CASE STUDY Apple Inc: Performance in a Zero-Sum World EconomyON NOVEMBER1, 2010, JOHN TARPEY, SENIOR FINANCIAL ANALYST at a securities firm, was sitting at his conference table to begin the task of fully analyzing the 2010 financial performance and strategic strategies of Apple Inc. On his table were hundreds of articles, reports,SEC documents, and company documents. The basic question he sought answers to with this in-depth analysis was how Apple’s performance continued to be out-standing, while the world and U.S. economy was flat to negative.A second, and more important question, was if Apple could sustain this high level of performance and major innovation. Exhibit 1 shows unit sales by key products, net sales by the same products, net sales by the company’s operating segments, and Mac unit sales by operating segments. John noted that there were nine positive increases versus three negative ones. He saw that the positive increases outnumbered the negative changes by three to one. In 2010, there wereonly three negative changes compared with nine changes for 2009. Net sales of desktop computers were up 43% in 2010, compared with a 23% drop in sales in 2009.John considered Apple’s Consolidated Statement of Operations (see Exhibit 2) and Balance Sheet (see Exhibit 3).[SEE BELOW FOR MORE INFO]
Apple Inc: Performance in a Zero-Sum World Economy
On November 1st, 2010 – John Tarpey, Senior Financial Analyst was hired for full 2010 financial analysis of Apple Inc. The basic questions he deemed worthy of investigating were how Apple’s performance is continuing to be outstanding, while the world and U.S. economy was flat to negative, and whether Apple will be able to sustain this high level of performance and major innovation
Apple Inc.’s Company Background
The main information regarding Apple Inc. is as it is shown on the table below:
* The Founders Build a Company: 1976-1984: The company was founded on April 1, 1976 by Steve Jobs and Steve Wozniak in Steve Job’s garage with a seed money earned from the sale of Job’s minivan.
* Professional Managers Fail to Extend the Company: 1985-1997: Jobs wanted to take the company in a risky direction, but no one was on board 14 year leave of Jobs resulted in company struggles and high turnover in top management.
* Jobs Leads Apple “Back to the Future”: 1998-2001: Apple introduced the iPod; thus creating a new market and re-opened Apple retail stores. Jobs takes his 1st leave from the company in 2009.
* A Corporate Renaissance?: 2002-2006: International stores were opened and market area was expanded through Europe. An alliance was made with Intel.
* Mobile Consumer Electronics Era: 2007-Present: The Company’s name was changed to Apple Inc. as its first sign of expanding the product range and not being only a computer company. Later on, Apple introduced iPhone, App Store, iPad and Apple TV. Jobs announced his surprising leave in 2011.
* Current Performance: Unaudited summary data for Apple Inc.’s year 2014-Quarter 2 performance is presented on the table below:
* Strategic Posture
* Mission: Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the...