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RECENT EVOLUTION

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by

Suhail Naber

on 10 December 2014

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Transcript of RECENT EVOLUTION

2011
2012
2014
2010
2013
RECENT PRODUCTS LAUNCH
IPAD 1
IPHONE OS 4
IPHONE 4S
IPAD 2
IPAD 3
IPAD 4
IPHONE 5
IPAD MINI 1
IPAD AIR
IPAD MINI 2
IPHONE 5C
IPHONE 5 S
IPHONE 6
GROUP E
IPHONE 6 Plus
IPAD MINI 3
IPAD AIR 2
- American Corporation, founded in 1977
by Steve Jobs, Steve Wozniek and Ronald Wayne

- Technology industry, producing hardware and
software.

- Operating in America, Europe, Japan, China, Asia Pacific.

- Channels of distribution: Retail, Online stores and
third parties vendors.

- Current CEO is Tim Cook


Introduction Apple

Products:
Apple Macintosh, iCloud, iPod, iPhone, iPad, Apple TV, Cinema Display, AirPort, iLife, iWork, Mac OS X, iOS, QuickTime, iTunes, Final Cut Studio, Aperture, Logic Pro, Safari

Services:
Services Apple Store, Apple Store online, App Store, iTunes Store, iBookstore, Mac App Store
Products and Services
Business Strategy
- Design and develop its own operating systems, hardware, application software, and services to provide its customers new products and solutions.

- Investment in research and development, marketing and advertising

- Enhancing and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience
Conclusion - Question A
If you were a financial analyst, would you advise the investment in this company?

- Apple's price is beating the
S&P 500
by 40% YTD, however, P/E is 14 compared to 34 for the industry

- Company is expected to grow at a faster pace than the S&P 500 in the next 5 years

- High investment in Capital Return Program

- Apple is the world's most valuable brand
Balance Sheet Analysis
Agenda
Dinesh Banga
Julieta Moya
Guillermo Reina
Marilia Orlandi
Suhail Naber
- Shift in the financial and economical structure between 2010-2012 and 2013/2014
Capital Return Program
- 2013-2014 Apple acquired a loan for $46B because most of the its "cash" is overseas

- Return over $100B to shareholders
by 2015

-Buy back $68B worth of shares


Income Statement Analysis
Ratios Analysis
- Profitability ratios

- Solvency ratios

- Liquidity ratios

- Market ratios


Profitability Ratios
Solvency Ratios
Liquidity Ratios
Market Ratios
If you were a financial institution, would you give the company a significant loan?

- $155B in cash, cash equivalents and marketable securities

- High liquidity/Solvency = low risk

- Largest company in the world in terms of sales and second most profitable company should have some bargaining power with debtors



So our answer is
c) If you were the president of the competitor, would you consider buying this company?

- Apple value is $688B VS. Microsoft $400B

- Windows VS. Macintosh are not compatible

- Apple has more diversified product line so it is difficult to merge

- Cultural and strategic differences




So our answer is
Conclusion - Question B
Conclusion - Question C
- Company background

- Balance sheet analysis

- Income statement analysis

- Ratios analysis

- Conclusion
- Debt to Equity ratio increased
- Equity ratio decreased

- Why do you think this shift occurred?
- 2011/2012 Sales has grown at a very rapid pace which was reflected in ROE and ROA

- 2013 COGS grew at a higher rate than sales and margins were
lower

- Net Income growth decreased in 2013 compared to previous years

- Apple's Market Value has tripled since 2010

- In 2012 Apple launched the biggest dividend payout program (over $100B by 2015)

- Compared to the industry, Apple is cheap (P/E)

So our answer is
Questions?

Thank You!

- ROE and EPS consistently increasing, but in 2013 they decreased due to fierce competition, and higher COGS.
-ROA decreased in 2013/2014 due to:
1. Capital return plan: Issues of long term investment and buyback shares
2. Decreased of margin (Ni+fe)

- Apple is the second most profitable company= Strategy in differentiation.
- Last 5 years, apple made $31.6B average yearly net income compared to $20.5B for Microsoft

- Apple is a very liquid company that is able to meet their short term liabilities

- As of now, they have $155B in cash, cash equivalent, and marketable securities. This is three times as much as cash held by the US Government and twice as much as the UK's government

- Liquidity ratios went down in 2013 - 2014 because they acquired debt
- Borrowed $46B for the Capital Return Program

- Most of their cash is overseas for tax purposes

- Overall company is very solvent
Impact on ROE, ROA and Gross Margin
Full transcript