Running head: BUSINESS ANALYSIS

Business Analysis Arneko Harris MGT/521 September 26, 2011 Evan Barnet

BUSINESS ANALYSIS Business Analysis In this paper, an overall business analysis of Apple Inc. will discuss the companys financial statements, the companys financial health and how it compare to other companies in the industry and globalization and how it has affected the companys business strategies. Lastly,

a benchmarking analysis will be conducted in the following comparison with other companies in the same industry. Apple Inc. has the talents of Steven Jobs along with other top idealists. Having such talent clearly gives Apple the advantage over other competitors in this industry. The collaborative efforts of the leaders give Apple Inc. a clear strategic advantage. Apple main goal is to stay on top of its competition. In order to accomplish this goal, the employees have to spend long hours determining what the consumers want and how to design their products based on that outcome. A good example would be the development of the iPhone. The iPhone was derived from a display of information of the iPod. This included a bigger touch screen that helped in the development of the smart phone. This vision didnt stop there; Jobs began to think in the future toward concepts of applications for the smart phone. Once it was realized that the iPhone was a personal computer, three years later Apple Inc. introduce the iPhone and its application system. According to (Bajarin, 2011) Apple raises the bar with every new generation of the iPhone. Apples new version of the iPad has stood out due to the attention to detail in the design, the applications, and the quality of service that it brings into the mainstream. The strategic advantage that Apple has over others is their available of cash in the bank. Instead of giving back to the shareholders, they use it for competitive issues such as pre-buying items in bulk at a huge discounts. Apple has a good strategic marketing advantage due to attracting millions of individuals into their stores. Apple Inc. has become a global success even in the downturn of the

BUSINESS ANALYSIS global market for American-based companies. However, this was an attribute to its sales of the iPad in global retail stores and strong product. Apple Inc. was rated number 35 in the top Fortune 500 this year, this was an increase of 21 slots over the last year. This success was the attribute to the introduction of the iPad first generation last year and the iPad second generation earlier this year. Computers and Office Equipment industry has rank Apple Inc. second. Apples third quarter 2011 financial statements reported record breaking revenue of $28.57 billion, which is an increase of $3.9 billion over second quarter and $1.8 billion increase over the first quarter of 2011. The net income of the company is an important measure to how profitable the company is over a period of time. The company reported a record breaking net income of $7.3 billion, which was an increase of $1.3 billion over first and second quarter net income. Hewlett-Packard one of Apples strongest competitor rates number 11 in the top Fortune

500 companies this year, an increase of one slot from the prior year. Chief Executive Officer Leo Apotheker has one goal for the company, this is to dominate clout computing as well as convince customers and businesses to use Hewlett-Packard hardware when connecting with public and private networks. This may be a battle to contend with because Apple is releasing the cloud in the fall of 2011. According to (New York Times, 2011), Hewlett-Packard released its third quarter 2011 financial statements. Hewlett-Packard reported revenue of $31.18 billion, which were a slight decrease of $4.5 million from their second quarter and a $1.1 billion decrease from the first quarter revenue of 2011. The net income for Hewlett-Packard was reported a $1.9 billion which was a decrease of $4 million from the second quarter and more of a decrease of $7 million from the first quarter net income of 2011.

BUSINESS ANALYSIS Dell another strong competitor for Apple Inc. rates as number 41 in the top Fortune 500 companies this year. This was an increase of three slots from last year. Third quarter 2011 financial statements reports a revenue of $15.65 billion, an increase of $6 million over the second quarter of 2011, and a small decrease from the first quarter revenue of 2011. Dells net income for 2011 reported at a $89 million, a decrease of $55 million from the second quarter, and a decrease of $37 million from the first quarter of net income (New York Times, 2011).

Assets of a business are important because they are assets that are available to fund daily operations and fund continual debt. Liabilities of a business are bills that are due for creditors and suppliers within a short period. Companies normally will withdraw or cash in the current assets to pay their current liabilities. Equity of a business is the amount of funds that is contributed by the stockholders plus the losses. Apple Inc. total assets for fiscal year 2011 is reported at $107 billion, total liabilities is at $37 billion and a total of $69 billion in total equity. Hewlett-Packard reports its total assets for the fiscal year at $125 billion, total liabilities at $86 billion and $39 billion for total equity. Total assets for Dell reports at $42 billion, total liabilities at $34 billion and $8 billion for total equity. Hewlett-Packard total assets leads over both Apple Inc. and Dell total assets. However, Hewlett-Packards liabilities exceeded both companies due to paying their ongoing expenses. (Investopedia, 2011) defines cash flow as the amount of money in and out over a given period. The cash flow comes from financing, investing, and/or operations. The out flow of the cash comes from the results of investments or expenses. Apples cash at the end of the period reports at $12 million, Hewlett-Packard reports at $13 million and Dell at $15 million. Reviewing each financial statement of each company has it importance of not just looking at just one company of interest for investment purposes, but to look at the companies that are in the same industry to obtain a more holistic view of their

BUSINESS ANALYSIS financial health. Management uses this information in several ways to gain advantage over the other companies. The financial health of Apple Inc is in excellent shape; after the deduction of the cost of doing business, taxes, and other expenses Apples net income far exceeds that of Hewlett-Packard and Dell. Total equity for Apple Inc. is the greater of the two companies. (Sorensen, 2011) states that Apple Inc. stays in front of the game in the swift-moving information technology industry, first with its iPhone, and more recently with its iPad. The forward thinking of Apple Inc. and its design prowess, it allows the company corner the market

on products that are ahead of its competitors. They are taking advantage of the liquid crystal that is displayed in the iPhone and iPad to keep other manufacturers from acquiring them for the next three years. Spring of last year, Apple began to sell the iPad which sold 15 million of the tablet devices. However, several competitors has entered, or preparing to enter the tablet market. This includes Blackberry-maker Research in Motion Playbook, Motorolas Xoom, Hewlett-Packards Touchpad and HTC. Citing sources, Taiwan-based news site DigiTimes estimates that Apple may have already occupied 60% of the market for touch screen displays (Sorensen, 2011). Like Apple Inc, Dell Inc, is a high tech companies that offers a range of technology product categories that includes desktop personal computers, software, mobility products, and peripherals, and networking products, servers, storage, and services (The New York Times, 2011). Dells services include a range of configurable information technology and business services, that includes infrastructure technology, consulting, and applications and product-related support services (Dell, 2011). Apple designs, manufacturers, and markets a range of personal computers, mobile communication, and media devices, and portable digital music players, and sells a range of related software, services, peripherals, networking solutions, and third-party digital content, and applications (Apple, 2011). Hewlett-Packard also provides hardware,

BUSINESS ANALYSIS software, solutions, and services (The New York Times, 2011). According to the (Financial

Times, 2011) like its competitors, Apple market its brand globally electronically and direct sales; however, they have a total of 317 retail stores, 233 stores based in the United States and 84 internationally. Apples financial health is strong. In comparison with its two leading competitors Hewlett-Packard, and Dell, Apple is giving them a run for it. The company has set breaking record sales on the iPhone, and the iPad first and second generations that help Apple achieve the goal to stay on top of its competitors. Apples revenue increased each year for the past five years. The key to their success is their attention to detail that helps raise the bar with every future vision they may have. Apple has become a trendsetter.

BUSINESS ANALYSIS References Apple. (2011). Apple Info. Retrieved from http://www.apple.com/about/ Bajarin, T. (2011, March 5). Apple's Strategic Advantage. Retrieved from http://technologypundits.com/2011/03/apples-strategic-advantage/ Dell. (2011). Our Story. Retrieved from http://content.dell.com/us/en/corp/about-dell-ourstory.aspx Financial Times. (2011). Apple Inc.. Retrieved from http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=us:AAPL Investopedia. (2011). Cash Flow. Retrieved from http://www.investopedia.com/terms/c/cashflow.asp#ixzz1YFSBBmL2 Sorensen, C. (2011). Apple's big advantage over rival tablet makers? Touchscreen displays.. Retrieved from http://www2.macleans.ca/2011/02/01/cant-touch-this/ The New York Times. (2011, May). Dell Inc. Retrieved from http://topics.nytimes.com/top/news/business/companies/dell_inc/index.html?scp=1spot&sq=dell&st=Search The New York Times. (2011,September). Hewlett-Packard Company. Retrieved from

http://topics.nytimes.com/top/news/business/companies/hewlett_packard_corporation/ind ex.html?scp=1-spot&sq=hewlett-packard&st=Search