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Ashley Campion Stephanie Lanter Wes Kincaid Michael Riggen John Hutchens Nathan Frost Claudia Martinez Slide 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 charge 1976 they began to build the Apple I, without a keyboard or power supply for a hobbyist club To startup their company, the pair sold everything they owned raising about $1300 Slide 3 A Bit of History With large ambitions in mind, Jobs and Wozniak sold 1/3 of the company to Mike Markkula Regis McKenna was hired for advertising and created the Apple logo By June of 1977, after the release of Apple II, annual sales totaled around $1 million By the end of 1978, Apple was considered one of the quickest growing companies in the U.S. Slide 4 A Bit of History 1980 Apple became public and offered 4.6 million shares at $22 each and sold out in minutes In May of 1981 a second share of 2.6 million was offered December of 1982 Apple became the first personal computer company to reach $1billion in annual sales In 1984 the Macintosh was finally released Slide 5 A Bit of History October 2001, the legendary iPod was released iPod Photo, Nano, Mini, Shuffle, and Touch iPhone release in 2007 Campaign created the most buzz in the industry Whether the iPhone succeeds wildly or fails badly, it wont 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 2007 Slide 6 Company Overview Mission 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. Slide 7 Company Overview Follow up of mission statement: iPhone is changing the world and how we communicate. Applications have simplified everyday things Apple relies on innovativeness that comes from intense research and development and competitive drive, which Jobs embodies Used to ask Bill Hewlett for spare parts when working on his first computers Slide 8 AT&T and Apple Exclusivity contract with AT&T allowed Apple to benefit from contracts made Win-Win for AT&T and Apple Set the tone for exclusivity contracts around the world O2 in Britain, Orange in France and T-Mobile in Germany Italy one of the few countries that sells iPhone from 2 different providers AT&T and Apple in WSJ- 4/15 Slide 9 iPhone Key Issues Technology Mishaps Faulty applications Service Problems Screen Problems Competition Missed out on computers, not making same mistake with iPhone Continue innovativeness to stay ahead Slide 10 iPhone Key Issues Target Market Currently target people under age 30 Need to expand into corporate climate Start with small businesses RIM Blackberry already has a huge advantage in the global market, but Apple has surpassed Palm Slide 11 iPhones Global Stance Sold all over US and Canada, although some problems with service in different parts of US The iPhone surprisingly sold most areas in South America. Quickly expanding in Europe and Asia. Slide 12 The Apple Strategy The Apple brand competes across many highly competitive markets According to Marketing Minds Apples strategy is very unique and dissimilar from competitors. Their product strategy is to create innovative products and services aligned with a digital hub strategy Slide 13 Branding Personality Apple dominates the market through their branding personality Focus on emotions, lifestyles, imagination, innovation, passion, hopes and dreams, and the power-to-the- people through technology Personality is also about simplicity and the subtraction of complexity in peoples lives Apple Community Feeling of inclusiveness Slide 14 12 Effective Strategies Apple Uses to Create Loyal Customers 1. A store created just for Apple A friendly place where users are encouraged to play and interact with Apple technology 2. Complete Solutions Apple products complement and interact with each other, giving Apple the control over the entire user process 3. Are you a Mac Apple prides itself on being a hip, young brand Im a Mac campaign Slide 15 12 Effective Strategies Apple Uses to Create Loyal Customers 4. Varied Products Selling low entry cost products gives the opportunity for users to be introduced to the brand 5. Proprietary Formats Apple downloaded music only works with Apple products. User is more likely to stay with the Apple brand than lose all of their music 6. Media Fodder Media Channels LOVE Apple (bloggers, media channels) Apple gift wraps news stories creating hype Slide 16 12 Effective Strategies Apple Uses to Create Loyal Customers 7. Education Sales Selling products to schools and universities creating early exposure 8. Products that Deliver Apple carefully analyzes what consumers are looking for, products are developed as a result of both research and innovative design 9. Outsourcing Unpleasantness With the iPhone, Apple was clever to stick with building a high-quality product and allowing AT&T handle the service Slide 17 12 Effective Strategies Apple Uses to Create Loyal Customers 10. Consistency Apple products contain the same basic architecture; current customers know what they are getting 11. New Innovations Diversifying its portfolio, offering a variety of ways to enjoy products at home or in the office 12. Attractiveness Packaging to aesthetic design to user-interface know- how. Apple makes its products accessible and attractive Slide 18 Company Analysis NAICS Code 334111- Electronic Computer Manufacturing In Jan. Apple was feeling the hit of the economic crisis, iPod sales slowed from previous years Sales still continue to grow year-to-year and a boom in iPhone sales keep the companys revenues rising Slide 19 Company Analysis First quarter of 2009 Driven in over $10 billion in revenue, a leap from last quarters $7.9 billion Earnings per share were barely up at $1.78, but ascended significantly from the previous quarter at $1.26 Quarter-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 Slide 20 Company Analysis first and fourth quarter of 2008, and the first quarter of 2009. Slide 21 Slide 22 STRENGHTS Most established and healthy IT brands in the world Excellent CRM (customer relationship management) by focusing, identifying, and maintaining customer loyalty Shifting in orientation Product Centric Customer Centric Innovative & high product-to-product integration Slide 23 WEAKNESSES iPhone [drawbacks & defects] - Doesnt contain Flash or Java - 2 megapixel camera - Battery life - Non-removable battery - Easy to break iPhone does not work in technologically advanced countries, such as, Japan and Korea Slide 24 OPPORTUNITIES Targeting 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 Slide 25 THREATS High 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 Apples market share dip incredibly fast now that people dont 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 Apples. Slide 26 FIVE BRAND KEY SUCCESS FACTORS A great brand experience Clear and consistent positioning Sense of dynamism Sense of authenticity A strong corporate culture Slide 27 Apple Openness & Trust Want 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. Slide 28 Employee Benefits Flexible benefits Flex dollars Stock Purchases 15% discount every six months Health + Fitness fitness plans, health education, and preventive care Slide 29 401(k) Savings and Investment Plan Pre-tax deferral No Waiting Investment options Online Investment Advice Slide 30 Collaboration Apple & BMW Apple & Adobe Flash Drive Slide 31 Innovation Apple is world leader in innovation Always a step ahead of the competiton According to BusinessWeek survey, they are the leader for past 5 years Survey asks company executives who they feel is the most innovate companies in the world Followed by Google, Toyota, respectively Slide 32 Innovation System for innovation is there is no system Steve Jobs Saying no a thousand times to find the right type of product Slide 33 Innovation and R&D Striving for innovation, it can be assumed they have a high budget for research and development However, when compared to other technological companies, Apple spends the least in terms of percentage of revenue Slide 34 Innovation Innovation at Apple becomes non-replicable Without an active system for innovation, there is nothing to imitate As long as Apple can continue to innovate, they will always be the leader Slide 35 Advertising Apple takes aggressive approach on advertising with iPhone Not a core competency, but still something they do extremely well With iPhone, Apple showcases product by highlighting its usability Slide 36 Advertising http://www.youtub e.com/watch?v=tH 0-GKBmOE8 http://www.youtub e.com/watch?v=tH 0-GKBmOE8 Apple showcases user friendliness and usability Advertisements take different approaches, but never lose focus of showcasing phones usability Slide 37 Financials Information off of Apples 2008 financial statements. Return on Investment (in millions) Asset turnover = sales / total assets = 10,167 / 42,787 =.23 07 08.15.23 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. Wrong A companys 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. Slide 38 Financials cont. Return on Assets ( in millions) Return on assets = net income * 100 / total assets = 1605 * 100 / 42,787 = 3.75% 07 08 3.56 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, Apples ROA increased by.19%. This tells investors that over the course of the year the companys Returns have increased so there is a chance that their own return will have increased. Slide 39 Financials cont. Return on Equity ROE = net income * 100 / owners equity = 1605 * 100 / 22,909 = 7.00% 07 08 6.22 7.0 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. Slide 40 Cash flow ratio shows how much debt is covered by cash flow. In the chart you can see Apples operating cash flow has only been getting stronger, indicating that the cash its 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. Slide 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, Apples CEO. We dont yet know how this economic downturn will affect Apple. But were 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 dividends Increase production capacity Acquire other companies and/or technologies Slide 42 Apples 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 earnings The higher the PE ratio, the more time the stock is multiplied One share of Apple stock will sell for 21.6 times earnings Slide 43 Stock Prices Average Close Apr. 09 120.22 Mar. 09 105.12 Feb. 09 89.31 Jan. 09 90.13 Dec. 08 85.35 Nov. 08 92.67 Oct. 08107.59 Average Close Sep. 08113.66 Aug. 08169.53 July 08158.95 June 08167.44 May 08188.75 Apr. 08173.95 Slide 44 Dividend payout Never gave a dividend payout It wasnt that Apple couldnt Keeping the retained earnings for financing their future growth Slide 45 Working Capital Current Assets 35,163 Current Liabilities 19,878 Working Capital 15,285 Has strong cash and cash equivalents Liabilities have increased but overall assets balance the working capital out Apple shows investors that it has more potential for growth Slide 46 Financial Conclusion Strong financial stability Invests in research and development to gain sustainable growth in the future Rich in cash and short term investments Apple should stay strong in the next financial periods