apple7s dependence on &ac sales 4as signi1icantl. less!
This 4as no small 1eat considering that the #%%" i&ac =ecame Apple7s =est$selling
product H=. a long shotG!
Apple o11ered iTunes Da 1ree applicationE to help their
consumers organiAe music on i5ods and &acs!
@
In #%%+* Apple e2panded iTunes =. "E opening the iTunes music store to allo4
&ac users to purchase music online and #E e2panding iTunes to 9indo4s users!
Sales o1 i5ods s;.roc;eted and currentl. pro(ide the =ul; o1 product sales to
Apple! In 2012* Apple announced that it 4ould start using Intel$=ased chips to run
&acintosh computers! In April 2005* Apple announced 'oot Camp* 4hich
allo4s users o1 Intel$=ased &acs to =oot either &ac or 9indo4s OS! This
1unctionalit. allo4s users 4ho ma. need =oth OSs to o4n just one machine to run
=oth* al=eit not simultaneousl.!
"%
T/e PC Industry
9e can glean Insight into the histor. and composition o1 the 5C Industr. 1rom its
epon.mous title! In the late "@uired a majorit. interest in
the .oung mo(ie compan. 5i2ar in 6e=ruar. "@83! Bo=s 4ent on to in(est R o1 his
personal 4ealth into 5i2ar!
In "@@/* 5i2ar solidi1ied its position 4ithin animated mo(ies 4ith the de=ut o1 To.
Stor.! Grossing J+/8 million 4orld4ide* it =ecame the +
rd
$largest grossing
animated mo(ie in histor.! A1ter this success* Bo=s too; 5i2ar pu=lic and
negotiated 1ar =etter terms 4ith )isne.! Later successes included Toy Story 2*
&onsters Inc!* and 6inding Iemo. The alliance =et4een 5i2ar and )isne. has
tremendous potential 1or economies o1 scope! As CEO o1 Apple and )isne.7s
largest shareholder* Bo=s is the strategic lin; =et4een )isne.* Apple* and 5i2ar!
Opportunities include com=ining the animated mo(ie e2pertise o1 )isne. and
5i2ar* as 4ell as sharing the content o1 )isne.7s A'C or ES5I net4or;s o(er
Apple7s digital o11erings! D'urro4s* Gro(er* and GreenE
A current e2ample o1 the 1usion =et4een )isne.* Bo=s* Apple* and technolog. is
(ideo on the i5od! )isne.7s )esperate -ouse4i(es 4as one o1 the 1irst tele(ision
programs a(aila=le 1or purchase and do4nload to the ne4er (ideo$ena=led i5od!
There are concerns a=out 4hether these s.nergies 4ill come to 1ruition! There are
1ears that the personalit. and st.le o1 Bo=s ma. con1lict 4ith )isne.* and that
)isne. CEO Iger could =e HAmelioedG $$ dri(en out o1 o11ice =. Bo=s in a manner
similar to ho4 Bo=s dro(e Amelio out o1 the CEO post at Apple! D'urro4s* Gro(er*
and GreenE!
()ternal Aanalysis
",
Tec/nological (n,iron'ent
'rand A4areness L St.le at a 5remium
Apple7s products are trend. and st.lish! A1ter Bo=s returned in "@@uisition (ersus internal de(elopment strategies 1or such
products as Garage'and and i&usic ha(e pro(en highl. (alua=le!
&70T Analysis of Apple Inc:
Although participation in such acti(ities ma. add (alue* the. ma. not =e a source
o1 competiti(e ad(antage! Ultimatel.* the (alue* rarit.* inimita=ilit.* andSor
organiAation D0RIOE o1 an acti(it. or resource determine its sustaina=ilit. as a
source o1 competiti(e ad(antage! 9ithin this conte2t* 4e can identi1. a 1irm7s
strengths* 4ea;nesses* opportunities* and threats DS9OTE!
In S9OT anal.sis Strength and 9ea;nesses are depends on Internal 1actors and
Opportunities and Threats )epends on E2ternal 6actors o1 and OrganiAation!
S9OT anal.sis is use1ul in decision ma;ing a=out the organiAation going 1or an.
ne4 or e2isting project!
Apple &70T Analysis
&trengt/:
#<
• iTunes &usic Store is a e2cellent source o1 re(enue* especiall. 4ith the i5od
and the accessi=ilit. on 9indo4s plat1orm!
• Apple Computer are e2pert in )e(eloping o4n so1t4are and hard4are!
• Apple7s niche audience pro(ides the compan. 4ith some lagging 1rom the
direct price competition!
• Gi(ing a 1ace$li1t to des;top and note=oo; lines!
• technolog. can =e used to impro(e product a4areness and sales!
• Lo4 de=tTmore maneu(era=le!
• Apple Computers ha(e good =rand lo.alt.!
• Strong Research O )e(elopment )epartment!
7ea8nesses:
• 9ea; relationship 4ith Intel and &icroso1t!
• 9ea; presence in =usiness arena!
• The product li1e c.cle o1 Apple products are (er. small 1or that reasons
re(enues are more depend on launch o1 ne4 products and ser(ices!
• 9ea; presence in mar;ets other than education and pu=lishing!
• Slo4 turn around on high demand products!
• Apples mar;et share is 1ar =ehind 1rom major competitor &icroso1t!
• In past the relationship =et4een Ste(e jo=s and emplo.ee 4ere not good
4hich result in reputation loss!
0pportunities:
#8
• Increase in 4orms and (iruses on 5Cs so the anti(irus solution can =e
de(eloped =. Apple
• Large population DGen MOYE 4hich are e2tremel. indi(idualistic and name
=rand conscious!
• The ties o1 apple other companies are 4ea;* Apple can de(elop good
relationship 1or joint (entures
• )o4nloada=le music and &5+ pla.ers are highl. mar;eta=le!
• The online sales o1 computer are increasing 4ith rapid speed!
• The laptop mar;et gro4th is highK Apple Computers should 1ocus to de(elop
ne4 models to cater the need o1 customers!
T/reats:
• Companies not seeing Apple as compati=le 4ith their so1t4are!
• Apple 1acing strong competition 1rom )ell* -5* Son. and Toshi=a in laptop
segment!
• )o4nloading 1ree music 1rom other online source 4ithout pa.ing cost is
common it ma. impact the iTunes sales!
• Apple so1t4are* Cell phone and hard4are are e2pensi(e as compared to
other competitors such as )ell!
• The long lasting recession ma. impact the sales o1 the compan. due to
higher prices o1 the products and ser(ices
• &icroso1t launched &icroso1t 0ista* 9indo4s < 4hich is gaining mar;et
share!
• The s4itching in technolog. is (er. 1ast
#@
6C9 *odel of Apple Inc.
+%
'oston Consulting Group D'CGE model is a techni>ue de(eloped =. 'RUCE
-EI)ERSOI o1 the 'oston Consulting Group in earl. "@ue =usinesses or products are classi1ied as lo4 or high per1ormers
depending upon their mar;et gro4th rate and relati(e mar;et share! It is (er.
use1ul tool to identi1. the product line o1 an organiAation!
6C9 'odel classified in four 'ain categories are
1.: &tar ;.: Cas/ Co- .: uit.
(alue o1 Apple! To complete this anal.sis* 4e de(eloped a pro$1orma income
statement and e2tracted 1ree cash 1lo4! 9e then discounted these cash 1lo4s using
a calculated 9eighted A(erage Cost o1 Capital D9ACCE! Apple7s 9ACC e>ualed
their cost o1 e>uit. since the. carr. no long$term de=t! 9e used the Capital Asset
5ricing &odel DCA5&E to calculate the cost o1 e>uit.!
CA5& consists o1 a ris;$1ree rate* a mar;et ris; premium* and a compan. 'eta!
The .ield on the "%$.ear Treasur. is the standard 1or a ris;$1ree rate! To determine
the mar;et ris; premium* 4e used the a(erage return that an in(estor 4ould re>uire
1or an in(estment 4ith a(erage ris;! 9e used data a(aila=le online to determine
Apple7s 'eta* projected to =e "!,3! The =elo4 chart summariAes Apple7s cost o1
e>uit.!
Cost of (BuityC7ACC Dote %alue
+is8 1ree +ate "% Yr Treasur. /!"#
*ar8et +is8 Pre'iu' DAnal.sisE ,
6eta 6rom Google "!,3
Ad>usted Apple +is8
Pre'iu'
/!8,
Cost of (BuityC7ACC "%!@3
,,
1inancial Analysis
Apple7s 1inancial per1ormance continued to strengthen o(er the last se(eral
>uarters! In the most recent earnings announcement* Apple reported signi1icant
gro4th in net re(enues dri(en =. the strong per1ormance o1 its i5od product line!
Iet sales 1or the #
nd
>uarter gre4 to J,!+3 =illion* 4hich is a +,Q increase o(er #
nd
quarter 2012 results! Iet income increased =. ,"Q to J,"% million!
The i5od product line continues to dri(e the 1inancial per1ormance o1 the compan.!
In the #
nd
>uarter alone* Apple sold 8!/ million i5ods* representing a 3"Q increase
o(er the /!+ million units sold in the #
nd
>uarter o1 the prior .ear! &ac sales
sho4ed slight gro4th o1 onl. ,Q!
Apple7s .ear$to$date re(enues total just o(er J"% =illion and earnings total just
under J" =illion! 6or the +
rd
>uarter* C6O 5eter Oppenheimer stated* HU4e e2pect
re(enue o1 a=out J,!# to J,!, =illionG 4hich 4ill push total sales a=o(e last term7s
annual num=ers!
,/
Apple ;$1; 1< financial analysis
#%"# April #/ 5osted =. admin under #%"# "? * Apple * Technolog. * USA
Apple #%"# "? results continues to impress! Re(enue has jumped 1rom #,*< =n!J
to +@*# =n!J or =. /@Q compared to #%"" ?"! -igh re(enue increase lead to e(en
more rapid Iet Income =e1ore depreciation increase! 9hich has risen 1rom 3*, =n!
J to "#*, =n!J or almost du==ed! This 4as lead =. slo4er re(enue cost DV,+QE and
operating cost increase DV+3QE then re(enue!
Companies sales =. geograph. is good! "S+ o1 sales are 1rom US and "S+ is 1rom
Asia 4hich are the regions 4ith highest estimated gro4th! Europe ta;es ##Q o1
sales! Asia sales has du==ed compared to last .ear so this mar;et has gro4n the
most! &ost o1 companies re(enue is generated =. i5hone /8Q 4hich sales has
increased =. V8/Q! &ost rise 4as in i5ad 4here re(enue has increased =. V"+#Q
and no4 contains "