Apple Computer, Inc. Company Report
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Company Profile
With its Market Capitalization at 10.8 billion, Apple Computer, Inc. (AAPL), or “The Company”, is a computer giant that markets personal computers, software, peripherals, and computing and communications solutions. It produces a line of desktop and notebook computers, the Mac OS X operating system, the iPod digital music player, and peripherals and software targeting various consumers in the education, arts, and business industries. The Company sells its products through its online store, retailers, resellers, and its own retail stores. As of 5/25/04, Apple operates 80 retail stores. In addition, the Company also sells third-party hardware and software at its retail stores.
With revenues of from the last year totaling at $7.18 billion, revenues rose 33% to $3.92 billion for the six-month period ending 03/04. Net Income before accounting changes was up from $8 million to $109 million. The change in revenues reflects the increase in sales of the iPod and computer accessories, whereas the increase in net income reflects a decrease in restructuring costs. 66% of Company shares are held my Institutions, whereas Insiders hold only 1.06% of them. The largest holder is Lord Abbett & Co at 9.95%.
Stock Price History
3-Year Stock Price Chart
10- Day Stock Price Chart
Over the last year (5/23/03-5/25/04), AAPL stock has appreciated 55% from$18.32/share to $28.41/share, which is about 62.5x that of earnings. The 52-Week change is at 49.24%, with the high trading at $29.58/share on 4/14/04 and the low trading at $16.63/share on 6/9/03. The average trading volume over the last three months is 7,045,272. The Price to Earnings ratio is at a high 62.58, not only indicating that it is fairly priced, but also that it will also give you a higher percentage of the earnings relative to its competitors.
Company Organization
The Company is divided into different sectors: Applications, Finance, Hardware Engineering, Retail, Software Engineering, Software Technology, Worldwide Product Marketing, and Worldwide Sales. Through these various sectors, the Company produces, markets, and sells hardware products, peripheral products, and software products and computer technologies.
Hardware Products
Hardware products offered by Apple include Power Mac, Xserve and Xserve RAID Storage System, Powerbook, iMac, eMac, and iBook. The Power Mac and Powerbook provide high-end power and options for the professional users who demand power and performance, while the iMac, eMac, and iBook provide power, performance, but most importantly, value.
Peripheral Products
The Company sells Apple-branded computer hardware peripherals such as the successful iPod digital music player, iSight digital video cameras, and a wide variety of TFT digital color displays. In addition, the Company also sells a variety of third-party products such as printers, digital video cameras, Personal Digital Assistants (PDA), and other various computing products and supplies through their retail and online stores.
Software Products and Computer Technologies
The Mac OS X version 10.3 is the Companys current operating system (codename Panther) offers a unique UNIX-based operating system. The server version of Panther allows for cross-platform usage, remote control usage, and heavy wireless networking.
The Companys line of professional application software include video editing programs such as Final Cut Pro 4, Shake 3, Logic Platinum, and DVD Studio Pro 2. They are widely used by professionals in the movie and animation industry. Consumer, education, and business-oriented applications include iLife, iChat AV, Final Cut Express, Keynote, and Appleworks 6.2.
The Companys Internet products include the iTunes Music Store, Safari, QuickTime, and .Mac. The iTunes Music Store has had a revolutionary impact on the music industry, while QuickTime has become a standard as a digital media player.
The Company also offers various networking options through Airport Extreme, Bluetooth technology, Rendezvous networking technology, and FireWire technology. The Airport Extreme provides Wi-Fi networking, while Bluetooth provides wireless sharing of files between Macintosh systems. Rendezvous allows users on the same network to access each others computers, while FireWire allows high-speed serial input/out transfers from digital camcorders/cameras to computers.
Competitors
The Company ranks ninth in sales in the Computer Hardware Industry, Technology Sector in the U.S., most of its competition coming from Hewlett-Packard Co. (HPQ), Dell Inc (DELL), and Microsoft Corp. (MSFT). The Companys Revenue Growth at 8.10% is on par with the industry. Relative to its competitors, AAPL only trails MSFT in its Gross Margin at 27.18% (Industry Gross Margin- 20.09%).
Of the top ten companies in its industry in the U.S., The Company ranks third in its share price after International Bus Machine (IBM ) and NCR Corp. (NCR), eighth in Market Capitalization above Seagate Tech (STX) and NCR, and first in its price to earnings ratio.
Apple Computers run on its own UNIX-based Operating System, which thus limiting its market, but also eliminating direct competitors in this specified market. This is evidenced by the Companys significantly lower level of employees, total revenue, EBITDA, and Net Income relative to its competitors.
3-Year Competitor Stock Price Change Chart
2-Year Price Comparison with Competitor and Index
Key:
AAPL= APPLE; HPQ = Hewlett-Packard; ^GSPC= Standard and Poors 500
Financials
In the three fiscal year period starting 9/29/01 and ending 9/27/03, total revenue at Apple Computers, Inc., has risen 15.73%. Cost of revenue has also increased 8.98%. Since total revenue growth has been higher than revenue cost over this period, the gross profit has naturally increased 38.29%. Earnings Before Interest And Taxes (EBIT) has grown 276.92% over this period, largely due to the negative EBIT figure for 2001. The Companys ability to get out and stay out of the red for its EBIT is essential to its growth.