Apple Inc. is an American worldwide Corporation whose headquarters are in California. Apple Inc. designs and sells computer software and hardware, including personal computers. It is best known for its iPod, iPhone, table computer and Mac line of computers. The company was formed in April 1, 1976 and incorporated as Apple computer, Inc in 1977. It is the second largest overtly traded company globally, with a market capitalization worth of US$414billion.
The price per earnings ratio (P/E ratio) refers to the valuation of a company's current share price compared to its per-share earnings. The P/E ratio shows up to date investor demand for firm's share where a high PE demonstrates enlarged demand. This is because investors are anticipating higher earnings in the future. It is calculated as:
Market Value per Share Earnings per Share (EPS)
With an initial investment of $100,000, I invested in Apple Inc Corporation from the period of March 1, 2013 to May 6, 2013. On the initial day, the company’s P/E ratio was at 9.760, gradually increasing to 11.00, at the time of selling my shares. The minimum level of the P/E ratio during the trading period was 9.322 on April 19 while the max value of 11.00 was on May 6, 2013.
Market capitalization refers to the entire dollar value of the total company’s outstanding shares. It is calculated by multiplying an organization’s outstanding shares by the present market price of one share. Market capitalization is a great method of estimating a company’s size compared to its company’s sales or total asset figures. Apple’s current market capitalization stands at 425.1B, with a P/E ratio of 10.81. This is a significant increase from my period of trading where it stood at 374.26B in March, peeking to 433.7B on March 22. In April, Apple’s market capital ranged between 366.57B and 409.59B. Apple was significantly edged out of the top position by Exxon Mobil Corp, the first time in over a year.
Apple’s ticker symbol is given as AAPL and is displayed as such in stock markets. Apple’s products include consist of laptops that run on the apple’s iLife software suite. The laptops come in varying sizes including the all-in-one desktop, a mini desktop and a tower desktop. It's more successful line of products includes the iPhone, iPod, and iPad range of products which run on the iPhone OS. Apple also sells a range of accessories that include wireless routers, monitors, headphones, keyboards etc. In addition, iTunes, its most successful yet innovation is Apple’s greatest selling point where it allows its users to download music for a free in the Apple devices. The company sells its products globally, through its online stores, retail stores, direct sales and third party wholesalers and re-sellers. NAICS is the standard used by federal statistical agencies in classifying business organizations for the purpose of gathering, analyzing and publishing statistical data in relation to U.S. business economy. Apple’s NAICS codes are given as 33411 categories for Electronic Computer Manufacturing, 51121 categories for software publishers and 334611 categories for software reproducing. Its SIC codes are SIC 3571 Electronic Computers category and SIC 7372 Prepackaged software.
Apple’s geographical market consists of five key segments which include the Americans, Europe, Japan, retail and others. The America’s segment consists of the North and South America while the Europe segment includes European countries, Middle East and Africa. They all provide similar products and services. The retail segment includes mainly retail stores in US, Canada, Japan and UK, with 116 retail stores in US and 8 international stores distributed among the rest. Apple enjoys a global audience with customers all over the world, majority of who are socioeconomically privileged. About 67% of the household in America with Apple products earn about $61,000 or more compared to 52% of non-apple households.
In AAPL’s first quarter results of 2013, the Earnings per share stands at 41.89 with a share price of 452.97, which shows that the market is paying $329 more of net income before depreciation earnings which shows that company shares are overvalued. The company posted quarterly revenue of $54.5billion with a net profit of $13.1billion, compared to the previous quarter’s revenue sales of $46.3 billion. Gross margin was reported at 38.6% compared to the previous quarter’s 44.7%. Apple declared a cash dividend of $2.65per share to the company’s shareholder’s that was paid February 14, 2013. The company sold over 75 million IOS devices that accumulated to $54billion in sales with $23billion in cash flow operations.
Apple’s enormous success is hugely attributed to Steve Job’s innovative management styles. He held the position of CEO and his management style involved inclusive decision making on all matters concerning the company’s operations. His micromanagement style ensured that he shared his innovations with the staff who contributed to the overall design and production of Apple’s key products. Apple engages a top-down style of management where employees are chosen based on expertise and not experiences. As such, Steve Jobs ensured that experts were in control of key functions instead of general managers. This style of management ensured that the staff only worked in the fields of expertise. Although it is a rigid system of management, it ensured each manger/ executive was accountable in their areas of expertise and not in any other.
Key employees in Apple Inc include the company’s officers and executives. The company’s CEO’s since Steve Jobs demise is Timothy Cook, who has been an officer in the company since 1998. He is responsible for the company’s nationwide sales, including end-end management, support and marketing. He was once head of Apple’s Macintosh Division where he was instrumental in the strategic reselling aspect of the department. Other key personnel include Eddy Cue, who is the Senior Vice president in charge of Internet Software and services division. He has an impeccable track record in building and amplifying online services and exceeding the high expectations of apple customers. Senior Vice President, Craig Federighi is in charge of the software engineering division and is responsible for IOS development of Apple’s products, including delivering innovative software’s for upcoming products. Other board of Directors includes Jonathan Ive Senior Vice President in charge of Industrial design, Chief Financial officer Peter Oppenheimer who acts a Senior Vice President, Dan Riccio, Senior Vice President in charge of hardware engineering among others.
The graph above is an illustration of the apple stock prices during the 10 week period of my investment. The highest market price at was 461.34 while the lowest closing price was 390.95.
Relevant news during trading period
- Jaffe, C (2013). Apple Prices $17billion Bond Deal to Strong Demand. Market Watch Available at: http://www.marketwatch.com/story/apple-to-sell-bonds-treasury-yields-hit-year-low-2013-04-30
The article talks about Apple’s bond issuance to shareholders by increasing quarterly dividends and buybacks. Apple was able to get interesting rates on the deal since everyone was searching for high-grade debt. Apple’s stock rose by 3% to $442.78 supporting the overall market falling to $400 the following week, with highs of $700.
Works Cited
Apple’s Company Profile (2006). Data Monitor. Available at: http://www.alacra.com/acm/2009_sample.pdf
Charley, C (2011). Management the Steve Jobs way – learning from Steve Jobs’ management style. Silicon Beach Trainning. Available at: http://www.siliconbeachtraining.co.uk/blog/steve-jobs-management-style/
Executive Profiles (2013). Apple Press Info. Available at: http://www.apple.com/pr/bios/
Dowling, S (2013). Apple Reports Record Results. Apple Press Info. Available at: from http://www.apple.com/pr/library/2013/01/23Apple-Reports-Record-Results.html
Jaffe, C (2013). Apple Prices $17billion Bond Deal to Strong Demand. Market Watch. Available at: http://www.marketwatch.com/story/apple-to-sell-bonds-treasury-yields-hit-year-low-2013-04-30
