The Contents
1) introduce the organization (iMac) (100 words)
2) describe and analyse its current activities and performance:
i. The department of innovation
ii. Company history
iii. Financial Performance
iv. Marketing structure and performance (600 words)
2) conclude with a recommendation to invest or not based on the findings of your investigation. Your recommendation should be clearly justified. (1000words)
i)The department of innovation
No doubt, to attract investor to invest this company what they first consider is that how many benefits they can earn from the company. As known, products is the most important path of earnings in Apple Inc.
－short history of Apple company product
View the product growth history of Apple, following, the main products of Apple will be shown:
－Apple introduced the Apple Macintosh family in 1984.
－The iMac is a consumer desktop computer that was first introduced by Apple in 1998,
－In 2001, Apple introduced the iPod digital music player
－Mac mini is the company's consumer sub-desktop computer, introduced in January 2005 and designed to motivate Windows users to switch to the Macintosh platform
－In January 2007, iPhone, a convergence of an Internet-enabled smartphone and video iPod
In those products, iMac and iPod is the most popular products. iMac, the translucent, jelly circle smooth fuselage of the computer redefined the outward appearance of personal computer, as a result, customers only depended on the surface and advertising , there were 15,000 customers booked iMac when it appeared, and in after of 3 years, iMac totally sold 5,000,000 units. Following, Apple Ltd continues to develop the next generation, the third generation of iMac.
－Innovations in 2007
At the Macworld Conference & Expo in January 2007, Steve Jobs (CEO of Apple) revealed the long anticipated iPhone. “iPhone combines three amazing products — a revolutionary mobile phone, a widescreen iPod with touch controls, and a breakthrough Internet communications device with desktop-class email, web browsing, maps, and searching — into one small and lightweight handheld device. iPhone also introduces an entirely new user interface based on a large multi-touch display and pioneering new software, letting you control everything with just your fingers. So it ushers in an era of software power and sophistication never before seen in a mobile device, completely redefining what you can do on a mobile phone. ” (2)
The iPhone's functions include those of a camera phone, a multimedia player, mobile telephone, and Internet services like e-mail, text messaging, web browsing and wireless connectivity. iPhone input is accomplished via touch screen with virtual keyboard and buttons.
“Jobs announced that the iPhone will first be available in June 2007 in the U.S., during the fourth quarter 2007 in Europe, and in 2008 for Asia.” It will be offered in two configurations with two different prices, based on a 2-year phone service contract: a 4 GB model for US 9 and an 8 GB model for 9 in U.S. Apple also announced that its goal is to capture 1% of the global mobile phone market, which would be approximately 10 million units being sold in the first full calendar year of iPhone availability. (3)
Apple not only has advantage in hardware, but also in software. There is a news that said Time Machine, Spaces, Plus Enhanced Mail & iChat Extend Apple’s Leadership in Software Innovation.
Time Machine is a revolutionary way to protect a consumer’s digital life; it automatically backs up everything on the Mac to an external hard drive or Mac OS X Server. Spaces is an intuitive new way to group applications required for a given task into a “space,” then instantly switch between different spaces to bring up the specific applications required for that given task. iChat makes video chats more fun, puts images and videos in the background. And Leopard’s Mail includes breakthrough new features that have never been seen before in a Mail application.
“Breakthrough features like Time Machine and Spaces are good examples of how Mac OS X leads the industry in operating system innovation,” said Steve Jobs, Apple’s CEO. “While Microsoft tries to copy the version of OS X we shipped a few years ago, we’re leaping ahead again with Leopard.” (4)
－The future of Apple
An embedded version of Mac OS X could conceivably show up on any kind of wireless handheld device in the future, providing the guts to drive whatever newfangled user interface Apple comes up with for a given market. A wireless phone may be only the first step of a longer-term strategic thrust into all manner of consumer.
The development of technology also pushes the change of Apple product in the meantime. It can be seen in the past time, the Apple innovation always at the front of other companies. At the beginning, the company only produce computer, but extend MP3 players, and go toward a phone industry development not only control hardware, but also make an own software. For the investor, the Apple Company is worth paying attention to them, and also believes, Apple in 2007 in will be more glorious.
ii) Company History
Apple was found in 1976 by Steven Wozniak and Steven Jobs. And on April 1, 1976, Apple 1, the first Apple computer was born. And in 1977, Apple II, the first personal computer, was released, together with the introduction of Apple Disk II, received warm welcomed by the market. Until 1980, Apple became a "real company," With the several thousand employees, a number of more experienced mid-level managers and, more importantly, several new investors, who take seats on the board of directors. In 1981, March, Jobs soon became chairman of Apple computer.
In order to made Apple would be a "grown-up" company, in early 1983, Jobs invited John Sculley, the president of Pepsi-Cola, as CEO of Apple. As Sculley did not know much about the computer industry, he and Jobs were at odds almost immediately. Which leaded Jobs resigned eventually, leaving Sculley as the head of Apple. However, in a battle with Microsoft's Bill Gates over the introduction of Windows 1.0, which had many similarities to the Mac GUI. Sculley made Apple effectively lost its exclusive rights to its interface design by signing a statement which announced that Microsoft would not use Mac technology in Windows 1.0, but which said nothing of future versions of Windows. Sculley began to lose interest in the day to day operations of Apple and In June of 1993, the Apple Board of Directors relieved Sculley of his position as CEO, putting Michael Spindler in the head chair. However, Spindler was the wrong man for the job and Apple posted a million loss for the quarter when Spindler in charge. In January 1996, Gil Amelio, the former president of National Semiconductor, replaced Spindler as CEO. Although Amelio made a strong effort to bring Apple back to profitability and he even announced massively changes in the corporate structure of the company to make Apple more transparent to consumers, in early July 1997, Apple announced the resignation of Gil Amelio, following another multi-million dollar quarterly loss. In late December 1996, Steven Jobs would again be returning to the fold after Apple acquired NeXT. At that moment, Jobs was being referred to as "interim CEO”.
Steve Jobs directed company involved into aggressive advertising campaign for upcoming new Macs and Rhapsody. He constructed an almost new Board of Directors, including Larry Ellison, CEO of Oracle. He also announced an alliance with Microsoft which allowed Microsoft and Apple would have a 5-year patent cross-license by exchanging for 0 million in Apple Stock. The alliance also made Microsoft agree to pay an unreleased sum of funds about it had stolen Apple's intellectual property in designing its Windows OS. Besides that, Microsoft also announced that Office '98 would be able to run on Mac soon. In 1997, Apple retrieved its Mac OS licenses from Power Computing, Motorola and IBM. On November 10, 1997, he introduced two ways of selling computers, either via web or phone. Besides that The Apple Store was the third-largest eCommerce site on the web within a week time. All of these new services and new innovated products contributed Apple had, for the first time in more than a year, had a profitable First Quarter- Million, In January, 1997. More importantly, in early May, Apple released iMac, which focused on low-end consumer with an affordable price. iMac became the best-selling computer and it drove company into a 5th consecutive profitable quarter, in January 1999. Based on the same principles, In July 1999, company successfully introduced the iBook which leads Apple’s stock raised in the high of 70s. With debuting “iTools” in January 2000, Apple's sales raised continually, as did the stock price, which had climbed to 130 by till March. At the same time, Steve became the permanent CEO of Apple.
In May 2001, Apple began to exploited personal electronic devices in the face of massive slow down in the Technology industry, such as mp3 players, digital still and video cameras, and PDAs. In January 2003, Apple released iLife, a bundled software package that included iTunes, iPhoto, iMovie and iDVD, for . All of these would revitalize Apple's sales and guarantee continually development of company. The successful introduction of iPod, iPod mini, iShuffled, together with Apple released iTunes for Windows since 2003, Apple found itself in the position of having a monopoly for the first time in several decades.
iii. Financial Performance
First of all, financial ratio is an excellent approach to analysis the performance of IMAC. It is calculated based on the historical account data, therefore it can be reflected the past performance of the company. Investor is concerned to see the financial statement whether the profitability and the liquidity of IMAC are acceptable or not. In order to show the financial performance with sufficient evidence, I have obtained the financial statement of 2005 and 2006 from the IMAC website. Here are 3 months of the Income Statement and Balance Sheet of IMAC shown as follows.
The ratio of Return On Capital Employed (ROCE) illustrates the profitability in relation to the size of the business and the measure of how effectively the managers of the business are using its capital employed in the business. The result of ROCE is 4.83% in 2005 and 7.44% in 2006. It shows that for every £100 million invested in IMAC in 2005 earned £4.83 million, a year later IMAC earned £7.44 million for every £100 million invested. However, IMAC is performing better than last year and 7.44% seems a reasonable return.
The ratio of Gross Profit Margin is measured the profit made by buying and selling. The margin will vary from business to business. A business with the need for a rapid turnover in stock will generally have a lower margin than a business with a slower turnover of stock. The Gross profit margin of IMAC is 27.2% in 2005 and 31.2% in 2006. This shows that for every £100 million of sales, the margin was £27.2 million in 2005. It then improved to £31.2 million in 2006. As a result, 31.2% seems an acceptable figure. However, this reflects the nature of IMAC, which is a service industry.
The ratio of Net Profit Margin measures the profitability of IMAC after expenses. The result of Net Margin has shown a satisfy improvement, from 14.5% in 2005 to 20.4% in 2006. It illustrates a significant reduction on expenses and this appears to be a healthy return if you invest on IMAC.
Current ratio measures the ability to cover current liabilities using current assets. The result shown that the current ratio is 2.27:1 in 2006 and 2.24:1 in 2005. The figure of 2.27:1 means that IMAC has £2.27 million to pay every £1 of current liabilities. However, both years have got sufficient resources to cover debts.
Overall, the profitability and the liquidity of IMAC appear satisfactory.
On the other hand, apart from seeing the profitability and the liquidity of IMAC, cash flow statement is an important feature to look at. Cash is more significant for business survival than profit. IMAC may not be able to meet its liabilities and to pay dividends without cash and hence lose the confidence of shareholders. In order to provide a fuller understanding of IMAC performance, there is a Cash Flow Statement illustrated as below.
According to the Cash Flow Statement of IMAC, there are three activities should be concerned. It identifies clearly the transaction performance of IMAC. Cash generated by operating activities has an improvement in 2006. It increased from £283 to £1813. For cash generated by investing activities, IMAC has invested more in 2006 than 2005. Finally, the figure of cash generated by financing activities is decreased, from £283 million in 2005 to £188 million in 2006. However, cash and cash equivalents have improved from £4150 million to £7150 million. In, general, IMAC has more cash available for investing and paying the loans. IMAC has enough cash to invest and investigate more new products to customers. Recently, it launched new Ipod shuffles, which satisfy the customers needed.
Overall, the financial statement illustrates IMAC has a satisfaction profitability and liquidity. It also has sufficient cash for investing new product and greater development. That evidence leads us confidently to believe IMAC will continue to get a profit and it is worth to investment.
Credit:ivythesis.typepad.com
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