Presentation on theme: "Apple Inc. Ashley Campion Stephanie Lanter Wes Kincaid Michael Riggen"— Presentation transcript:
1 Apple Inc. Ashley Campion Stephanie Lanter Wes Kincaid Michael Riggen John HutchensNathan FrostClaudia Martinez
2 A Bit of History Founded in 1976 by Steve Jobs and Steve Wozniak Wozniak, a self-taught engineer, began building boxes that allowed him to make long-distance phone calls free of charge1976 they began to build the Apple I, without a keyboard or power supply for a hobbyist clubTo startup their company, the pair sold everything they owned raising about $1300
3 A Bit of HistoryWith large ambitions in mind, Jobs and Wozniak sold 1/3 of the company to Mike MarkkulaRegis McKenna was hired for advertising and created the Apple logoBy June of 1977, after the release of Apple II, annual sales totaled around $1 millionBy the end of 1978, Apple was considered one of the quickest growing companies in the U.S.
4 A Bit of History1980 Apple became public and offered 4.6 million shares at $22 each and sold out in minutesIn May of 1981 a second share of 2.6 million was offeredDecember of 1982 Apple became the first personal computer company to reach $1billion in annual salesIn 1984 the Macintosh was finally released
5 A Bit of History October 2001, the legendary iPod was released iPod Photo, Nano, Mini, Shuffle, and TouchiPhone release in 2007Campaign created the most buzz in the industry“Whether the iPhone succeeds wildly or fails badly, it won’t really matter. This campaign has been an education in itself. Never before in history has a product been so widely anticipated.”iPhone named “Invention of the Year” by Time Magazine in 2007In an article written by John Reese, on Income.com, he statesTime called it “It’s a genuine handheld, walk-around computer, the first device that really deserves the name. “
6 Company Overview Mission Statement: Vision Statement: “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.”Vision Statement:“Man is creator of change in this world. As such he should be above systems and structures, and not to subordinate to them.”
7 Company OverviewFollow up of mission statement: iPhone is changing the world and how we communicate.Applications have simplified everyday thingsApple relies on innovativeness that comes from intense research and development and competitive drive, which Jobs embodiesUsed to ask Bill Hewlett for spare parts when working on his first computers
8 AT&T and AppleExclusivity contract with AT&T allowed Apple to benefit from contracts madeWin-Win for AT&T and AppleSet the tone for exclusivity contracts around the worldO2 in Britain, Orange in France and T-Mobile in GermanyItaly one of the few countries that sells iPhone from 2 different providersAT&T and Apple in WSJ- 4/15
9 iPhone Key Issues Technology Mishaps Competition Faulty applications Service ProblemsScreen ProblemsCompetitionMissed out on computers, not making same mistake with iPhoneContinue innovativeness to stay ahead
10 iPhone Key Issues Target Market Currently target people under age 30 Need to expand into corporate climateStart with small businessesRIM Blackberry already has a huge advantage in the global market, but Apple has surpassed Palm
11 iPhone’s Global Stance Sold all over US and Canada, although some problems with service in different parts of USThe iPhone surprisingly sold most areas in South America.Quickly expanding in Europe and Asia.
12 The Apple StrategyThe Apple brand competes across many highly competitive marketsAccording to Marketing Minds Apple’s strategy is very unique and dissimilar from competitors. Their product strategy is to create innovative products and services aligned with a “digital hub” strategyDigital hub--whereby Apple Macintosh computer products function as the digital hub for digital services, including the Apple iPod, personal digital assistants, cellular phones, digital video and still cameras, and other electronic devices
13 Branding PersonalityApple dominates the market through their branding personalityFocus on emotions, lifestyles, imagination, innovation, passion, hopes and dreams, and the power-to-the-people through technologyPersonality is also about simplicity and the subtraction of complexity in people’s lives“Apple Community”Feeling of inclusiveness
14 12 Effective Strategies Apple Uses to Create Loyal Customers A store created just for AppleA friendly place where users are encouraged to play and interact with Apple technologyComplete SolutionsApple products complement and interact with each other, giving Apple the control over the entire user process“Are you a Mac”Apple prides itself on being a hip, young brand“I’m a Mac” campaignFrom “The Best Article Everyday”
15 12 Effective Strategies Apple Uses to Create Loyal Customers 4. Varied ProductsSelling low entry cost products gives the opportunity for users to be introduced to the brandProprietary FormatsApple downloaded music only works with Apple products. User is more likely to stay with the Apple brand than lose all of their musicMedia FodderMedia Channels LOVE Apple (bloggers, media channels)Apple gift wraps news stories creating hype
16 12 Effective Strategies Apple Uses to Create Loyal Customers 7. Education SalesSelling products to schools and universities creating early exposureProducts that DeliverApple carefully analyzes what consumers are looking for, products are developed as a result of both research and innovative designOutsourcing UnpleasantnessWith the iPhone, Apple was clever to stick with building a high-quality product and allowing AT&T handle the service
17 12 Effective Strategies Apple Uses to Create Loyal Customers ConsistencyApple products contain the same basic architecture; current customers know what they are gettingNew InnovationsDiversifying its portfolio, offering a variety of ways to enjoy products at home or in the officeAttractivenessPackaging to aesthetic design to user-interface know-how. Apple makes its products accessible and attractive
18 Company Analysis NAICS Code Electronic Computer ManufacturingIn Jan. Apple was feeling the hit of the economic crisis, iPod sales slowed from previous yearsSales still continue to grow year-to-year and a boom in iPhone sales keep the company’s revenues rising
19 Company Analysis First quarter of 2009 Driven in over $10 billion in revenue, a leap from last quarter’s $7.9 billionEarnings per share were barely up at $1.78, but ascended significantly from the previous quarter at $1.26Quarter-to-quarter increase in earnings per share were higher than the climb in revenue, meaning that Apple held up its margins regardless of consumer cutbacks
20 first and fourth quarter of 2008, and the first quarter of 2009. Company Analysisfirst and fourth quarter of 2008, and the first quarter of 2009.
22 STRENGHTS Most established and healthy IT brands in the world Excellent CRM (customer relationship management) by focusing, identifying, and maintaining customer loyaltyShifting in orientationProduct Centric Customer CentricInnovative & high product-to-product integration
23 WEAKNESSES iPhone [drawbacks & defects] Doesn’t contain Flash or Java 2 megapixel cameraBattery lifeNon-removable batteryEasy to breakiPhone does not work in technologically advanced countries , such as, Japan and Korea
24 OPPORTUNITIESTargeting the market at a corporate level,meaning, iPhone is already a phenomenally successful and can be leveraged too much higher levels with the attention to corporate market and by developing multiple price points.The Apple iPhone is a viable stepping stone for Apple to attract new users who previously had not owned an Apple product before.Many car models from all major automakers have equipped their new models with Apple products connectivity
25 THREATSHigh level of competition in the technology markets [Apple invests a lot in research & development, as well as, in marketing in order to retain its competitive position]Also, economic crisis is already seeing Apple’s market share dip incredibly fast now that people don’t want to spend the excess amounts of cash for an iPhone, or an Apple product, when they can get similar products that offer the same service, at a lower price far less than those of Apple’s.
26 FIVE BRAND KEY SUCCESS FACTORS A great brand experienceClear and consistent positioningSense of dynamismSense of authenticityA strong corporate culture
27 Apple Openness & TrustWant to be the company that embraces open platforms and to trust decision to the wisdom of crowds.Not open like to keep thing hidden. (closed system)Created a cult of Apple followers.Apple has proven to get customers what they want before they know they want it.
28 Employee Benefits Flexible benefits Stock Purchases Health + Fitness Flex dollarsStock Purchases15% discount every six monthsHealth + Fitnessfitness plans, health education, and preventive care
29 401(k) Savings and Investment Plan Pre-tax deferralNo WaitingInvestment optionsOnline Investment Advice
31 Innovation Apple is world leader in innovation Always a step ahead of the competitonAccording to BusinessWeek survey, they are the leader for past 5 yearsSurvey asks company executives who they feel is the most innovate companies in the worldFollowed by Google, Toyota, respectively
32 Innovation System for innovation is “there is no system” – Steve Jobs “Saying no a thousand times” to find the right type of product
33 Innovation and R&DStriving for innovation, it can be assumed they have a high budget for research and developmentHowever, when compared to other technological companies, Apple spends the least in terms of percentage of revenue
34 Innovation Innovation at Apple becomes non-replicable Without an active system for innovation, there is nothing to imitateAs long as Apple can continue to innovate, they will always be the leader
35 Advertising Apple takes aggressive approach on advertising with iPhone Not a core competency, but still something they do extremely wellWith iPhone, Apple showcases product by highlighting its usability
36 Advertising http://www.youtube.com/watch?v=tH0-GKBmOE8 Apple showcases user friendliness and usabilityAdvertisements take different approaches, but never lose focus of showcasing phone’s usability
37 Financials Information off of Apple’s 2008 financial statements. Return on Investment (in millions)Asset turnover = sales / total assets= 10,167 / 42,787 =Asset Turnover you are really looking at how efficiently a company uses its assets to generate sales or revenue. People think that having a lot of assets is a good thing. WrongA company’s value is in its income stream. The ideal company would produce income without assets! Apple here is doing a fine job by it increasing, meaning they are keeping up with sales.
38 Financials cont.Return on Assets ( in millions)Return on assets = net income * 100 / total assets= 1605 * 100 / 42,787 = 3.75%ROA shows how profitable a company is before moving on to see how well it is leveraged. It shows investors how much profit a certain company generates from each $1 in assets. It measures how much the company earns in relation to all of the assets it owns. It is also part of the test to see the return to shareholders.As shown above, Apple’s ROA increased by .19%. This tells investors that over the course of the year the company’s Returns have increased so there is a chance that their own return will have increased.
39 Financials cont. Return on Equity ROE = net income * 100 / owner’s equity= 1605 * 100 / 22,909 = 7.00%Look at financial leverage refers to how a company uses its debt to increase returns on equity. A company takes the proceeds that it receives from borrowing or debt and reinvests it into the company.When comparing ROA and ROE the fact that both numbers increased over the course of a year shows that the company is using its financial leverage wisely. Since the ROE has increased it shows that the company also has a high growth rate.
40 Cash flow ratio shows how much debt is covered by cash flow. In the chart you can see Apple’s operating cash flow has only been getting stronger, indicating that the cash it’s bringing in every year is enough to cover all of its short-term liabilities such as payroll, inventory purchases, and so on. This is why apple has little to no debt.
41 Financials“Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone we sold more phones than RIM,” said Steve Jobs, Apple’s CEO. “We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.” – Steve Jobs With no debt to pay back there are a few things Apple could do for the future:Redistribute the wealth to shareholders in the form of dividendsIncrease production capacityAcquire other companies and/or technologies
42 Apple’s PE ratio Market price per share $116.32 PE ratio 21.6 Used to determine how much people are willing to pay for a dollar of current earningsThe higher the PE ratio, the more time the stock is multipliedOne share of Apple stock will sell for 21.6 times earnings
43 Stock Prices Average Close Apr. 09 120.22 Mar. 09 105.12 Feb. 09 89.31 JanDecNovOctAverage CloseSepAugJulyJuneMayApr
44 Dividend payout Never gave a dividend payout It wasn’t that Apple couldn’tKeeping the retained earnings for financing their future growth
45 Working Capital Current Assets 35,163 Current Liabilities 19,878 Has strong cash and cash equivalentsLiabilities have increased but overall assets balance the working capital outApple shows investors that it has more potential for growth
46 Financial Conclusion Strong financial stability Invests in research and development to gain sustainable growth in the futureRich in cash and short term investmentsApple should stay strong in the next financial periods