Apple Financial Analysis

Company Profile

Apple Inc., formerly Apple Computer, Inc., was incorporated under the laws of the State of California on January 3, 1977. Headquartered in Cupertino, California, Apple designs, manufactures and markets personal computers and related software, services, peripherals and networking solutions. The Company also designs, develops and markets a line of portable digital music players along with related accessories and services, including the online sale of third-party audio and video products. Apple Inc's products and services include the Macintosh line of desktop and notebook computers, the Mac OS X operating system, the iPod line of portable digital music players, the iTunes Store, a portfolio of peripherals that support and enhance the Macintosh and iPod product lines, a portfolio of consumer and professional software applications, the Xserve and Xserve RAID server and storage products, and a variety of other services and support offerings. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers and value-added resellers. In addition, Apple also sells a variety of third-party Macintosh and iPod compatible products, including application software, printers, storage devices, speakers, headphones and various other accessories and supplies through its online and retail stores.

The Company manages its business primarily on a geographic basis. Apple Inc.'s, operating segments comprises the Americas, Europe, Japan and Retail. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as the Middle East and Africa. The Retail segment operates Apple-owned retail stores in the United States, Canada, Japan, and the United Kingdom. Other operating segments include Asia-Pacific, which includes Australia and Asia except for Japan, and the Company's subsidiary, FileMaker, Inc.

Business Strategy

The Company is committed to bringing the best personal computing and portable digital music experience to students, educators, creative professionals, business, government agencies, and consumers through its innovative hardware, software, peripherals, services, and Internet offerings. Apple's business strategy leverages its unique ability to design and develop its own operating system, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative industrial design. The Company believes continual investment in research and development is critical to facilitate innovation of new and improved products and technologies. Besides updated to its existing line of personal computers and related software, services, peripherals, and networking solutions, Apple continues to capitalize on the convergence of digital consumer electronics and the personal computer by creating and refining innovations like the iPod and iTunes Stores. Apple's strategy also includes expanding its distribution network to effectively reach more of its targeted customers and provide them with a high-quality sales and after-sales support experience.

Company History

On April 1, 1976, the Apple computer was born. Steven Wozniak, a high school drop-out who worked for Hewlett-Packard, dabbled in computer-design and created what would become the Apple I. His high school buddy Steven Jobs, also a drop-out, worked for Atari and convinced him that the two should form a company to market the new computer, which eventually took off in 1977 with the Apple II. Hobbyists did not take the Apple I very seriously, and Apple did not begin to take off until 1977, when the Apple II debuted at a local computer trade show. The first personal computer to come in a plastic case and include color graphics, the Apple II was an impressive machine. Orders for Apple machines were multiplied by several times after its introduction. And with the introduction in early '78 of the Apple Disk II, the most inexpensive, easy to use floppy drive ever (at the time), Apple sales further increased.

With the increase in sales, however, came an increase in company size, and by 1980, when the Apple III was released, Apple had several thousand employees, and was beginning to sell computers abroad. Apple had taken on a number of more experienced mid-level managers and, more importantly, several new investors, who opted to take seats on the board of directors. Older, more conservative men, the new directors made sure that Apple became a "real company," much to the dismay of many of its original employees.

Following I will include a series of computer designs which were developed through the following years up until the present to show how the computer technology has evolved.

1976 * Apple I

Based on the MOStek 6502 chip, the Apple I included only the circuit board. A tape-interface was sold separately, but you had to build the case. Initial cost: $666.66.

1983 * Lisa

The first personal computer to use a GUI (Graphical User Interface). It contained a Motorola 68000 Processor running at 5 Mhz, 1 MB of RAM, two 5.25" 871k floppy drives, an external 5 MB hard drive, and a built-in 12" 720 x 360 monochrome monitor. Initial cost: $9,995.

1983 * Apple //e

One of the most successful Apple computers ever. It used the 65C02 processor, running at 1.02 Mhz, and came with 64K of RAM, 32K ROM, BASIC (an assembly language interface), and several other hard-coded options. Initial cost: $1,395.

1984 * Mac 128k

The first affordable computer to include a GUI, and using the new 8 MHz Motorola 68000 chip. It came in a small beige case with a built-in black and white monitor, a keyboard, mouse, and a floppy drive that took 400k 3.5" disks--the first personal computer to do so. Initial cost: $2,495.

1989 * Portable

Apple's first attempt at a more easily portable Macintosh. It had a bay for a 3.5" half-height drive, and could support up to two Super Drives. Its active matrix screen (later backlit) made it incredibly expensive. Initial cost: $6,500.

1993 * Color Classic

Identical to the Classic II, except for a color screen, a larger ROM, and a restyled case. Also released as the Performa 250. Initial