This presentations analysis the effect of unexpected events on Apple's share price

1. Topics in Accounting – case analysis – apple Inc. Tomotaka Brink Fushimi Davide Maraschi Philipp Refior Ben Carrion Schafer

2. Apple – a volatile stock…

3. The Apple Stock – yearly overview Q1 financial data release Jobs takes medical leave Jobs back at work Jobs presents new iPods

4. The Apple Stock – last three months Normal 15-20M Normal 15-20M Peak 30M Low 10-15M Peak 42M Trading Volume Medium 20-30M Stabilized? Press Release Financial Results Q4 Steve Jobs Returns to Stage, new iPods

8. Ratio Analysis: Vertical Cost of sales down Gross margin up General /admin costs down R&D spending up Net income up

10. Estimates for Apple stock price after the release or Q4 results Analysts had been expecting EPS between $1.24 and $1.72, In the end the actual EPS were 1.82 (as from the latest annual report) If we consider that the price was already factoring in the rosiest expectation (1.72) then the increase was 5.8% (1.82 / 1.72 = 5.8%) The price of the stock should have also increased accordingly by 5.8%. Therefore 189.86 (closing price on October 19 th ) + 189.86* (5.8%) = $ 200.87

11. Actual Apple stock price after the release or Q4 results Press Release Financial Results Q4

12. Actual Apple stock price after the release or Q4 results

13. The Apple Stock – Market reaction Overall market reaction ($208.71) exceeded our estimate of $200.87 That could be explained by several factors : New Accounting Rules proposed by FASB (end of August 2009) Instead of spreading iPhone revenue over two years they will be able to report sales for certain gadgets all at once. Analyst seem to believe that under new accounting rules Apple would increase its earnings by 44%  Potential Target Price $235 Although Apple is not required to implement those until 2010, it’s possible that the market has already factored in those expectations.

14. The Apple Stock – Market reaction Press Release Financial Results Q4 One week after the announcement of the financial results the stock began to fall From its peak on the morning of Monday, October 26 th at $205.82 To a low on Tuesday, November 3 rd of $186.71

15. The Apple Stock – Market reaction Press Release Financial Results Q4 Potential reasons for downturn: - Nokia`s lawsuit over breach of patents - Reaction after breaking the psychological $200 mark - Reports of malfunctions of new iPod product

16. The Apple Stock – Market reaction Press Release Financial Results Q4