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Brief History of HD Strategic Analysis
Where we are now SWOT Matrix
Vision and Mission SPACE
External Analysis Grand Strategy Matrix
CPM IE matrix
EFE BCG
Summary Summary
Internal Analysis Possible strategies
IFE QSPM
Financial ratio analysis Recommendations
Net Worth Analysis Strategic implementation
Summary and desired results
Objectives & Goals
Wozniak and Jobs form the Apple Computer Company on April Fool's
Day.
Wozniak and Jobs finish work on a preassembled computer circuit
board. It has no keyboard, case, sound or graphics. They call it the
Apple® I.
The Apple I board is released for sale to hobbyists and electronics
enthusiasts at the price of $666.66.
Apple's first formal business plan sets a goal for sales to grow to $500
million in ten years. As it turns out, the company will pass that mark in
half the time.
Apple I computer boards are sold through 10 retail stores in the U.S.
Apple moves from Jobs' garage to a building on Stevens Creek
Boulevard in Cupertino, California.
The new Apple® II is unveiled at the first West Coast Computer Fair. It
is the first personal computer able to generate color graphics and
includes a keyboard, power supply and attractive case.
The Apple logo as seen today is designed by Rob Janoff, art director for
Regis McKenna Advertising.
Regis McKenna Advertising launches its first ad campaign for Apple.
Although advertising is initially aimed at electronics enthusiasts,
Apple will soon become the first company to advertise personal
computers in consumer magazines.
Monthly orders reach a $1 million annual sales rate.
http://www.apple-history.com/frames/?
Apple introduces various interface cards for connecting
to most printers.
Apple's Disk II® is introduced at the Consumer
Electronics Show. It is the easiest to use, lowest priced,
and fastest mini-floppy disk drive ever offered by a
computer manufacturer. It will make possible the
development of serious software. Production at first is
handled by just two employees, turning out 30 drives a
day.
In only its second year, Apple is one of the fastest
growing companies in America. Sales have increased,
and its dealer network has grown to over 300.
Apple's first printer, the Silentype®, is introduced.
Apple opens a manufacturing plant in Carrollton, TX. Apple
facilities now occupy more than half a million square feet of floor
space in the U.S. and Europe.
Apple goes public. Morgan Stanley and Co. and Hambrecht &
Quist underwrite an initial public offering of 4.6 million shares of
Apple common stock at a price of $22 per share. Every share is
bought within minutes of the offering, making this the largest
public offering since Ford went public in 1956.
Apple's employee count breaks 1,000.
Apple's distribution network is the largest in the industry-800
independent retailers in the U.S. and Canada, plus 1,000 outlets
abroad.
Apple's first mass storage system, the 5MB ProFile(tm) hard disk
is introduced, priced at $3,499.
Apple becomes a household name. Surveys show that public
awareness rose from 10 percent to 80 percent in 1981.
Apple Dot Matrix printer introduced for $2,195.
Apple becomes the first personal computer company to reach $1
billion annual sales rate. It throws a "Billion Dollar Party" for
employees.
Apple University founded to provide employee training programs.
Apple enters the Fortune 500 at number 411 in under five years.
EVA (Employee Volunteer Action) is created to match the skills of
Apple employees with community needs.
Apple is elected to the Consumers Digest Hall of Fame for
responsiveness to consumer needs.
Apple II receives the 1984 Industrial Design Excellence Award
(IDEA) sponsored by the Product Industrial Designers Society of
America.
Apple announces a computer training scholarship program for
elementary and secondary school educators.
Apple announces plans to create an independent software company, to
be known later as Claris.
For the first time, Apple uses its HyperCard technology to distribute a
1987 HyperCard supplement on diskette for Macintosh personal
computers.
Apple files suit against Microsoft and Hewlett-Packard to protect its
Macintosh audio visual display. The lawsuit is seen as having industry
wide implications regarding copyright laws.
Apple reports first billion dollar quarter in its history as net
income rises 108 percent.
Apple reports net sales of $4.07 billion and net income of $400.3 million
for fiscal year 1988.
Apple acquires Coral Software Corp., which markets programming
languages and artificial intelligence tools for Macintosh computers.
Apple introduces 32-Bit QuickDraw(tm) that allows Macintosh
personal computers to process and display photo-quality documents,
images and visualizations with exceptional color clarity.
Apple donates $2 million in computers to 23 schools to help at-risk
students.
Fiscal 1990 revenues surpass $5.5 billion.
Apple announces it will restructure the company over the next
12 months to reduce operating expenses. Apple's workforce is
reduced approximately 10 percent.
Apple and IBM sign a letter of intent to cooperate on major
technology initiatives for the 1990s.
Apple, IBM, and Motorola finalize milestone technology
alliance.
Apple announces a new Token Ring 4/16 NB Card, for the
Macintosh product line. It is the first product to emerge from
Apple and IBM alliance.
Apple and Kodak announce that they are working together to
integrate support for Photo CD images into future versions of
QuickTime.
The U.S. Environmental Protection Agency officially releases
the Energy Star emblem for display with energy-efficient
computers and peripherals. Apple has more than 20 products
that meet the EPA's the technical requirements.
Apple's Macintosh celebrates 10th birthday!
As of January 2005 Apple has introduced the Mini
Mac and the iPod Shuffle.
The Apple Mini Mac is
a compact desktop
computer. It is 2 inches
tall and weights 2.9lbs.
The Mini Mac starts at
$499 and comes
standard with iChat AV
desktop video
conferencing, Mail,
Address Book,
QuickTime®, iSync, and
a DVD Player.
http://www.apple.com/pr/library/2005/jan/index.html
Graphics from: http://www.apple.com/ipodshuffle/
On April 29, 2005, the
Mac OS X Tiger will be
released. This is an
advanced operating
system that requires a
Macintosh computer
with a PowerPC G3, G4
or G5 processor, Built-in
FireWire, 256MB of
RAM, and 3GB of
available hard disk
space. It cost $129 for a
single user and $199 for
a 5 license family pack
http://www.apple.com/macosx/newfeatures/over200.html
52 Week Low: 12.75
Apple had a 2:1 Stock split on 52 Week High: 45.44
02/28/05
Last Trade: 35.50
To become the world wide leader in
computer and mp3 player sales.
Apple ignited the personal computer revolution
in the 1970s with the Apple II and reinvented
the personal computer in the 1980s with the
Macintosh. Apple is committed to bringing the
best personal computing experience to students,
educators, creative professionals and consumers
around the world through its innovative
hardware, software and Internet offerings.
Mission Statement (Proposed)
The Apple commitment to excellence is its mission to provide
computers and service (2) for people (1) that meet the highest
standards of value and reliability. Apple is one of leaders in the
computer industry and makes the best-selling computers in the
world (7) (3). Apple provides the highest level of quality and value
for our customers. Those are timeless fundamentals. We also apply
innovative technology to our core business (4) to differentiate
ourselves and make our products irresistible to our customers,
beneficial to society, and profitable to our company (5). We strive to
provide additional opportunities for growth and enrichment of
company personnel while maintaining a work environment for all
employees (9) that encourages personal commitment and
participation in support of achieving excellence. We are committed
to being a good corporate citizen, and being openly honest with all of
our stakeholders (6). We support activities that help to build
common understanding, enhance excellence, and enable people to
improve their lives and reinforce their commitment to society (8).
Opportunities Threats
Increase in worms and Companies not seeing Apple
viruses on PCs. as compatible with their
Large population (Gen software.
X&Y) which are extremely Dell and HP are major
individualistic and name competitors.
brand conscious. Increasing competition with
Weak ties with Microsoft music downloads.
products. Dell does not invent but
Downloadable music and provides computers at a more
MP3 players are highly cost effective rate for
marketable. customers.
Increase sales of computers Recession—price of Apple
online by 25 percent. computers are higher.
Increase sales of laptops by Intel’s future Pentium release.
20 percent.
Apple Computer Market Dell
Critical Success Weight Rating Weighted Rating Weighted Rating Weighted
Factors Score Score Score
Market Share 0.10 1 0.10 3 0.30 4 0.40
Price 0.10 2 0.20 3 0.30 4 0.40
Financial Position 0.15 3 0.45 2 0.30 3 0.45
Product Quality 0.15 3 0.45 2 0.30 4 0.60
Consumer Loyalty 0.15 4 0.60 2 0.30 3 0.45
Advertising 0.04 2 0.08 3 0.12 3 0.12
Management 0.06 4 0.24 3 0.18 3 0.18
Global Expansion 0.06 2 0.12 2 0.12 3 0.18
Innovation 0.14 4 0.56 2 0.28 2 0.28
Web Development 0.05 3 0.15 2 0.10 3 0.15
Weaknesses
Dependency on new product launches. 0.06 1 0.06
Weak presence in business arena. 0.07 1 0.07
Slow turn around on high demand products. 0.03 2 0.06
Weak relationship with Intel and Microsoft. 0.10 1 0.10
Weak presence in markets other than education and publishing. 0.04 2 0.08
Total 1.00 2.78
Company Industry Sector S&P 500
Valuation Ratios
P/E Ratio (TTM) 69.70 26.87 33.52 24.01
P/E High - Last 5 Yrs 277.96 54.58 64.14 45.41
P/E Low - Last 5 Yrs 6.84 17.34 19.55 16.26
Beta 1.75 1.60 1.91 1.00
Price to Sales (TTM) 1.41 1.84 5.08 3.33
Price to Book (MRQ) 2.20 7.56 4.78 4.29
Price to Tangible Book (MRQ) 2.26 8.77 6.53 7.56
Price to Cash Flow (TTM) 37.64 19.69 25.48 17.32
Price to Free Cash Flow (TTM) 45.13 23.77 28.26 28.97
% Owned Institutions 63.21 50.31 48.14 64.19
Dividends
Dividend Yield N/A 0.70 0.75 2.04
Dividend Yield - 5 Yr Avg 0.00 0.34 0.27 1.48
Dividend 5 Yr Growth Rate NM 7.94 1.50 6.48
Payout Ratio (TTM) 0.00 7.99 9.34 26.78
www.investor.stockpoint.com
Financial Ratios (cont)
Growth Rates % Company Industry Sector S&P 500
Sales (MRQ) vs Qtr 1 Yr Ago 36.28 12.54 18.89 13.40
Sales (TTM) vs TTM 1 Yr Ago 15.45 10.97 11.78 11.90
Sales - 5 Yr Growth Rate 0.88 7.09 14.52 9.30
EPS (MRQ) vs Qtr 1 Yr Ago N/A 34.00 35.07 28.69
EPS (TTM) vs TTM 1 Yr Ago 587.04 35.55 41.74 21.92
EPS - 5 Yr Growth Rate -29.16 6.85 13.18 12.15
Capital Spending - 5 Yr Growth Rate 28.95 2.65 1.99 4.06
Financial Strength
Quick Ratio (MRQ) 2.26 1.02 2.54 1.26
Current Ratio (MRQ) 2.53 1.25 3.02 1.76
LT Debt to Equity (MRQ) 0.00 0.38 0.23 0.68
Total Debt to Equity (MRQ) 0.07 0.52 0.29 0.85
Interest Coverage (TTM) 13.75 11.34 9.81 11.86
Profitability Ratios %
Gross Margin (TTM) 27.27 30.60 51.71 47.32
Gross Margin - 5 Yr Avg 26.65 31.08 51.13 47.01
EBITD Margin (TTM) 3.34 12.43 18.41 20.79
Financial Ratios (cont)
EBITD - 5 Yr Avg 2.87 12.18 16.18 20.82
Operating Margin (TTM) 1.63 8.70 13.63 20.33
Operating Margin - 5 Yr Avg 1.25 8.28 11.62 18.35
Pre-Tax Margin (TTM) 2.77 9.47 15.96 17.27
Pre-Tax Margin - 5 Yr Avg 5.34 9.76 14.77 17.54
Net Profit Margin (TTM) 2.03 6.02 9.90 13.12
Net Profit Margin - 5 Yr Avg 4.24 6.55 8.67 11.59
Effective Tax Rate (TTM) 26.74 29.57 27.57 31.31
Effective Tax Rate - 5 Yr Avg 22.62 30.59 32.39 34.20
Management Effectiveness %
Return on Assets (TTM) 2.09 8.44 6.07 6.40
Return on Assets - 5 Yr Avg 5.47 9.25 5.79 6.79
Return on Investment (TTM) 3.05 16.54 8.75 9.97
Return on Investment - 5 Yr Avg 7.90 17.57 9.30 10.93
Return on Equity (TTM) 3.26 30.10 12.17 18.71
Return on Equity - 5 Yr Avg 10.37 31.78 13.11 19.22
Efficiency
Revenue/Employee (TTM) 617,760 568,624 401,787 622,866
Net Income/Employee (TTM) 12,555 37,722 65,474 81,707
Receivable Turnover (TTM) 11.59 7.25 7.64 9.76
Inventory Turnover (TTM) 91.47 20.93 9.64 10.46
Asset Turnover (TTM 1.03 1.45 0.77 0.92
SE + Additional paid in capital + retained earnings 4,095M + 119M +2,325= 6.5B
9/28/02 Net income x 565M x 5 = 325M
Share price (10/17/03)/ EPS (10/17/03) x avg. net income (3years)
[22.75/ 0.49] x 275M =
12.7B
Number of shares outstanding x share price
358,958,989 x 22.75 = 8.1B
Method average = 6.9B
Apple has rated their iTunes Music Store being a good source of
revenue, especially with the iPod and the availability on Windows
platform, their low debt—more maneuverable, and their Web
technology being used to improve product awareness and sales as
their 3 highest strengths.
Apple did not rate any of their weaknesses higher than a 2. they
should work on being able to direct more attention to those areas
and especially concentrate on the two areas of dependency on
new product launches and the weak presence in business arena.
S-O Strategies W-O Strategies
Increase awareness through the web Increase ties with Microsoft and
of the immunity of Mac products to Intel and their products.(W1,
worms and viruses. (S5, O1) W2, W4 O2, O3)
Advertise using individuals that will Promote to business the safety
link Generation X & Y to the iTunes
and other related products. (S1, O2, of having a worm and virus free
O4, O5, O6) computer by using Mac. (W2,
Using movies and music groups that W4, O1, O5, O6)
are geared towards Gen X and Y to W-T Strategies
promote computers and laptops. (S3, Improve relationship with
S5, O2, O5, O6)
Microsoft and Intel so that
S-T Strategies companies will see them as
Increase and promote the compatible. (W1, W2 T1)
compatibility to Window operating
system. (S5,T1)
Increase productivity and turn
Promote the originality of Apple around of high demand
computers and the different style products to compete with Dell
and stable system that is slightly and HP (W5, T2)
more but worth the price difference
in style, stability and speed. (S2, S5,
T2, T4, T5)
Space Matrix
Conservative FS Aggressive
CA IS
Forward Integration
Backward Integration
Horizontal Integration
Market Penetration Defensive Competitive
ES
Market Development
Product Development
Joint Venture
RAPID MARKET
GROWTH
Quadrant II Quadrant I
WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION
Apple
Concentric Diversification Computer
Conglomerate
Quadrant III Quadrant IV
Diversification
Horizontal Diversification SLOW MARKET
GROWTH
Retrenchment
Divestiture
Liquidation
Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
III
I II
High
3.0 to 3.99
IV V VI
Medium
2.0 to 2.99
VII VIII IX
Market Penetration
International Market
Medium Cash Cows Dogs Development
0
Product
Development
Sell
Low -20
156M
Total expected cost =
Common Stock Debt Financing 50/50 Combination
Financing Financing
High Low High Low High Low
EBIT 20,000.0 6,000.00 20,000.0 6,000.00 20,000.0 6,000.00
0 0 0
Interest (6%) 0.00 0.00 3,900.00 3,900.00 1,950.00 1,950.00