Apple, Inc. (AAPL)
From ValueWiki
Apple, Inc designs, manufactures, markets, and supports personal computers, portable media players, servers, software, and storage devices[1]. The company is probably best known for their Macintosh® personal computers, the iPod®, iTunes® media player, and the new iPhone®. Apple sells its products worldwide through its online and retail stores [1].
Contents |
|
|
Snapshot
Divisions
- Personal Computers
- Apple designs, manufactures, and markets personal computers. In support of the Macintosh® line of desktop and portable computers, the company creates and markets related software, services, peripherals, and networking solutions.[1]
- Portable Digital Music Players
- iPhone
- Apple has received much press for the iPhone, set to premiere in June for $499. The iPhone is reportedly selling well on pre-orders, and is on schedule for its debut on June 14.[2]
- Servers, Storage, and Software
- In addition, Apple develops a variety of other products, including the Xserve® server and Xserve RAID storage products, various consumer and professional software applications, the Mac OS® X operating system, the iTunes Music Store®, and various peripherals supporting and enhancing the Macintosh® and iPod® product lines.[1]
- Retail Stores
- Apple sells its products through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value added resellers. Apple's retail stores also sell third-party Macintosh® compatible products, including printers, storage devices, memory, digital video camcorders and cameras, and personal digital assistants.[1]
Strategy
Apple is vertically integrated, designing its own operating system, software, and hardware, and selling these products through its own retail stores. Apple leverages this vertical integration to ensure the most possible retail dollars spent on an Apple product end up on Apple's balance sheet.[1]
To retain an edge in the highly competitive Personal Computer and Consumer Electronics markets, Apple's stated philosophy is to increase investment in research and development, as well as marketing and advertising to extend market position.
In June 2005, Apple announced its plan to begin using Intel microprocessors in its Macintosh computers. Through April 1, 2006, Apple has introduced the new iMac®, MacBook® Pro, and Mac® mini computers, which all run on Intel microprocessors. Apple anticipates completing the transition of all of its Macintosh® computers to Intel microprocessors by the end of 2006.
Markets
Apple participates in several highly competitive markets, including personal computers with its Macintosh® line of computers, consumer electronics with its iPod® line of digital music players, and distribution of third-party digital content through its online iTunes Music Store.[1]
- Americas
- Net sales in the Americas rose $679 million or 47% in the second quarter of 2006 compared to the second quarter of 2005, with Macintosh® sales increased 4% year-over-year. The increase in net sales is primarily attributable to the growth of iPod® sales, other music related products and services, and desktop and portable Macintosh® systems. During the second quarter of 2006, the Americas segment represented approximately 49% of Apple's total net sales, as compared to 44% in the same period of 2005.[1]
- For the first six months of 2006, net sales in the Americas rose $1.7 billion, or 57%, year-over-year, and represented approximately 48% of Apple's total net sales as compared to 46% in the same period of 2005.
- Europe
- European net sales rose $261 million or 37% during the second quarter of 2006 compared to the same period in 2005. European Macintosh® sales rose 14% in the second quarter of 2006 compared to the same period in 2005. This is attributable to strong sales of iPod®, portable Macintosh® systems, Internet services, and Apple-branded software.[1]
- European net sales increased $656 million or 42% during the first six months of 2006 compared to the same period in 2005. Total European Macintosh® sales were up 18% for the first six months of 2006 compared to the same period in 2005. This is the result of growth in iPod® sales, other music related products and services, and portable Macintosh® systems.
- Japan
- Japan®s net sales increased 9% or $25 million for the second quarter of 2006 compared to the second quarter of 2005. Net sales increased for iPods, Apple-branded software, APP, and other music related products and services. Macintosh® sales decreased 20% during the second quarter of 2006 compared to the same period in 2005. Apple believes this decrease results from the Intel transition as customers wait for the new Intel-based Macintosh® systems.[1]
- In the first six months of 2006, Japanese net sales increased $195 million or 42% year-over-year. These increases are attributed to strong iPod® sales, other music related products and services, Macintosh® portable systems, and Mac OS X.
Recent Events
| 07/25/08 8:07 am | REFILE-UPDATE - Netflix profit higher; subscriber growth strong (at Reuters) |
| 07/25/08 8:07 am | Options Trader: Friday Outlook (at Seeking Alpha) |
| 07/25/08 8:07 am | Abercrombie & Fitch CFO jumps to Kellwood (AP) |
| 07/25/08 8:07 am | A Tale of Two Tapes (at Minyanville.com) |
| 07/25/08 7:07 am | AT&T Earnings Give Hope to Telcos (at BusinessWeek) |
| 07/25/08 7:07 am | Microsoft: What Web Strategy? (at BusinessWeek) |
| 07/25/08 7:07 am | Cash for Trash (BusinessWeek) |
| 07/25/08 6:07 am | The 10 Best Commercials of All Time: Coca Cola (at TheStreet.com) |
| 07/25/08 6:07 am | Apple Investors Need to Get a Grip (at Seeking Alpha) |
| 07/25/08 5:07 am | Apple: Expecting Short-Term Weakness (at Seeking Alpha) |
Future Events
- Earnings Dates
- Earnings Guidance
- Analyst Estimates
- Conferences and Expos
- Next Annual Shareholder's Meeting
Leadership
Company Officers
Board of Directors
- Fred D. Anderson ® Partner, Elevation Partners[3] ® Former CFO, Apple Computer, Inc.
- Bill Campbell ® Chairman and former CEO,[3] Intuit Corp.
- Albert Gore Jr. ® Former Vice President of the United States[3]
- Steve Jobs ® CEO, Apple[3]
- Dr. Eric Schmidt[3] ® CEO, Google
- Jerry York ® Chairman, President and CEO,[3]Harwinton Capital
Compensation
Insider Trades
Institutional Ownership
Risks
Apple TV
- Critics such as TVPredictions.com suggest Apple TV will be unable to attract a userbase because it does not receive or record cable or satellite channels, requires programs to first be downloaded to computer, has compatibility issues, does not function as a DVD player, and is yet another set top appliance users will have to fit into their entertainment systems.[4]
iPod Competition
- According to the Wallstreet Journal, the iPod will face its stiffest competition from cellphones, which are already incorporating most iPod features. Apple is currently responding to this challenge by developing their own brand of cellphone and digital music player.
- Apple also faces competition from the new Microsoft Zune, which is being called the "iPod killer."
Lawsuits
- Cisco announced a lawsuit against Apple on January 10 over use of the trademark name "iPhone." Apple has dismissed Cisco's lawsuit as "silly," claiming that their products are substantively different. Experts make a compelling case that Cisco lost the rights to the iPhone trademark last year. As of February 23, 2007, it appears the two companies have reached an agreement to both use the name "iPhone", and that the threat of lawsuit has evaporated.
- Apple announced on August 23rd that it will pay $100 Million to Singapore-based Creative Technology Ltd to settle a patent dispute related to iPod® technology.
Nasdaq Delisting
Nasdaq placed Apple on notice for impending delisting August 11 for failure to provide a quarterly filing. Apple is restating past earnings to correct illegal handlings of employee stock option backdating.
- Nasdaq allowing Apple to stay listed while delinquent
- The Story from CNET
- Why Apple Won't be Delisted from The Apple Blog
Options Backdating
In an ongoing SEC investigation, it now appears that Steve Jobs was granted 7.5 million backdated options, however, he never exercised them. Apple is one of 160 companies that have acknowledged option back-dating. However, as Apple is the most high profile company under investigation, there is some concern the SEC is eager to make an example of them. Apple's CFO Fred Anderson already resigned last summer in response to the scandal.
Battery Recall
Apple announced a recall of 1.8 Million Sony Batteries citing reports of minor injuries from overheating.
Competition
Several of Apple's competitors have announced their intention to target Apple's key markets, including software, video editing, iPod®, iTunes. Some of Apple's key competitors have greater financial, marketing, manufacturing, or development resources, as well as larger customer bases.
- Key Competitors
Interest Rate Risk
Apple's income and expenses are exposed to interest rate fluctuations in the U.S. and abroad. Interest rate hikes affect Apple's earned interest on cash, cash equivalents, and short-term investments, as well as foreign currency hedges. Apple's primary exposure to market risk for interest rate changes is in its investment portfolio, which consists of various short-term investments with underlying maturities ranging from 3 months to 5 years.[1]
Foreign Currency Risk
Apple is a net receiver of non-U.S. currencies. Therefore, changes in exchange rates, particularly the strengthening of the U.S. dollar, can affect Apple's net sales and gross margins.[1] Though they historically have priced their products at a 5-10% premium outside USA (possible due to Apple's strong control of the channel and localized hardware (keyboards) - almost completely eliminating the possibilities of parallel imports) - and it could easily be assumed Apple would react quickly to larger fluctuations through price increases. Thus eliminating most currency risks - and actually adding income historically by taking home the risk premium.
Greenpeace
- Steve Jobs responds to Greenpeace in this May 2, 2007 blog post. In response to Apple's effort to become a greener company, Greenpeace upgraded Apple's rating from 2.7 to a 5 out of 10. However, Greenpeace still insists "it's not everything we asked for. [5]
Criticism
History
Apple Computer was founded in 1976 by Steve Jobs and Steve Wozniak in Jobs' parents' Cupertino California garage. To fund the company, Jobs sold his Volkswagen and Steve Wozniak sold his Hewlett-Packard scientific calculator to raise net starting capital of $1,300. Later that year Apple delivered the $666 Apple I. Marketing the computer to hobbyists, sales of the Apple I earned the fledgling company $774,000. [6]
In 2007, Apple Computers changed its name to Apple, Inc., to reflect its diversified products.
- Wikipedia has a very thorough history of Apple Computer.
- Apple-History.com is an extremely comprehensive history of Apple and its products.
Corporate Culture
Apple is credited with putting Silicon Valley on the map, and creating Silicon Valley's hard-working yet corporate-casual environment. According to CRN.com, before Apple built the world's first personal computer in a Cupertino garage in 1976, Silicon Valley was just a "sleepy orchard region" in Northern California. [6] Even as the company grew, Job's worked hard to maintain Apple's rebel spirit. In January 1983, when the Mac team held an off-site retreat in Carmel, Steve Jobs coined a phrase "It's better to be a pirate than join the navy." Jobs was addressing concerns that the burgeoning Mac team, already 80 employees, was becoming more like a Navy than a band of pirates. In response to Job's call to action, programmers Steve Capps and Susan Kare painted a pirate flag featuring a Jolly Rogers with an Apple rainbow-colored eyepatch, and hung it above the Macintosh building. The image was featured in Fortune magazine in 1984, and became emblematic of Apple's corporate culture. [7]
To this day, Apple's corporate culture is characterized by its intense work ethic and casual dress code. Apple workplace surveys reflect a "relaxed", "casual," "collegial" environment with "long hours, weekends included" and "no end to challenges and cool projects." When Steve Jobs took over as interim CEO in the fall of 1997, he was known for walking around the Apple campus barefoot in cutoff shorts and a black shirt. [8] Jobs' commitment to casual-wear is so thorough, he reportedly showed up barefoot to meetings with Microsoft executives. [9] In the article, "Steve's Job:Restart Apple", Time magazine featured a spread of Jobs in jeans with his sneakers propped up on Apple's boardroom table. Many trend-watchers, such as the LA Times, credits Jobs and Apple with spawning the corporate casual philosophy that has affected the business culture of Silicon Valley, and greater American corporate culture in general. The LA Times quotes employment specialists John Challenger and Miriam Wardak, saying, when Gen X and Y workers see "T-shirt-and-jeans donning Steve Jobs, chief executive of Apple Computer Inc.", they realize the can "doff their suits and still get rich."[10]
Fundamentals
Ratios and Statistics
- Yahoo Finance has key statistics such Cash Flow, EBITDA and Enterprise Value.
- Reuters has key ratios.
SEC Filings
Historical Prices
Options
Technical Analysis
http://gicharts.blogspot.com/search?q=goog
http://gicharts.blogspot.com/2008/07/apple-inc-aapl_02.html
Rumors
- ValueWiki Rumor Page
- Discuss rumors on the Talk Page and link to the topics here.
- Rumors
- Rumor Sites
Message Boards
Notes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 http://www.sec.gov/Archives/edgar/data/320193/000110465906031303/0001104659-06-031303-index.htm 10Q filed 05/05/06
- ↑ TechCrunch on iPhone
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 http://www.apple.com/pr/bios/
- ↑ http://www.tvpredictions.com/applebomb032107.htm "Why Apple TV Will Bomb"
- ↑ GigaOM Retrieved May 3, 2007
- ↑ 6.0 6.1 CRN.com
- ↑ Pirate Flag at Folklore.org
- ↑ Salon.com
- ↑ Barefoot with Microsoft
- ↑ LA Times Business Casual
