Apple Inc. Financial Analysis

The period between 1981 and 2010 has been broken up into the following periods:

Period Years Why?

1 1981-1985 IBM’s invasion and Macintosh

2 1986-1996 Jobs-less times

3 1997-2001 Jobs is back

4 2002-2007 Digital hub & IPod

5 2008-2009 IPhone age

The following table shows the different indicators for the periods addressed. There are a number of indicators here, but one indicator that is usually used to determine a firm’s success is not there. This indicator is market share. Market share is not really relevant determining the success of Apple because it operates in different markets and its primary market has shifted with time, from PC’s to mp3 players (iPod), smart phones (iPhone) and tablets (iPad).

Period1 Period2 Period3 Period4 Period5

ROE 15.5% 10.3% 2.2% 8.3% 19.8%

ROA 23.5% 19.4% 0.8% 13.6% 31.9%

Gross margin (%) 46.4% 40.4% 25.1% 29.8% 37.7%

Operating margin (%) 12.3% 8.0% -0.8% 8.0% 24.8%

Profit margin (%) 7.5% 5.1% 1.9% 6.7% 17.8%

R&D/sales (%) 5.5% 7.4% 6.0% 5.3% 3.0%

SG&A/sales (%) 28.2% 24.3% 20.0% 18.2% 9.9%

R&D+SG&A/sales (%) 33.7% 31.6% 26.0% 23.5% 12.9%

Revenue growth 56.0% 17.3% -8.7% 30.0% 35.3%

Net income growth 15.4% 22.5% -15.9% 76.4% 54.8%

Revenue/employee ($million) 0.25 0.57 0.82 0.78 1.12

Net income/employee ($million) 0.02 0.02 0.02 0.06 0.20

The above table seems to indicate that Period 3, when Jobs came back, was the least successful period according to most measures. However, this is grossly skewed by 1997, which is the year Jobs came back, where the performances were at an all time low. As can be seen by the graph below, this period was actually a period of stabilisation and recovery. Period 2 was actually the time when all indicators were on their way down. It was only after the return of Jobs that things started to pick up again.

It’s also very evident that Period 4 and 5 were significant growth periods with strong returns as well as good growth in revenues and net income. Period 1 is also a period that...