Apple is a computer company that specializes in the production of personal computers and computer accessories. Apple has produced many different types of products and is primarily known for the advancement of multimedia personal computers. Most people that are involved with video, music, pictures, and sound use Apple computers for their projects because of the quality of the equipment that Apple uses.
Many people view Apple as a runner-up in the computer industry because of Microsoft’s almost complete control on personal computers. The truth behind Apple and Microsoft is told in a brilliant movie titled “Pirates of Silicon Valley. It goes into great detail about how Apple was ahead of Microsoft and ended up not releasing the product before Microsoft because it actually gets stolen (IMDB, 1999). What the movie tries to explain is that Apple is not a runner-up company, but rather, a cutting edge company that pushes computers a step further every day.
The Group’s principal activities are to design, manufacture and market personal computers and related software, peripherals and personal computing and communicating solutions” (Winthrop Corporation, 2006). Apple has many different products other then the personal computer. Apple made a huge jump forward just a couple of months ago with the release of the iPod. This electronic device allows users to download music off of the Apple browser iTunes and transfer them to an iPod which is a transportable MP3 player. The iPod seemed to have saved Apple as they continued to fall behind more and more and fade into the competition.
How Apple is run is completely different then Microsoft. That is one of the major differences and why Microsoft is at the front of the computer industry and Apple is number two. There are 16,820 employees at Apple (Hoovers, 2006). The CEO is Steven Jobs who has had his position since 1998. Peter Oppenheimer is the CFO of the company and has been in his position since 1996 (Reuters Fundamentals, 2006). The company does not change leadership very often which sometimes prevents a company from growing. One of the problems with Apple growing is that Microsoft owns a very large amount of stock in Apple and has a controlling interest. So, this helped develop the different divisions in Apple. The last time that the company had a major change in the upper management was in 1998. Apple still remains an American icon, though.
Computers are still an important part of its mix, but these days music-related products are at the top of Apple’s playlist. Apple Computer’s desktop and laptop computers — all of which feature its OS X operating system — include its Mac mini, iMac, and MacBook for the consumer and education markets, and more powerful Power Mac and MacBook Pro for high-end consumers and professionals involved in design and publishing. The company scored a runaway hit with its digital music players (iPod) and online music store, iTunes. (Hoovers, 2006)
Apple appeared on Forbes most admired companies for 2006 (Forbes, 2006). They ranked number 2 in the computer industry and number 11 in overall companies. With over 32 competitors, this report was very beneficial to Apple and showed that the company is still alive and strong (Hoovers, 2006).
Apple’s current stock market share is worth $68.75 (Yahoo Finance, 2006). Their stock has continuously been on the rise since the release of the iPod. This is one of the first times in the history of the company that the stock has been stable and not just rode along with the rest of the technology stock. Apple has finally set themselves apart from the technology world and planted a name in the stock market.
Apple has many different divisions ranging from the laptop and personal computer division, to the music division, to the video and sound division, and finally to the server, wireless network, and computer accessories division. Each division makes up a little part of Apple and could not operate without the other divisions. Currently, the music division is on the top for Apple, but this could easily change with the release of a new wireless network card, new video editing software, or even a new laptop that beats the rest of the market. Each division is able to produce their own technology away from the upper management and the controlling interest of other companies. The company is structured so that if it was purchased, each individual division would have to be purchased, and could not be acquired in one big sale.
This is very different from most companies and also is a very big advantage to Apple Computers and the employees that work there. It also prevents Apple from being bought up and dissolved within the next couple of years by a larger company such as Microsoft.
Apple is diverse and does not just focus on one section of the technology market. This is what enables them to still exist in such a competitive world. Most software and hardware companies in the technology industry disappear very quickly by being bought out by a larger company like Dell or Microsoft. Apple has dived into each section of technology which does not allow the company to be easily bought. Google is following a very similar pattern and is one of the largest reasons why they still exist under original leadership today.
Apple’s financial reports are very impressive for the last year. Net sales for 2005 were $13,931 million. That was a $5,652 million increase from 2004 (Apple Computers, 2005). That is a large increase for any company, but especially a technology company.
Their return on assets is a surprisingly 35%. This is a great ratio because it means that Apple is operating at a very high rate of efficiency. A large reason for this is because many of the software products do not take very much cost to create. A basic compact disc with a manual can cost close to $1,000 from Apple with a cost of maybe $2 to produce. This does not include time put into the project to create the software.
Apple’s debt ratio is also at 35%. This is good for the computer industry and means that the company is successfully making money on borrowed money (Larson, Wild, and Chiappetta, 2005). A bank would have no problem lending Apple money on a loan. This helps the company greatly if they get into a bind and need some money quickly.
The current ratio is at 2.9 which is just about perfect for a company the size of Apple. They would have no problem covering their liabilities with assets if a problem arose and there was a shortage of cash within the company.
Apple’s profit margin is a very high 10%. This is also great for the company and shows that they are working with great efficiency. It shows that the company is making a lot of money on each individual sale.
Overall, Apple’s financial reports show that they are doing extremely well and have a huge increase in profitability from 2004 to 2005. This shows that they are heading in the right direction as a company and if they can continue on their current path can become even more successful in years to come.
The beginning of the financial statements describes their large increase in revenue from the previous year to 2005 and lets the reader know that the introduction of the iPod greatly helped the company. If looking at Apple’s financial statements for investments, most people would probably not invest in the company. Although their financial reports look great, they do not have a product that people need and that will continue to be sold for the rest of time. Most of Apple’s competition has already begun work and announced a release date for competition to the iPod.
Although most people have already purchased iPod’s and will not switch to another program, it may be hard if the market gets flooded and there are no other options available. If this did happen, then Apple would drop back down extremely fast and the financial statements would not look anywhere near as well as they did for 2005.
Luckily, Apple Computers has a strong history supporting them to sway investors towards them regardless of the risk. They have slowly developed over the years and continue to grow to most everyone’s surprise in the computer industry and the rest of the world. If Apple continues to produce new and innovative technology like they did in 2005, they will grow to become one of the greatest computer companies in the current generation.
References
Apple Computers, (2005). United States Securities and Exchange Commission. Retrieved August 27, 2006, from Annual Report Web site: http://media.corporateir.net/media_files/
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Forbes, (2006). Fortune. Retrieved August 27, 2006, from Most Admired Companies Web site: http://money.cnn.com/magazines/
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Hoovers, (2006). Apple Computer, Inc. Retrieved August 27, 2006, from Company Information Web site: http://www.hoovers.com/apple-computer/
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IMDB, (1999). Movie Database. Retrieved August 27, 2006, from Pirates of Silicon Valley Web site: http://www.imdb.com/title/tt0168122/
Larson, K, Wild, J, & Chiappetta, B (2005). Fundamental Accounting Principles. New York: McGraw-Hill Irwin.
Reuters Fundamentals, (2006, Augt 27). Investing. Retrieved August 27, 2006, from Officers & Directors Web site: http://www.investor.reuters.com/Officers.
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Winthrop Corporation, (2006). Apple Computer, Inc. Retrieved August 27, 2006, from Company Snapshot Web site: http://corporateinformation.wrightanalytics.com
/corpinfo.php?page=037833100
Yahoo Finance, (2006). Yahoo Finance. Retrieved August 27, 2006, from Apple Computer Inc Web site: http://finance.yahoo.com/q?s=AAPL
