Apple company term paper - Essay Example

Apple Inc. Apple Inc. Goes Here al Affiliation Goes Here Apple inc. I. Industry Apple computer is primarily in the computer and peripherals market with such companies as International Business Machines, Sun Microsystems, and Dell Inc. This industry is also flooded with computer clones (generic). Apple estimates that the sales of computers and peripherals will rise 12% for 2007 and 10% for 2008 (Standard and Poor's, 007). There are a lot of competitors that are looking to exploit this market as well. There is an expected rise in demand of computers, peripherals, and communications devices in third world markets. The biggest gain will be in the internet based market. In this market any internet related hardware and software will sell well. In this market the winners will be those who can reduce the costs associated with the internet while still remaining profitable. Many in the industry will most probably be close to the profitability line. It would also make sense that those in this market initially take a loss while promoting their hardware and peripherals (undercutting competitors) but eventually make gains on sales. Apple Inc.'s stock price is the highest in the industry at $166.39 (as of November 26, 2007). That is $61.06 more than its closest competitor International Business Machines (IBM). II. Company Governance Apple Inc.'s operations are overseen by the board of directors. The CEO and senior management reports to this board. The board of directors assures that standards are set and then met. They are responsible to long-term shareholders. They make sure that the company sets standards that ensure its business success. The current board of directors includes Bill Campbell (Chairman and former CEO), Millard Drexler (Chairman and CEO), Albert Gore Jr. (Former Vice President), Steve Jobs (CEO, Apple Founder), Arthur D. Levinson PhD., Dr. Eric Schmidt, and Jerry York. These directors have full access to any employee of the company. Other management in charge of different market segments: Steven P. Jobs> Chief Executive Officer, Director Officer Since: 1998 Age: 52 Bio&Compensation-Reuters TradingActivity-YahooFinance Peter Oppenheimer> Chief Financial Officer, Senior Vice President Officer Since: 07/1996 Age: 44 Bio&Compensation-Reuters TradingActivity-YahooFinance Timothy D. Cook> Chief Operating Officer Officer Since: 03/1998 Age: 46 Bio&Compensation-Reuters TradingActivity-YahooFinance Daniel Cooperman> Senior Vice President, General Counsel, Secretary Officer Since: 11/01/2007 Age: 56 Bio&Compensation-Reuters Philip W. Schiller> Senior Vice President - Worldwide Product Marketing Officer Since: 1997 Age: 47 Bio&Compensation-Reuters TradingActivity-YahooFinance Anthony Fadell> Senior Vice President- iPod Division Age: 38 Bio&Compensation-Reuters Ronald B. Johnson> Senior Vice President - Retail Officer Since: 01/2000 Age: 49 Bio&Compensation-Reuters TradingActivity-YahooFinance Bertrand Serlet> Senior Vice President - Software Engineering Officer Since: 07/08/2003 Age: 46 Bio&Compensation-Reuters TradingActivity-YahooFinance Sina Tamaddon> Senior Vice President - Applications http://finance.google.com/financeq=aapl III. Company Operations Apple Computer began as a small garage operation to a multimillion dollar company. This company has garnered its market share by anticipating what clients want and need. Apple services major clients such as school districts and companies that require servers, work stations, and peripherals. Apple also targets general consumers with laptops and ipods (and much more). 2007 began with Apple Computer changing its name and ticker to Apple Inc. and AAPL. Apple Inc. has gone through many changes since it inception in 1976. Stock market records for this company show that it was listed for the first time in September of 1984. The company has moved beyond offering just computers and peripherals. The company offers a wide variety of hardware and software products, digital music devices and mobile communications devices. Apple Inc.'s primary focus is on personal computers. Apple also sells related peripherals and software. Apple has broadened its horizons by manufacturing and selling portable digital music players, mobile communications devices, and server and storage products. This company has created, and marketed, it's own operating system called Mac OS X. Apple Inc. is "committed to bringing the best personal computing, portable digital music, and mobile communication experience to students, educators, creative professionals, businesses, government agencies, and consumers through its innovative hardware, software, peripherals, services, and internet offerings" (Form 10-K, 2007). Apple is not alone in this industry. Major competitors include Dell Inc. IBM and Sun Microsystems. The market is also saturated with non-brand clones. Apple Inc. is in constant price competition with its competitors in the digital market. Apple is focusing on its music products and mobile communications products as they have a good part of the market share. Apple's fiscal year runs from September to August of the following year. As part of its annual report completed in 2007 Apple reported 197 retail stores in the United States, Canada, Japan, the United Kingdom, and Italy (McGraw-Hill, 2007). Apple's major competitors are in these markets as well. IV. Complete Financial Ratio Analysis Apple Inc. reported its 2007 financial information in its 10-K annual report. Financial information can also be found on several other web-sites such as Standard and Poor's (used in this evaluation. Cash dividends have not been paid out since 1996 when Apple offered convertible debt. Analysis for this report uses data from the past five years (2003 through 2007). Years 2003 through 2006 are located in Appendix A. This report will include the following: Earnings per Share - EPS Price to Earnings Ratio - P/E Projected Earning Growth - PEG Price to Sales - P/S Price to Book - P/B Dividend Payout Ratio Dividend Yield Book Value Return on Equity EPS = Net Earnings/Outstanding shares 2007 EPS = 3496.000/864.595 = 4.04 2006 EPS = 1918.000/844.058 = 2.360 2005 EPS = 1335.000/808.439 = 1.650 2004 EPS = 276.000/743.180 = .370 2003 EPS = 69.000/721.262 = .095 P/E = Stock Price/EPS Recent Stock Price = 166.39 12 Month Trailing EPS = 3.93 166.39/3.93 = 42.34 Projected Earning Growth (PEG) = P/E / (Projected Growth in Earnings) PEG = 42.34/10 = 4.23 Price to Sales = P/S = Stock Price / Sales Price Per Share P/S = 166.39/6.2 = 26.84 Price to Book = P/B = Share Price / Book Value Per Share P/B = 166.39/10.3 = 16.16 Dividend Payout Ratio = DPR = Dividends per Share / EPS DPR = 0/4.04 = 0 Dividend Yield = Annual Dividend Per Share / Stock's Price per Share Dividend Yield = 0/166.39 = 0 Book Value = Assets - Liabilities = 25347 - 10815 = 14532 Return on Equity = Net Income/Book Value = 3496/14532 = .241 = 24.1% V. Stock Market History AAPL is an S&P 4 star rated stock. As the chart below shows, Apple Inc. is an outlier in its industry (IBM) and in the stock market in general. The Dow Jones Industrial Average's trend shows slow growth as does the Standard and Poor's. Apple Inc. has had consistent growth since mid 2003. This can be attributed to Apple's sales of 'ipods' and other popular items offered by Apple Inc. Continued success for this company would include research and development of products and services that are in demand. Apple Inc.'s stock market history goes back to September 1984. Apple's trend line for that period shows slow steady growth along the same line as others in the industry. In mid 2003 Apple's sales, and stock prices, took off. The stock market fell quite a bit 2002 to 2003 and slowly recovered (Apple included). For most it was a slow recovery. For Apple Inc. the recovery came more quickly and outpaced others in its market sector. VI. Bond Ratings Records show that in 1996 Apple Computer advertised that they would offer $575,000,000 in convertible debt. During this timeframe Apple was not doing so well. The convertible debt would help shore up operations until more profits came in. Apple's notes were due in 2001 and paid 6% (62 basis points). This was just slightly lower than a 5 year U.S. Treasury note at the time. The notes were convertible to stock at the rate of $29.25 a share. When issued the bonds were rated as junk bonds (The New York Times, 1996). VII. Management's Assessment in Annual Report The most recent annual report (10-K) for the fiscal year ending on September 29th 2007 was filed on November 11th of 2007. Management reported five year earnings: Five fiscal years ended September 29, 2007 (In millions, except share and per share amounts) 2007 2006 2005 2004 2003 Net sales $ 24,006 $ 19,315 $ 13,931 $ 8,279 $ 6,207 Net income $ 3,496 $ 1,989 $ 1,328 $ 266 $ 57 Earnings per common share: Basic $ 4.04 $ 2.36 $ 1.64 $ 0.36 $ 0.08 Diluted $ 3.93 $ 2.27 $ 1.55 $ 0.34 $ 0.08 Cash dividends declared per common share $ - $ - $ - $ - $ - Shares used in computing earnings per share (in thousands): Basic 864,595 844,058 808,439 743,180 721,262 Diluted 889,292 877,526 856,878 774,776 723,352 Cash, cash equivalents, and short-term investments $ 15,386 $ 10,110 $ 8,261 $ 5,464 $ 4,566 Total assets $ 25,347 $ 17,205 $ 11,516 $ 8,039 $ 6,817 Long-term debt (including current maturities) $ - $ - $ - $ - $ 304 Total liabilities $ 10,815 $ 7,221 $ 4,088 $ 2,976 $ 2,594 Shareholders' equity From September 29th 2007 10-K Report Management has pointed out in the 10-K report that Apple Inc. intends on continuing to provide products and services to support the growing digital marketplace. This includes corporations and consumers. Apple will continue to target market the 'digital lifestyle'. It will do so by expanding its distribution network to include resellers. Apple has targeted the resale market by offering a sales consultant program. Apple will also continue to target market schools and educators. Apple Inc. management realizes that there are third parties that develop and market software for Apple's Mac computers. Management intends on marketing to these third parties while honoring the creativity of its own software developers. Apple is currently marketing a new rollout called 'iLife'. This software offers users a digital lifestyle application suite. It features ipod, iphoto, iDVD, and other programs. Management will focus on target marketing existing hardware devices (Ipods, MacBook, etc) while working to develop new technology and products. The company continues to focus on wireless communications, connectivity, and networking. Apple management acknowledges that they are up against aggressive competition in all segments of the market. Other companies offer products very similar to Apple's (digital music and video services) but Apple management believes that Apple hardware and software are superior to similar products in the marketplace. To maintain its superior market stance Apple will continue aggressive research and development to optimize usage of current devices and to create new devices that have marketing potential. Apple's primary objective is to stay ahead and competitive in the marketplace. Apple plans to do this with new product offerings and transitions. VIII. My Assessment of the Company's Present and Future Prospects. Would You Buy Apple's Stock and Why Apple Inc., like its garaged predecessor: Apple Computer, intends to stay in the lead in the hardware and software business. For those who invested in Apple Computer in 1984 the ride has been incredible! The stock price then was $3.02. It has risen to $166.39 since then because of constant new products and innovations. If you bought 10 shares of stock in 1984 for a total of $30.29 your stocks would be worth $1663.90. today. Apple is rated as a four star buy by Standard & Poor's and five stars by Morningstar. This company should see continued growth. Of course, its continued growth is contingent upon Apple's ability to keep ahead of other when it comes to product innovation and product development. The investor should employ a buy and hold strategy for this stock because day to day the stock price fluctuates up and down with the total market. Using the buy and hold strategy means that the investor can take advantage of Apple's long term trend upward. In September Apple Computer changed its name to Apple Inc., changed its ticker to AAPL, and changed its classification from 'electronics' to 'hardware'. All these changes indicate a corporation that is changing. The changes are positive and indicate ownership of its place in the hardware market. The following graph shows Apple in comparison to other major players in the market. They include Dell, Avid Technology, Hewlett-Packard, and Sun Microsystems. IBM was compared earlier in this paper. As the graph shows, Apple is making gains while the others are small, but respectable gains. If Apple can invest its earning in research and development then there is a good chance that apple will remain a good investment option. References American Psychological Association (2001). Publication manual of the American Psychological Association (5th ed.). Washington, DC: American Psychological Association. Apple Inc. (2007). Investor Relations. Governance Highlights, Committee Composition, Board of Directors. Retrieved November 26, 2007 From http://phx.corporate-ir.net/phoenix.zhtmlc=107357&p=irol-govHighlights Form 10-K. Apple Inc. (2007). Retrieved November 26, 2007 From http://emi.compustat.com/cgi-irwinus-doc/docserver.cgikeytype=&keyval=sr_AAPL_tree_di%3Aname;%2Ddate&doctype=DI&docformat=html&ie=.html Fisher, Lawrence. (1996). Credit Markets; Apple Plans an Offering of 6%. Retrieved November 26, 2007 From http://query.nytimes.com/gst/fullpage.htmlres=9F0CE4D91F39F936A35755C0A960958260&n=Top/News/Business/Companies/Apple%20Inc Hoover's (2007). Apple Inc. Annual Balance Sheet-Hoover's. Retrieved November 26, 2007 From http://www.hoovers.com/apple/--ID__12644,period__A--/free-co-fin-balance.xhtml Standard and Poor's Stock Report SubIndustry Page: Apple Computer. Retrieved November 26, 2007 From http://emi.compustat.com/cgi-irwinus-auth/mihome.cgitree=aapl&submitit=Go%21&go=Go%21&tab=company Yahoo Beta Charts and Graphs. Retrieved from www.finance.yahoo.com and http://finance.yahoo.com/q/bct=5y&s=AAPL&l=on&z=m&q=l&c=avid%2C+dell%2C+hpq%2Cjavad Appendix A. Table 1 ANNUAL BALANCE SHEET % Change APPLE INC SIC: 3571 (Electronic Computers) 1 Infinite Loop GICS: 45202010 (Computer Hardware) Cupertino, CA 95014 S&P Long-Term Issuer Credit Rating: Ticker: AAPL S&P Short-Term Issuer Credit Rating: Fiscal Year: 9 Latest Q Sep07 Sep07 Sep06 Sep05 Sep04 ASSETS Cash & Short-Term Investments 0.000 52.186 22.382 51.190 19.667 Net Receivables 0.000 41.617 116.845 24.952 10.526 Inventories 0.000 28.148 63.636 63.366 80.357 Prepaid Expenses - - - - - Other Current Assets (52.147) 326.301 91.459 27.727 39.683 ------------------ ------------------ ------------------ ------------------ --------------- Total Current Assets 0.000 51.327 40.864 45.996 19.840 Gross Plant, Property & Equipment - - 40.108 14.099 10.562 Accumulated Depreciation - - 19.578 12.352 17.030 ------------------ ------------------ ------------------ ------------------ --------------- Net Plant, Property & Equipment 0.000 43.013 56.793 15.559 5.680 Investments at Equity - - - - - Other Investments - - - (100.000) (72.000) Intangibles - 90.395 84.375 (1.031) (11.009) Deferred Charges - - - - - Other Assets 27.578 523.469 (42.012) 78.270 30.759 ------------------ ------------------ ------------------ ------------------ --------------- TOTAL ASSETS 0.000 47.323 48.948 43.491 18.122 LIABILITIES Long Term Debt Due In One Year - - - - (100.000) Notes Payable - - - - - Accounts Payable 0.000 46.608 90.556 22.605 25.737 Taxes Payable - - - - - Accrued Expenses - 25.011 93.937 75.766 29.002 Other Current Liabilities 207.021 89.008 48.902 (7.904) 47.826 ------------------ ------------------ ------------------ ------------------ --------------- Total Current Liabilities 0.000 43.703 85.735 30.000 13.704 Long Term Debt - - - - - Deferred Taxes - - 23.701 - - Investment Tax Credit - - - - - Minority Interest - - - - - Other Liabilities 0.000 143.089 25.939 (0.340) 25.106 ------------------ ------------------ ------------------ ------------------ --------------- TOTAL LIABILITIES 0.000 49.771 76.769 37.357 14.738 EQUITY Preferred Stock - Redeemable - - - - - Preferred Stock - Nonredeemable - - - - - ------------------ ------------------ ------------------ ------------------ --------------- Total Preferred Stock - - - - - Common Stock 0.000 23.261 23.686 40.056 30.530 Capital Surplus - - 100.000 35.484 (50.000) Retained Earnings 0.000 62.800 40.549 50.847 12.548 Less: Treasury Stock - - - - - ------------------ ------------------ ------------------ ------------------ --------------- Common Equity 0.000 45.553 33.726 47.084 20.199 ------------------ ------------------ ------------------ ------------------ --------------- TOTAL EQUITY 0.000 45.553 33.726 47.084 20.199 ------------------ ------------------ ------------------ ------------------ --------------- TOTAL LIABILITIES & EQUITY 0.000 47.323 48.948 43.491 18.122 Common Shares Outstanding 0.000 1.995 2.424 6.659 6.740 Table 2 ($ MILLIONS) APPLE INC SIC: 3571 (Electronic Computers) 1 Infinite Loop GICS: 45202010 (Computer Hardware) Cupertino, CA 95014 S&P Long-Term Issuer Credit Rating: Ticker: AAPL S&P Short-Term Issuer Credit Rating: Fiscal Year: 9 Latest Q Sep07 Sep07 Sep06 Sep05 Sep04 Sep03 ASSETS Cash & Short-Term Investments 15,386.000 15,386.000 10,110.000 8,261.000 5,464.000 4,566.000 Net Receivables 4,029.000 4,029.000 2,845.000 1,312.000 1,050.000 950.000 Inventories 346.000 346.000 270.000 165.000 101.000 56.000 Prepaid Expenses NA @CF 208.000 0.000 0.000 0.000 Other Current Assets 2,195.000 4,587.000 1,076.000 562.000 440.000 315.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- Total Current Assets 21,956.000 21,956.000 14,509.000 10,300.000 7,055.000 5,887.000 Gross Plant, Property & Equipment @NA @NA 2,075.000 1,481.000 1,298.000 1,174.000 Accumulated Depreciation @NA @NA 794.000 664.000 591.000 505.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- Net Plant, Property & Equipment 1,832.000 1,832.000 1,281.000 817.000 707.000 669.000 Investments at Equity NA 0.000 0.000 0.000 0.000 0.000 Other Investments NA 0.000 0.000 0.000 1.400 5.000 Intangibles NA 337.000 177.000 96.000 97.000 109.000 Deferred Charges NA @CF 1,042.000 0.000 0.000 0.000 Other Assets 1,559.000 1,222.000 196.000 338.000 189.600 145.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- TOTAL ASSETS 25,347.000 25,347.000 17,205.000 11,551.000 8,050.000 6,815.000 LIABILITIES Long Term Debt Due In One Year 0.000 0.000 0.000 0.000 0.000 304.000 Notes Payable NA 0.000 0.000 0.000 0.000 0.000 Accounts Payable 4,970.000 4,970.000 3,390.000 1,779.000 1,451.000 1,154.000 Taxes Payable 0.000 0.000 0.000 0.000 0.000 0.000 Accrued Expenses NA 2,919.000 2,335.000 1,204.000 685.000 531.000 Other Current Liabilities 4,329.000 1,410.000 746.000 501.000 544.000 368.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- Total Current Liabilities 9,299.000 9,299.000 6,471.000 3,484.000 2,680.000 2,357.000 Long Term Debt 0.000 0.000 0.000 0.000 0.000 0.000 Deferred Taxes 619.000 @CF 381.000 308.000 @CF @CF Investment Tax Credit @CF 0.000 0.000 0.000 0.000 0.000 Minority Interest 0.000 0.000 0.000 0.000 0.000 0.000 Other Liabilities 897.000 897.000 369.000 293.000 294.000 235.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- TOTAL LIABILITIES 10,815.000 10,815.000 7,221.000 4,085.000 2,974.000 2,592.000 EQUITY Preferred Stock - Redeemable @CF 0.000 0.000 0.000 0.000 0.000 Preferred Stock - Nonredeemable 0.000 0.000 0.000 0.000 0.000 0.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- Total Preferred Stock 0.000 0.000 0.000 0.000 0.000 0.000 Common Stock 5,368.000 5,368.000 4,355.000 3,521.000 2,514.000 1,926.000 Capital Surplus 0.000 0.000 0.000 (60.000) (93.000) (62.000) Retained Earnings 9,164.000 9,164.000 5,629.000 4,005.000 2,655.000 2,359.000 Less: Treasury Stock 0.000 0.000 0.000 0.000 0.000 0.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- Common Equity 14,532.000 14,532.000 9,984.000 7,466.000 5,076.000 4,223.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- TOTAL EQUITY 14,532.000 14,532.000 9,984.000 7,466.000 5,076.000 4,223.000 ------------------ ------------------ ------------------ ------------------ ------------------ -------------- TOTAL LIABILITIES & EQUITY 25,347.000 25,347.000 17,205.000 11,551.000 8,050.000 6,815.000 Common Shares Outstanding 872.329 872.329 855.263 835.019 782.888 733.454 Table 3 ANNUAL INCOME STATEMENT (MILLIONS, EXCEPT PER SHARE) APPLE INC SIC: 3571 (Electronic Computers) 1 Infinite Loop GICS: 45202010 (Computer Hardware) Cupertino, CA 95014 S&P Long-Term Issuer Credit Rating: Ticker: AAPL S&P Short-Term Issuer Credit Rating: Fiscal Year: 9 LTM Sep07 Sep07 Sep06 Sep05 Sep04 Sep03 Sales 24,006.000 24,006.000 19,315.000 13,931.000 8,279.000 6,207.000 Cost of Goods Sold 15,535.000 15,568.000 13,525.000 9,738.000 5,870.500 4,387.200 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Gross Profit 8,471.000 8,438.000 5,790.000 4,193.000 2,408.500 1,819.800 Selling, General, & Administrative Exp. 3,745.000 3,745.000 3,145.000 2,393.000 1,910.000 1,683.000 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Operating Income Before Deprec. 4,726.000 4,693.000 2,645.000 1,800.000 499.000 136.800 Depreciation,Depletion,&Amortization 317.000 284.000 192.000 150.000 149.500 111.800 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Operating Profit 4,409.000 4,409.000 2,453.000 1,650.000 349.000 25.000 Interest Expense 0.000 0.000 0.000 0.000 3.000 8.000 Non-Operating Income/Expense 599.000 599.000 365.000 165.000 60.000 101.000 Special Items 0.000 0.000 0.000 0.000 (23.000) (26.000) ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Pretax Income 5,008.000 5,008.000 2,818.000 1,815.000 383.000 92.000 Total Income Taxes 1,512.000 1,512.000 829.000 480.000 107.000 24.000 Minority Interest 0.000 0.000 0.000 0.000 0.000 0.000 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Income Before Extraordinary Items & Discontinued Operations 3,496.000 3,496.000 1,989.000 1,335.000 276.000 68.000 Preferred Dividends 0.000 0.000 0.000 0.000 0.000 0.000 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Available for Common 3,496.000 3,496.000 1,989.000 1,335.000 276.000 68.000 Savings Due to Common Stock Equiv. 0.000 0.000 0.000 0.000 0.000 0.000 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Adjusted Available for Common 3,496.000 3,496.000 1,989.000 1,335.000 276.000 68.000 Extraordinary Items 0.000 0.000 0.000 0.000 0.000 1.000 Discontinued Operations 0.000 0.000 0.000 0.000 0.000 0.000 ----------------- ------------------- ------------------ ------------------ ------------------ --------------- Adjusted Net Income 3,496.000 3,496.000 1,989.000 1,335.000 276.000 69.000 Earnings Per Share Basic - Excluding Extra Items & Disc Op 4.040 4.040 2.360 1.650 0.370 0.095 Earnings Per Share Basic - Including Extra Items & Disc Op 4.040 4.040 2.360 1.650 0.370 0.095 Earnings Per Share Diluted - Excluding Extra Items & Disc Op 3.930 3.930 2.270 1.560 0.355 0.095 Earnings Per Share Diluted - Including Extra Items & Disc Op 3.940 3.930 2.270 1.560 0.355 0.095 EPS Basic from Operations 4.040 4.040 2.330 1.550 0.395 0.120 EPS Diluted from Operations 3.930 3.930 2.240 1.460 0.370 0.120 Dividends Per Share 0.000 0.000 0.000 0.000 0.000 0.000 Com Shares for Basic EPS 870.881 864.595 844.058 808.439 743.180 721.262 Com Shares for Diluted EPS 895.666 889.292 877.526 856.780 774.622 726.932 Table 4 PROFITABILITY APPLE INC 1 Infinite Loop Cupertino, CA 95014 Ticker: AAPL Fiscal Year: 9 Sep07 Sep06 Sep05 Sep04 Sep03 Sep02 Sep98 Period Averages Geometric Mean AVERAGE RETURNS 5-YR 10-YR 5-YR 10-YR Pretax ROA (Total) 23.538 19.599 18.519 5.153 1.403 1.412 7.721 13.643 10.910 9.082 @NC Pretax ROA (Fixed) 321.748 268.637 238.189 55.669 14.264 14.684 78.897 179.701 152.935 110.329 @NC Pretax ROA (Tangible) 23.826 19.787 18.704 5.225 1.428 @NC @NC 13.794 @NC 9.197 9.197 Net ROA 16.432 13.834 13.622 3.713 1.037 1.055 7.252 9.728 8.223 6.536 @NC Pretax ROI 40.855 32.298 28.943 8.237 2.131 2.012 13.861 22.493 17.763 14.631 @NC Net ROI 28.520 22.797 21.288 5.936 1.575 1.503 13.019 16.023 13.394 10.529 @NC Pretax ROE 40.855 32.298 28.943 8.237 2.212 2.171 25.885 22.509 20.097 14.740 @NC Net ROE 28.520 22.797 21.288 5.936 1.635 1.622 24.312 16.035 15.472 10.608 @NC Relative Net ROE @NC @NC @NC @NC @NC 17.469 166.249 @NC 81.600 @NC @NC --------------- -------------------------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ --------------- --------------- --------------- --------------- STOCK PRICE DATA Price-High 155.000000 86.400000 54.560000 19.635000 11.660000 13.085000 10.938000 Price-Low 72.600000 47.870000 18.825000 9.625000 6.360000 6.900000 3.188000 Price-Close 153.470000 76.980000 53.610000 19.375000 10.360000 7.250000 9.531000 Relative Price-Close 10.061 5.759 4.405 1.738 1.026 0.863 0.937 Price/EPS Basic from Ops-High 38.366 37.082 35.200 49.709 97.167 109.042 18.382 Price/EPS Basic from Ops-Low 17.970 20.545 12.145 24.367 53.000 57.500 5.357 Price/EPS Basic from Ops-Close 37.988 33.039 34.587 49.051 86.333 60.417 16.019 P/E Ratio-High 38.366 36.610 33.067 53.068 122.737 145.389 18.697 56.770 25.153 49.676 @NC P/E Ratio-Low 17.970 20.284 11.409 26.014 66.947 76.667 5.449 28.525 11.815 23.549 @NC P/E Ratio-Close 37.988 32.619 32.491 52.365 109.053 80.556 16.293 52.903 24.608 47.023 @NC Relative P/E Ratio-Close 199.464 195.469 180.486 272.440 421.267 297.457 61.021 267.416 124.895 252.254 @NC Price/Book-High 9.304 7.401 6.102 3.028 2.025 2.294 3.964 5.572 4.717 4.811 4.160 Price/Book-Low 4.358 4.101 2.105 1.484 1.105 1.210 1.155 2.631 2.040 2.281 1.794 Price/Book-Close 9.213 6.594 5.996 2.988 1.799 1.271 3.455 5.318 3.830 4.554 3.123 Relative Price/Book-Close @NA @NA @NA @NA @NA 49.067 91.683 @NC @NC @NC 60.795 Price/Sales-High 5.632 3.826 3.270 1.857 1.378 1.636 0.996 3.193 2.563 2.826 2.259 Price/Sales-Low 2.638 2.120 1.128 0.910 0.752 0.863 0.290 1.510 1.141 1.340 0.974 Price/Sales-Close 5.577 3.409 3.213 1.832 1.224 0.906 0.868 3.051 2.079 2.675 1.696 Price/Cash Flow-High 35.770 33.881 30.679 36.127 47.564 51.333 14.083 36.804 44.364 36.399 36.028 Price/Cash Flow-Low 16.754 18.772 10.585 17.709 25.944 27.069 4.104 17.953 21.097 17.255 15.533 Price/Cash Flow-Close 35.417 30.187 30.145 35.649 42.261 28.442 12.272 34.732 32.288 34.455 27.044 APPLE INC Sep07 Sep06 Sep05 Sep04 Sep03 Sep02 Sep98 5-YR 10-YR 5-YR 10-YR Earnings Yield 2.611 3.021 2.982 1.820 0.895 1.249 5.995 2.266 3.289 2.073 @NC Dividend Yield 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 @NC @NC Relative Dividend Yield 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 @NC @NC Dividend Payout Ratio @NA 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 @NC @NC Book Value 16.659 11.674 8.941 6.484 5.758 5.704 2.759 9.903 7.416 9.172 6.602 Beta 1.325 1.515 1.530 1.804 1.650 @NA @NA 1.565 @NC 1.557 1.557 Reinvestment Rate 24.057 19.922 17.881 5.437 1.610 1.587 18.819 13.782 12.687 9.442 @NC Tax Rentention Rate 69.808 70.582 73.554 72.063 73.913 74.713 93.921 71.984 76.059 71.966 75.685 Earnings Retention Rate 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 Relative Earnings Retention @NA 108.384 109.026 112.508 116.325 120.544 120.150 111.561 114.501 111.516 114.405 --------------- -------------------------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ --------------- --------------- --------------- --------------- FINANCIAL LEVERAGE Leverage 1.736 1.648 1.563 1.599 1.576 1.537 2.999 1.624 1.790 1.623 1.753 Net Borrowing Power @NA 15.441 11.834 8.664 7.413 6.748 4.477 10.838 8.235 10.408 7.716 LT Debt % Capital 0.000 0.000 0.000 0.000 0.000 7.164 36.749 0.000 6.701 @NC @NC Total Debt % Capital 0.000 0.000 0.000 0.000 7.199 7.164 36.749 1.440 7.421 @NC @NC LT Debt % Common Equity 0.000 0.000 0.000 0.000 0.000 7.717 63.941 0.000 9.734 @NC @NC Current Ratio 2.361 2.242 2.956 2.632 2.498 3.250 2.433 2.538 2.733 2.526 2.711 Quick Ratio 2.088 2.002 2.748 2.431 2.340 2.957 2.141 2.322 2.497 2.307 2.471 Interest Coverage Ratio @NC @NC @NC 93.000 9.500 6.909 5.984 @NC 23.757 @NC @NC Times Interest Earned @NC @NC @NC 128.667 12.500 8.909 6.306 @NC 31.788 @NC @NC --------------- -------------------------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ --------------- --------------- --------------- --------------- GROWTH RATES 5-YR 10-YR Sales 24.287 38.648 68.269 33.382 8.098 7.067 (16.099) 37.235 13.058 28.036 @NC Net Income 75.767 48.989 383.696 305.882 4.615 275.676 129.569 146.868 @NC 72.555 @NC EPS (Basic) 71.186 43.030 345.946 289.474 5.556 263.636 128.227 136.678 @NC 70.195 @NC Cash Flow 72.695 45.348 245.006 163.922 13.289 413.793 145.415 105.776 @NC 70.643 @NC Capital Spending 11.872 152.692 47.727 7.317 (5.747) (25.000) (13.208) 39.925 30.835 @NC @NC Reinvested Earnings 62.800 40.549 50.847 12.548 3.647 1.698 55.616 33.012 24.903 22.622 @NC Equity Capital 45.553 33.726 47.084 20.199 3.126 4.464 36.833 30.437 23.056 21.475 @NC Total Assets 47.323 48.948 43.491 18.122 8.209 4.601 1.323 33.458 17.120 27.236 @NC APPLE INC Period Averages Geometric Mean Sep07 Sep06 Sep05 Sep04 Sep03 Sep02 Sep98 5-YR 10-YR 5-YR 10-YR TURNOVER ANALYSIS Inventory 50.545 62.184 73.218 74.783 86.875 143.607 16.897 69.521 99.629 68.381 81.393 Receivables 6.985 9.293 11.796 8.279 8.194 11.139 5.971 8.909 8.648 8.772 8.476 Total Assets 1.128 1.343 1.421 1.114 0.947 0.932 1.394 1.191 1.175 1.178 1.156 --------------- -------------------------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ --------------- --------------- --------------- --------------- % OF SALES Research & Development 3.258 3.686 3.833 5.907 7.588 7.785 5.218 4.854 5.538 4.602 5.278 Advertising @NA 1.750 2.060 2.488 3.109 3.640 2.558 2.352 3.043 2.298 2.913 COGS 64.850 70.023 69.902 70.908 70.681 70.028 73.237 69.273 70.748 69.236 70.703 Pretax Income 20.861 14.590 13.028 4.626 1.482 1.515 5.538 10.918 8.537 7.707 @NC Net Margin 14.563 10.298 9.583 3.334 1.096 1.132 5.201 7.775 6.416 5.546 @NC --------------- -------------------------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ --------------- --------------- --------------- --------------- PER EMPLOYEE Sales 1012.911 956.851 828.240 616.639 457.541 469.079 614.819 774.437 673.583 743.031 648.417 Net Income 147.511 98.534 79.370 20.557 5.013 5.310 31.978 70.197 51.378 41.211 @NC Total Assets 1069.494 852.323 686.742 599.583 502.359 514.500 443.858 742.100 630.561 716.288 608.607 CURRENT INFORMATION MARKET RETURNS RELATIVE RELATIVE RELATIVE Price-High 190.120000 Price-High 12.063 P/E Ratio 47.017 P/E Ratio 262.978 Total Market Return-5 Yrs 88.248 % Total Market Rtn-5 Yrs 642.218 % Price-Low 152.930000 Price-Low 10.267 Price/Book 11.402 Market/Book @NA Total Market Return-10 Yrs 46.200 % Total Market Rtn-10Yrs 655.928 % Price-Close 189.950000 Price-Close 12.260 Div Yield 0.000 Div Yield 0.000 Price Change-5 Yrs 88.248 % Price Change-5 Yrs 753.741 % Price Change-10Yrs 46.200 % Price Change-10 Yrs 861.895 % Read More