Apple Presentation Final-20151210-151407512

introduction
• The story of Apple starts in 1976
• • Apple were the first company to release a home
computer
• • Apple is now a multinational corporation that creates:
• - Consumer electronics
• - Computer software
• - Commercial servers

Founder of Apple Inc.
• The founder Steve Wozniak; a brilliant engineer, who developed
his own computer at home which was the first of it’s kind
• Steve jobs (a good friend of Wozniak’s) was also interested in
computers and urged Wozniak to sell his new home computer
• Jobs and Wozniak decided to go into business April 1st 1976 as
‘Apple Computers Inc.

The Apple I
• Released April 1st 1976
• This computer was the first to use a keyboard
and could be connected to a T.V screen which was
to start a revolution

• The Apple II is an 8-bit home computer; one of the first
highly successful mass-produced microcomputers
• The Apple III was a business-oriented personal
computer that was intended as the successor to the
Apple II series
• The Apple Lisa : Development of the Lisa began in
1978 and was released in 1983

• The Macintosh• Released in 1984
• The Macintosh II• In 1987 the Mac II was the first
computer to have computer graphics
• The Macintosh Portable• In 1989 the Macintosh
Portable was Apple’s first attempt at building a
portable computer.

• The PowerBook 100• In 1991 the PowerBook 100
became the worlds first modern laptop
• Quadra 950 • The Macintosh Quadra 950 was the
third desktop computer in Apple Computers ‘Quadra’
line
• The PowerMac 6100• Power Macintosh 6100 was first
introduced in 1994

• The iMac• The Original iMac was a revolutionary
computer• The traditional computer tower was
integrated into the monitor• It was introduced in 1984
• iPod• In 2001 Apple released the iPod• The iPod is the
most popular selling mp3 player in world

• iTunes• In 2003 the iTunes music store was launched for both
Mac & Windows• This online music store allowed people to easily
and legally buy songs over the internet for the first time
• The iMac’s• In 2006 when the first Intel iMac launched, it was
clear that Apple had made a good choice• IBM had failed to keep
pace with it’s Power PC G5 chip. The new core2 duo chips were
vastly superior for performance.

• The iPhone• The iPhone was widely rumored before
its launch in 2007• Used the same operating system
as the Mac• Multi touch display to control it• Amazing
internet experience on a phone• The iPhone has
became the worlds most popular phone

• The iPad• In 2010 Apple announced the iPad• A new
class of device that fits between a smart phone and a
full computer, allowing an unparalleled internet
experience and great applications designed
specifically for multi touch• The worlds most popular
electronic tablet

Mission Statement
Apple designs Macs, the best personal computers in the
world, along with OS X, iLife, iWork and professional
software. Apple leads the digital music revolution with its
iPods and iTunes online store. Apple has reinvented the
mobile phone with its revolutionary iPhone and App store,
and is defining the future of mobile media and computing
devices with iPad."

Apple’s Vision Statement
• “We believe that we are on the face of the earth to make great
products and that’s not changing. We are constantly focusing
on innovating. We believe in the simple not the complex. We
believe that we need to own and control the primary
technologies behind the products that we make, and participate
only in markets where we can make a significant contribution.
We believe in saying no to thousands of projects, so that we
can really focus on the few that are truly important and
meaningful to us. We believe in deep collaboration and cross-
pollination of our groups, which allow us to innovate in a way
that others cannot. And frankly, we don’t settle for anything
less than excellence in every group in the company, and we
have the self- honesty to admit when we’re wrong and the
courage to change. And I think regardless of who is in what
job those values are so embedded in this company that Apple
will do extremely well.”

Four Pillar Strategy
• Offer a small number of products.
• Focus on the high end
• Give priority to profits over market share
• Create a halo effect that makes people starve for new Apple
products

Competitive Strategy
• Apple attempts to increase market demand for its products
through differentiation. Apple has continuously succeeded in
creating demand for its products, giving the company power
over prices through product differentiation, innovative
advertising, ensured brand loyalty, and hype around the launch
of new products. By focusing on customers willing to pay
more and maintaining a premium price at the cost of unit
volume, Apple also set up an artificial entry barrier to
competitors.

Competitive Strategy Contd.
• Apples ability to quickly adjust, enter and dominate new
markets have shown to be a part of it's competitive advantage.
They have shifted from a computer company, to media devices
(ipod/ipad) and now smart phones.
• They year by year invest more in research and development.
Apple continues to believe that focused investments in R&D
are critical to its future growth and competitive position in the
marketplace and are directly related to timely development of
new and updated products that are central to the Company’s
core business strategy.

HR Strategy
• "Much of the Company’s future success depends on the
continued availability and service of key personnel, including
its Chief Executive Officer, executive team and other highly
skilled employees.”
• Apple's new CEO Tim Cook strongly believes in putting the
right person in the right role. They only want hard working
innovative workers who are committed to work, apple and
perfection.
• They many times recruit high quality innovative workers from
other companies.

Senior Vice President of
Online and Retail Stores

Angela Ahrendts
• She has increased Retail employee significantly since she
joined Apple. Unlike John Browett who inflamed Apple’s
retail staff by cutting work hours and benefit.
• Ahrendts launched Share Your Ideas, an internal app in which
they can propose improvements or lodge complaints.
• Apple says retail employee satisfaction has risen since
Ahrendts arrived, and the latest numbers are the highest
they’ve ever been.

Acquisition of Beats
•Last year, digital track sales fell by 6 percent, while
streaming music consumption skyrocketed by 32 percent,
according to a report from venture capital
firm Kleiner Perkins Caufield & Byers.
•Apple CEO Tim Cook said that Apple"could build about
anything that you could dream of," adding that acquiring
Beats would give them a "head start" and add "kindred
spirits" to the company

The company products include the IPod, the
IPad, the Mac (PC and laptop), IPhone ,
Apple TV (released this year in 2015), Apple
Watch and all accessories that are necessary
for each product. The company’s services
include Apple Care, ICloud, Apple Pay, and
internet services such as the ITunes Store.
Also, The Apple Company has its own
operating systems such as iOS, OS X, tvOS,
and WatchOS which are used in the
products they create.

2015 Change 2014 Change 2013 Change 2012 Change 2011
$93,864 N/A $65,232 4% $62,739 9% $57,512 50% $38,315
$50,337 N/A $40,929 8% $37,883 4% $36,323 31% $27,778
$58,715 N/A $29,846 17% $25,417 13% $22,533 78% $12,690
$15,706 N/A $14,982 11% $13,462 27% $10,571 94% $5,437
$15,093 N/A $10,344 -8% $11,181 4% $10,741 8% $9,902
$21,462 6% $20,228 7% $18,828 33% $14,127
$233,715 28% $ 182,795 7%
170,910$ 9% 156,508$ 45% 108,249$Totalnetsales(in
millions)
Americas
Europe
GreaterChina(a)
Japan
RestofAsiaPacific
Retail
Net Sales byOperating Segment:

Percentage of sales by each Operating Segment
2015 2014 2013 2012 2011
40% 36% 37% 37% 35%
22% 22% 22% 23% 26%
26% 16% 15% 14% 12%
7% 8% 8% 7% 5%
6% 6% 7% 7% 9%
12% 12% 12% 14%
$108,249
Total net sales (in
millions)
$233,715 182,795$
$170,910 $156,508
Europe
Greater China (a)
Japan
Rest of Asia Pacific
Retail
Net Sales by Operating Segment:
Americas

Americas Europe GreaterChina(a) Japan RestofAsiaPacific
$62,016.40 $33,333.82 $38,915.29 $10,387.75 $10,000.14
$9,290.80 $4,993.81 $5,829.98 $1,556.21 $1,498.14
$10,188.40 $5,476.27 $6,393.22 $1,706.56 $1,642.88
$7,963.60 $4,280.44 $4,997.16 $1,333.90 $1,284.13
$4,026.80 $2,164.41 $2,526.82 $674.49 $649.32
Totalnetsales(in
millions)
$93,486 $50,248.75 $58,662.47 $15,658.91
$15,074.61
OtherProducts
Iphone
Ipad
Mac
Ipod
Services
Operating Segments:
Year Ended 2015
NetSalesbyProduct:

Americas Europe GreaterChina(a) Japan RestofAsiaPacific Retail
$16,283.29 $11,821.49 $5,381.76 $2,299.90 $4,139.82 $6,209.73
$6,785.47 $4,926.18 $2,242.66 $958.40 $1,725.12 $2,587.68
$7,711.18 $5,598.23 $2,548.61 $1,089.15 $1,960.47 $2,940.71
$2,638.36 $1,915.42 $872.00 $468.65 $670.77 $1,006.16
$3,318.04 $2,408.86 $1,096.64 $1,333.90 $843.57 $1,265.36
$1,583.80 $1,149.82 $532.46 $223.70 $402.66 $603.99
$14,613.63$9,742.41
$6,373.70$12,674.13$27,820
Totalnetsales(in
millions)
$38,320.14
YearEnded2011
Operating Segments:
Iphone
Ipad
Mac
Ipod
Itunes,Software&Services
Accessories
NetSalesbyProduct:

PercentageChangeinProductsaccordingtoSegments2015vs.2011
Americas Europe GreaterChina(a) Japan RestofAsiaPacific
381% 282% 723% 452% 242%
37% 1% 260% 62% -15%
32% 2% 251% 57% -19%
244% 81% 463% 246% 55%TotalSales%Changeof 2015vs
2011
OperatingSegments:
NetSalesbyProduct:
Iphone
Ipad
Mac

2015 2014 2013 2012 2011
iPhone 231,218 37% 169,219 13% 150,257 20% 125,046 73% 72,293
iPad 54,856 -19% 67,977 -4% 71,033 22% 58,310 80% 32,394
Mac 20,587 9% 18,906 16% 16,341 -10% 18,158 9% 16,735
iPod 14,377 -45% 26,379 -25% 35,165 -17% 42,620
UnitSalesbyProduct:

2015vs.2011 2014vs2011
iPhone 320% iPod -34%
iPad 69%
Mac 23%

Apple Inc. Income
Statement
• Net Sales and Revenue of 231.28 Billion
Dollars
• Gross Income of 89.03 Billion Dollars
• Net Income of 53.39 Billion Dollars

Revenues
2011 2012 2013 2014 2015
Sales/Revenue 108.6B
155.97
B
170.87
B
182.35
B
231.28
B
Cost of Goods Sold (COGS) incl. D&A 64.08B 87.92B
107.24
B
111.96
B
142.26
B
COGS excluding D&A 62.26B 84.64B
100.48
B
104.02
B
131B
Depreciation & Amortization Expense 1.81B 3.28B 6.76B 7.95B 11.26B
Depreciation 1.62B 2.6B 5.8B 6.85B 9.96B
Amortization of Intangibles 192M 677M 960M 1.1B 1.3B
Gross Income 44.52B 68.06B 63.63B 70.38B 89.03B

Sales and Revenues
Breakdown
66%
10%
11%
9%4%
Sales Breakdown
iPhone
iPad
Mac
Services
Other Products
Net Sales byProduct:
2015 2014 2013
iPhone 155,041 52% 101,991 12% 91,279
iPad 23,227 -23% 30,283 -5% 31,980
Mac 25,471 6% 24,079 12% 21,483
Services 19,909 10% 18,063 13% 16,051
Other Products 10,067 20% 8,379 -17% 10,117
Total net sales 233,715 28% 182,795 7% 170,910
233,715
155,041
23,227
25,471
19,909
10,067
0 100,000 200,000
TOTAL NET SALES
IPHONE
IPAD
MAC
SERVICES
OTHER PRODUCTS
Sales Breakdown

Sales by Country
93,864
50,337
58,715
15,706 15,093
AMERICAS EUROPE GREATER
CHINA
JAPAN REST OF ASIA
PACIFIC
Operating Segment

Expenses
201
1
201
2
201
3
201
4
201
5
SG&A Expense
10.0
3B
13.4
2B
15.3
1B
18.0
3B
22.4
B
Research & Development
2.43
B
3.38
B
4.48
B
6.04
B
8.07
B
Other SG&A 7.6B
10.0
4B
10.8
3B
11.9
9B
14.3
3B
Unusual Expense
862
M
(607
M)
-
205
M
0
EBIT after Unusual Expense
(862
M)
607
M
-
(205
M)
0
Non Operating
Income/Expense
54M
(566
M)
352
M
(72M
)
3.7B
Non-Operating Interest
Income
519
M
1.09
B
1.62
B
1.8B
2.92
B
Interest Expense 0 -
136 384 733Net Income
25.9
2B
41.7
3B
37.0
4B
39.5
1B
53.3
9B

Balances Sheet Assets
Fiscal year is October-September.
All values USD millions.
2011 2012 2013 2014 2015
Cash & Short Term Investments
25.95
B
29.13
B
40.55
B
25.08
B
41.6B
Cash Only 2.9B 3.11B 8.71B
10.23
B
19.06
B
Short-Term Investments
23.05
B
26.02
B
31.84
B
14.85
B
22.55
B
Total Accounts Receivable
11.72
B
18.69
B
20.64
B
27.22
B
30.34
B
Accounts Receivables, Net 5.37B
10.93
B
13.1B
17.46
B
16.85
B
Accounts Receivables, Gross 5.42B
11.03
B
13.2B
17.55
B
16.93
B
Bad Debt/Doubtful Accounts (53M) (98M) (99M) (86M) (82M)
Other Receivables 6.35B 7.76B 7.54B 9.76B
13.49
B
Inventories 776M 791M 1.76B 2.11B 2.35B
Finished Goods 776M 791M 1.08B 1.64B 2.35B
Work in Progress 0 0 0 0 0
Raw Materials 0 0 683M 471M 0
Progress Payments & Other - - - - -
Other Current Assets 6.54B 9.04B
10.34
B
14.12
B
15.09
B
Miscellaneous Current Assets 5.82B 7.84B
10.34
B
14.12
B
15.09
B
Total Current Assets
44.99
B
57.65
B
73.29
B
68.53
B
89.38
B
2011 2012 2013 2014 2015
Net Property, Plant & Equipment 7.78B
15.45
B
16.6B
20.62
B
22.47
B
Property, Plant & Equipment -
Gross
11.77
B
21.89
B
28.52
B
39.02
B
49.26
B
Buildings 2.06B 2.44B 3.31B 4.86B 6.96B
Land & Improvements - - - - -
Computer Software and
Equipment
- - - - -
Other Property, Plant &
Equipment
2.78B 3.71B 3.97B 4.51B 5.26B
Accumulated Depreciation 3.99B 6.44B
11.92
B
18.39
B
26.79
B
Total Investments and Advances
55.62
B
92.12
B
106.2
2B
130.1
6B
164.0
7B
Other Long-Term Investments
55.62
B
92.12
B
106.2
2B
130.1
6B
164.0
7B
Long-Term Note Receivable 0 0 0 0 0
Intangible Assets 4.43B 5.36B 5.76B 8.76B 9.01B
Net Goodwill 896M 1.14B 1.58B 4.62B 5.12B
Net Other Intangibles 3.54B 4.22B 4.18B 4.14B 3.89B
Other Assets 3.56B 5.48B 5.15B 3.76B 5.56B
Tangible Other Assets 1.96B 2.48B 5.15B 3.76B 5.56B
Total Assets
116.
37B
176.
06B
207
B
231.
84B
290.
48B

Total Assets
116.3
7B
176.0
6B
207B
231.8
4B
290.4
8B
Total Liabilities
39.76
B
57.85
B
83.45
B
120.2
9B
171.1
2B
Liabilities & Shareholders' Equity
116.3
7B
176.0
6B
207B
231.8
4B
290.4
8B
2011 2012 2013 2014 2015
Ratios

2015 2014 2013
Profitability Ratio
Gross Profit Margin 37.24% 38.60% 38.49%
Operating Profit Margin 86.89% 90.11% 93.38%
Net Profit Margin 42.44% 29.33% 21.19%
Total Return on Asset 25.41% 23.49% 24.23%
Net Return on Total Assets 24.96% 23.07% 23.67%
Return on Stockholder Equity 60.75% 47.95% 39.66%
Return in Invested Capital 41.96% 38.06% 34.87%
Liquidity Ratio
Current Ratio 110.88% 108.01% 167.87%
Working capital 877 508 2963
Leverage Ratio
Debt-to-Equity Ratio 82.00% 31.65% 13.73%
Long-term Debt-to-Equity Ratio 44.79% 25.99% 13.73%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Profitability Ratio
2015 2014 2013

Research and
Development
• Apple Spends 3% of total revenues
On research and development
“The Company continues to believe that
focused investments in R&D are critical to
its future growth and competitive position
in the marketplace and are directly related
to timely development of new and updated
products that are central to the Company’s
core business strategy”

Apple 2010
• Record Mac, iPhone, and iPad sales
• Revenue of $20.34 billion and net quarterly profit of $4.31
billion, or $4.64 per diluted share
• 27 percent more macbooks and 91 percent more iPhones
than the year before
• 11 percent decrease iPod sales
• International sales accounted for 57 percent of the quarter’s
revenue
• Music related products and services sales increased by 912
million (23%) compared to 2009.

Apple 2011
• Record in Mac and IPad sales
• quarterly revenue was recorded as 28.27 billion and diluted
EPS of 7.05.
• 17.07 million (21 percent increase) 4.89 million (a 26 percent
increase)
• 6.62 million iPods, a 27 percent unit decline from the year-ago
quarter
• Annual revenue grew to 108 billion.
• Music related sales increase (6.3 billion or 28 percent
compared to the previous year)

Apple 2012
• iPhones sales of 26.9 million (58 percent increase compared to
the previous year).
• Revenue for the year was now 36 billion and diluted EPS of
8.67
• 1 percent increase (4.9 million) in Mac (demand for macbook
air)
• 26 (14 million) percent increase in iPads
• Instruction of the new iPad in March
• iPod sales continued to decrease by 19 percent (5.3 million)
• Declared dividends of 2.65 dollars per common share

Apple 2013
• iPhone sales generated a 26 (33.8 million) percentage growth.
• Revenues and diluted EPS was 37.5 billion and 8.26
respectively.
• iPad sales increase .1 million increase from the previous years.
• Sold 4.6 million Macs, compared to 4.9 million from the
previous year.
• Apple declared dividend for another of 3.05 per common share

Apple 2014
• Revenue of 42.1 billion
• Launched the iPhone 6 and 6 plus.
• Net sales increased by 11 percent
• Mac sales increase
• Ipod sales continues to decrease as the demand for new
technology increases
• Preview of the apple watch
• Acquired Beats Music, LLC, Beats Electronics, LLC,.

Operating Activities
Why did net income decrease by 11% in 2013 and 66% in
2014 ?
• Decrease in IPod and IPad sales .
Deprecation/ Amortization increase by
106%(2013),17.5%(2014)
Due to acquisition of Beats LLC
What caused decrease in deferred income tax expense
decrease 74%(2013),increase 1.05%(2014)
• International earning to be reinvested outside U.S(Potential
cause for tax decrease )
Why A/R decreased in 2013,decreased by 61%(2013) and
increased by 95%(2014)

Dramatic inventory increased in 2013 by 64% and decreased
by 93% in 2014.
Often currents / non correct assets increase ,increase by
69%(2013) and decreased by 86%(2014)
Decrease in account payable by 48%(2013)However
increased by 1.5%(2014)
Non Current liabilities rose, increased by 78%(2013) and
increased 33%(2014)
• Long term debt contributed by floating and fix rate notes
• Cash from operating A ,increased by 55 %(2013) and
Continuation of Operating
Activities

Investing Activities
Proceeds from market table securities ,decreased by 2%(2013) and
Proceeds from sales of marketable securities ,Increased by
56%(2013) and decreased by 7.4 % (2014)
• Issued 5.1 million shares of beats p/s at485 and c/s 417(millions)
Increase payments M+A, Increased 42% and 660%
• Company acquired Beats Music U.S for 2.6 billion
Payment for acquisition PPE, decreased by 1.5 %(2013) and
Cash from IA, decreased by 31%(2013) and 33%(2014)

Financial Activities
Proceeds from c/s ,decreased by 20.3%(2013) and increased by
38%(2014)
Excess tax benefits from equity awards , decreased by 48%(2013) and
increased 5.4% (2014)
• Received income tax benefits from employee stock plan awards .
Tax paid related to not net share settlement ,decreased by 12%(2013)
and increased 7%(2014) .
T/S decreased by 97%
Proceeds from insurance of commercial paper .
Cash from FA, decreased 864%(2013) and decreased by 130%(2014).
Cash + Cash equivalent ,increased 278%(2013),and decreased
88%(2014) .

• Proceeds from insurance of commercial paper .
• Cash from FA, decreased 8.64%, and decreased
by 130%.
• Cash + Cash equivalent ,increased 278%,and
decreased 88% .
Continuation of Financial
Activities

STRENGTH
Brand reputation:
Apple is the number 1 brand around the
world. Its brand value is $145.3 Billion
now.
Customer Loyalty:
Apple has achieved millions of its loyal
customer due to its high quality products
and loyal customer services.

Excellent Research and Development:
Apple has excellent Research and
Development Division.
Strong financial performance:
Apple has best financial performance
among many top companies. It has higher
gross profit margin among its competitors.
It has no debt.

Strong marketing and advertising teams:
Apple has excellent marketing and
advertising strategies. Apple has been
selected as the winner or co-winner for five
consecutive years.
Multiple Products:
Apple has too many excellent products
liked by the millions of customers. (e.g.
MAC, iphone, ipad, ipod, tv, iwatch...)

Apple owns their Operating System:
Apple owns their Operating System (iOS),
which is used across their entire
product line allowing them to sell a
complete product without paying large
royalty payments to their competitors.
High skilled man powers :
Apple has experienced, well-trained,
enthusiastic and motivated work force.

Leading innovator:
Apple is an innovator and technology
leader. Apple has been chosen as the most
innovative business in the world for the
3rd time in 2012.
Weaknesses:
High price:
Apple has been selling its products in a
higher price. Price sensitive consumers
would not buy its products frequently.

Decreasing market share:
Apple's Worldwide iPhone Market Share
has been declining (Forbes APR 6, 2015)
Patent infringements:
Apple was ordered to pay $533 million for
patent infringement to the firm Smartflash
LLC.

Further changes in management:
Apple has lost its visionary CEO Steve
Jobs.
Security Threats:
Apple’s customers has increased chances
of phishing attacks by hackers as they
spend more time focusing on Apple’s
security weaknesses.

Incompatibility with different Operating Systems:
Apple uses its own Operating System iOS
which is not compatible with the other
operating systems.
Opportunity:
High demand of Apple's products:
There is a huge demand of Apple products
in the market.

Growth of smart phone markets:
Apple is a leading firm in mobile
technology. The smart phones market has
been significantly increasing globally.
Growth of mobile advertising market:
The growth of mobile advertising market is
also a good opportunity to Apple.

Increasing popularity of cloud based services:
Now, cloud-based services is expanding in
the market. So, Apple could expand its
range of iCloud services and softwares as
the market demands.
Online stores and retail stores:
Apple has 453 retail stores in 16 countries
and online stores available in 39
countries.

Threats:
Strong competition:
There is a strong competition in the market
which threats apple. (Samsung,
Google, Microsoft, Nokia etc.)
Change in technology:
Technology has been changing rapidly.
This phenomenon keeps Apple under the
pressure to release new products faster and
faster.

Increase in tax:
The increase in tax will negatively affect the
company.
Dollar Appreciation:
Apple earns more than half of its revenues from
outside the US. Dollar appreciation against other
currencies reduces potential profits from those
countries.
Increasing salary:
The increasing salary for employees will likely
to raise the prices for Apple products.

Potent Risk to Company
(Tax Evasion)
• Apple Inc. for tax reasons is a Irish Company
• Apple does not do operations or have employees in
Ireland
• Ireland tax rate is 12.5% vs. United State 35%
• May have to payback 10 years of taxes, which the
company is unable to estimate
• Forbs estimate 44 billion dollars in taxes not paid for the
last 3 years.

Suggestion
• With Apple going into the Stream they should start
creating original content

Conclusion
• Apple Incorporated was a very successful company for
the year of 2015, however due to the constant change in
the technology industry Apple needs to current to have
the competitive edge as they can in an instance be
irrelevant.

Apple Presentation Final-20151210-151407512

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