Apple Inc is a global Hi-Tech company that has taken the advantages of internet and globalization to generate superior financial performances within the last 5 years. This paper evaluates the impact of internet on Apple Inc profitability using 5-year financial records between 2008 and 2012. The findings of the research reveal that the company net income increased by more than 300% between 2008 and 2012. The report concludes that Apple is a top beneficiary of internet technologies.
Internet and Global Finance Strategies
Within the present competitive business environment, firms are continuously looking for various strategies to be ahead of their competitors and achieve competitive market advantages. Many firms have identified that internet technology is a powerful tool to enhance competitive market advantages. The traditional organizations have identified that internet is a powerful tool to deliver value to customer and presently, the internet technology has enabled firms to coordinate and interact their value chain activities to customer with the objective of improving financial performances. These changes generally refer to as NBT (Net-based business transformation). The net-based business transformation is the substitution of traditional business operations from paper, fax and telephone-based communication into electronic business transactions with the objective to enhance tighter coordination with customer and suppliers, increase inventory turnover, enhance customer satisfaction, and improve time-to-market. Despite the potential benefits of internet to the improvement of firms' financial performances, there is still lack of systematic evidence regarding the process through which the internet contributes to the financial performances of Apple Inc.
Objective of this study is to investigate the impact of internet on the revenue and profitability of Apple Inc. within 5-year span between 2008 and 2012.
Theoretical Framework
The model of financial performance and digitalization argues that the major goal that makes firms to engage in net-based business is to improve their financial performances. Typically, firms' objective to engage in the internet based investment is to improve firms business value, which include profitability, market share, ROA (return on assets), ROE (return on equity), and gross margin. According to the model, the driving force that makes firms to engage in the net-based business is to enhance financial performances. The model further reveals that the strategy to evaluate a company financial performances is to use financial ratio tools which include ROA, ROE, gross profit margin, price-earning ratio, current ratio, quick ratio, gearing ratio, and evaluation of firm's balance sheet and comprehensive income statements. (The Irish Times). The study uses the model of financial performances and digitalization to investigate the impact of internet on the revenue and profitability of Apple Inc.
Company Overview
Apple Inc., formerly known as Apple Computer Inc., is a multinational Hi- tech company that designs, develops and sells computer software, personal computer and computer electronics. The company is the second largest IT (information technology) company by revenue. In 2012, Fortune listed Apple as the most admired company in the United States. The best-known company products are iPhone, iPad, and iPod music player. The company software includes iTunes media browser, iOS operating systems, and the Safari web browser. Apple Inc. has been the major Hi-Tech company that takes advantage of internet to boost its profitability within the last 5 years. Apple sells its product globally through online stores, third part cellular carriers, retail stores and direct sale forces. (Apple 2012 Annual Report).
The paper provides the comprehensive impact of internet on Apple Inc. financial performance between 2008 and 2012. The paper uses the 5-year financial records of Apple Inc. To evaluate the impact of internet on the company financial performances.
Impact of Internet on the Apple Inc. Financial Performances
Bughin, et al. argue that internet has changed the way million of organizations transact businesses globally. Essentially, internet has become an essential component for billion of people and businesses around the world.
"The adoption and use of ICTs such as the Internet makes it cheaper and easier for firms to extend their markets, manage their operations, and coordinate value chains across borders. By lowering the costs of transactions and information, technology has reduced market frictions and provided signi-can't impetus to the process of broadening world markets. ICT fosters globalization by declining coordination and transaction costs and creating new and expanded markets with economies of scale." (Kraemer, Gibbs, and Dedrick, 323-324)
Apple Inc. has used the internet to revolutionize the method the company offers its product and services to customer. Typically, iTune is one of the unique Apple's products. iTunes is a free application that allows Apple consumer to download different applications into their smart phone, personal computer, iPod, iPhone, and Apple TV. With internet technologies, it is possible for consumer globally to download the applications, organize music, and browse movies and TV shows. Moreover, Apple Inc. also introduces iCloud, which assists consumer to instantly access the iTune library on their iPhones or personal computers. With the power of internet technologies, Apple has tremendously increased its profitability in the last 10 years. For example, the iTune contents have reached one billion people in February 2013. Apart from individual consumers who download iTune contents for personal enjoyment through the internet, educators in 30 countries create iTune U. courses to deliver educational materials to their students. More than 155 countries could access these education courses via iTune.
Moreover, Apple has used network of internet-online store to reach its customer worldwide. Since Apple operates in multiple countries, the company creates different online stores in all the countries that the company operates. Using internet technology, Apple has been able to reach its customer globally and the company has been able to its online store to sell varieties of its product and services, which include Apple iPhone, Mac, iPod, iPad, iTunes and other products.
Laudon & Marakas argue that Apple has taken the advantages of internet technology to launch the iTunes Music Store that creates a marketplace for the downloadable music. Apple also sells its products and services on the web and manages music digitally. The business solution assists the company to increase sales within the last 5 years. Thus, Apple uses the digital technology to gain competitive advantages within a market environment. Using the internet technologies to deliver superior sale performances, Apple has been able to improve the company financial performances between 2008 and 2012.
Analysis of Apple Sales
The internet technology that Apple integrated in its business operations made the company to record superior financial performances between 2008 and 2012. Since 2008, Apple has recorded a tremendous increase in the net sales. Net sales between 2011 and 2012 increased by 45% ($48.3 billion). Several factors contributed to the increase during the period. First, the company used the internet technology to boost the sales of iPhone using its online stores. For example, the iPhone net sales in 2012 was $80.5 Billion revealing the increase of 71% between 2011 and 2012 while the iPhone unit sales totaled 125 million in 2012 representing 71% increase between 2011 and 2012.
Between 2009 and 2010, Apple net sales increased by $22.3 Billion, which was 52% increased during the period. Typically, the company recorded net sales of $25.2 billion in 2010, which represented the increase of $22.3 Billion or 52% between 2009 and 2010. Between 2008 and 2009, the company net sales increased by 14%. Similarly, the company was able to record an increase in the net sales during the period because the company has used the internet technology to boost the sales of iPhone. The iPhone revenue between 2008 and 2009 was $13 billion revealing an increase of $6.3 billion (93%) between 2008 and 2009.
Moreover, the company takes the advantage of the internet technologies to sale other music related products between 2008 and 2012. Net sales of other music related product and services was $8.5 billion in 2012 revealing the increase of $2.2 Billion, 35% between 2011 and 2012. The increase was primarily due to the increase in the sales of iTune, which generated the total of sales of $7.5 billion in 2012 compared to $5.4 Billion net sales of iTune in 2011. The internet also increased the net sales of the music related products of Apple between 2008 and 2010. The company recorded the increase of $912 million in the music related sales in 2010 revealing an increase of 23% between 2009 and 2010. Moreover, the iTunes generated the total sales of $4.1 billion in 2010.
The Table 1 reveals the net sales and the net income of Apple Inc. between 2008 and 2012. Overview of the company financial records reveal that the company net income was $6.1 billion in 2008 and increased to $41.7 Billion in 2012 revealing the $35.6 billion or 583% increase in the net increase between 2008 and 2012.
Table 1: Apple Inc. Net sales and Net Income between 2008 and 2012 ($ Million)
2012
2011
2010
2009
2008
Net sales
156,508
108,249
65,225
42,905
37,491
Net income
41,733
25,922
14,013
8,235
6,119
Earnings per share:
Basic
44.64
28.05
15.41
9.22
6.94
Diluted
44.15
27.68
15.15
9.08
6.78
Cash dividends declared per share (a)
2.65
0
0
0
0
Shares used in computing earnings per share:
Basic
934,818
924,258
909,461
893,016
881,592
Diluted
945,355
936,645
924,712
907,005
902,139
Total cash, cash equivalents and marketable securities
121,251
81,570
51,011
33,992
24,490
Total assets
176,064
116,371
75,183
47,501
36,171
Total long-term obligations (b)
16,664
10,100
5,531
3,502
1,745
Total liabilities
57,854
39,756
27,392
15,861
13,874
Total shareholders' equity
118,210
76,615
47,791
31,640
22,297
The growth of internet technology around the world primarily contributes to the growth of Apple total revenues and the net income. From the statistics presented by the Internet World Stats, 2.4 billion people around the world were using internet in 2012, which represented 34.3% of the world population. Between 2000 and 2012, there was a tremendous growth of 566.4% of internet users. Despite the growth in the internet users globally, the internet penetration rates varies across the globe. The North American region recorded the 78.6% in the internet penetration rates followed by Australia 67.6% and Europe 63.2%. The overall world internet usage is presented in Table 2 and Fig 1.
Table 2: World Internet Usage Statistics
WORLD INTERNET USAGE
June 30, 2012
World Regions
Population
( 2012 Estimation )
Internet Users
Dec. 31, 2000
Internet Users
Latest Data
Internet Penetration Rate
Growth
2000-2012
Users %
of Table
Africa
1,073,380,925
4,514,400
167,335,676
15.6%
3,606.7%
Asia
3,922,066,987
114,304,000
1,076,681,059
27.5%
44.8%
Europe
820,918,446
105,096,093
518,512,109
63.2%
21.5%
Middle East
223,608,203
3,284,800
90,000,455
40.2%
2,639.9%
North America
348,280,154
108,096,800
273,785,413
78.6%
11.4%
Latin America / Caribbean
593,688,638
18,068,919
254,915,745
42.9%
1,310.8%
10.6%
Oceania / Australia
35,903,569
7,620,480
24,287,919
67.6%
WORLD TOTAL
7,017,846,922
360,985,492
2,405,518,376
World Average 34.3%
Source: Internet World Stats
Fig 1: World Internet Penetration Rates, 2012
Source: Internet World Stats
Apple has taken the advantages of growth in the global internet usage and variation in the internet penetration rates across the geographical regions to launch the internet marketing campaign to reach its potential customers. Over the years, Apple has launched the internet marketing campaign to reach the geographical regions that have higher internet penetrations rates. From the data presented in Table 2, the growth of internet penetration rates in American and European regions are similar to the growth of Apple sales in these region. In American region, the company recorded $16.5 Billion net sales in 2008; however, the net sales of the region increased to 57.5 Billion in 2012. Similarly, the European region recorded 31% of the net sales of Apple Inc. In 2012. In 2008, the company net sales in Europe were $9.2 Billion and increased to $36.3 Billion in 2012.However, Japan was the third region that Apple recorded high net sales. In Japan, Apple recorded $1.7 Billion in the net sales in 2008 and increased to $10.5 Billion in 2012. (See Table 3). Factor that assisted the company to record high sales in Japan during the period was that Japan was ranked among the top internet users in the world. Typically, average of 79% of Japanese has access to the internet. (World Bank, 2012). To generate sales, Apple specifically focuses its internet marketing campaigns on the countries and regions that have high percentages of internet users. Using this strategy, the company has been able to generate high sales in its product and services and other music related products. Typically, billion of consumer downloaded different application into their iPhone and personal computer in February 2013. Thus, Apple always focuses its marketing campaign in the regions having high internet users since a consumer will require an internet connection to download Apple music products.
Table 3: Total Net Sales by Regions ($ Millions)
2012
Change
2011
Change
2010
2009 Changes
2008
Change
2008
Net Sales by Operating Segment:
Americas net sales
57,512
50%
38,315
56
29%
18,981
15%
16,552
Europe net sales
36,323
31%
27,778
49
58%
11,810
28%
9,233
Japan net sales
10,571
94%
5,437
37
75%
2,279
32%
1,728
Asia-Pacific net sales
33,274
47%
22,592
3,179
18%
2,686
Retail net sales
18,828
33%
14,127
44
47%
6,656
(9)%
$7,292
Total net sales
156,508
45
$108,249
66
52%
$42,905
14%
$37,491
The increase in the company financial performances in the last 5 years also enhances the company stock performances. The graph in Fig 2 reveals the company five-year comparison of shareholder returns. The cumulative returns are calculated based on the Dow Jones U.S. Technology Index, S&P Computer Hardware Index, and the S&P 500 Composite Index. The historic stock performances comparison reveals that Apple stocks perform better than the Dow Jones U.S. Technology Index, S&P Computer Hardware Index, and the S&P 500 Composite Index.
Fig 2: Apple Inc. Stock Performance
Table 4: Comparison of Apple Stock Performances
September 30,
2008
September 30,
2009
September 30,
2010
September 30,
2011
September 30,
2012
Apple Inc.
74
S&P 500
78
73
80
81
S&PComputer Hardware
84
99
Dow JonesUS Technology
76
85
95
98
The table 4 shows that performances of Apple stocks were higher than the Dow Jones U.S. Technology Index, S&P Computer Hardware Index, and the S&P 500 Composite Index with the last five years. In 2012, Apple stock price was $437, while the stock price of S&P 500 was $105. Apple stock price also performs better than the prices of S & P. Computer Hardware. Moreover, Apple stocks also perform better than the Dow Jones U.S. Technology in 2012. Moreover, Apple stock returns are higher than the S&P 500 Composite Index, and Computer System stock returns within the last 5 years.
Total Return % (04/18/2013)
YTD
1-Year
3-Year
5-Year
Apple Inc.
-25.83
-34.25
17.37
19.96
Computer Systems
-11.88
-22.42
9.06
9.54
S&P 500 TR
8.76
13.84
11.30
4.39
+/- Computer Systems
-13.95
-11.83
8.31
10.41
+/- S&P 500 TR
-34.59
-48.09
6.07
15.57
History (03/31/2013)
2008
2009
2010
2011
2012
YTD
Apple Inc.
-56.91
53.07
25.56
32.71
-16.32
Computer Systems
-39.24
74.07
20.77
14.84
15.37
-3.67
S&P 500 TR
-37.00
26.46
15.06
2.11
16.00
10.61
+/- Computer Systems
-17.67
72.83
32.30
10.72
17.34
-12.65
+/- S&P 500 TR
-19.91
38.00
23.45
16.71
-26.93
Dividend Yield %
1.00
1.80
Market Cap USD Mil
75,997
190,983
297,089
377,519
499,696
415,683
Apple has been able to enjoy the superior financial performances because the company has fully implemented electronic operations to accomplish its day-to-day business activities. Barua, et al. argues that electronic business operations have assisted firms to enjoy superior performances over their competitors. Typically, electronic transactions and information exchanges assist firms to enhance effective information exchange with customer and supplier. Firms have taken the advantages of electronic procurement (e-procurement) to procure materials at low cost from anywhere in the world. More importantly, the net-based business operations have assisted firms to facilitate their value chain activities, which enhance relationships with customer and suppliers.
Typically, firms could lower costs using the high-level digitalization and substitute expensive human labor with IT operations to achieve a superior financial performances. Moreover, e-procurement assist firms to better coordinate their material movement and procurement process that ultimately reduce inventory. Thus, firm using digitalization business operations are better in coordinating their materials movement and procurement process, which ultimately reduce transportation costs, obsolescence and reduce inventory.
Over the years, Apple has taken the advantages of internet to develop electronic procurement to cut costs. The e-procurement is the use of internet to acquire goods and services at low costs. Before 2000, Apple's ability to satisfy customer was significant reduced because there was a significant shortage of G4 chip supplied by Motorola. Typically, Apple experienced huge customer dissatisfaction because of the shortage of G4 chips in 1999. Apple tried to correct the problem of material shortage that occurred in 1999 by implementing the e-procurement. The e-procurement has assisted Apple to source for cheap and quality materials used to design and develop its product at low costs.
Based on internet advantages that Apple has enjoyed, the company has enjoyed superior financial performances over the years. Overview of the company statement of comprehensive income reveals the extent the company has been able to increase its financial performances using the internet technology. Between 2008 and 2012, Apple Inc. increased its the total revenue from $37.5 Billion to $156.5 billion dollars revealing that the company was able to increase its total revenue by 321% ($119 Billion) between 2008 and 2012. The company also increased its the net income from $6.1Billon to 41.7 Billion between 2008 and 2012.The company was able to increase its net income by 584% ($35.6 Billion) within the span of five years. The company was able to record the supernormal profits within the short period because Apple focused on the research and development (R & D) to develop highly advanced products. Between 2008 and 2009, the company increased the expenses on R&D by 207% revealing the increase from $1.1 Billion in 2008 to $3.4 Billion in 2012. Zedtwitz et al. argue that top firms in the United States intensified on the R&D to derive low cost and 24-hour faster global communication. With increase in the R&D expenses, Apple has devised a sophisticated technology to coordinate with its global suppliers using faster internet communication.
Apple Inc. Comprehensive Statements of Income
Income
2012
2011
2010
2009
2008
Revenue
65.22B
42.90B
37.49B
Cost of Revenue
87.85B
64.43B
39.54B
25.68B
24.29B
Gross Profit
68.66B
43.82B
25.68B
17.22B
13.20B
Research and Development Expense
3.381B
2.429B
1.782B
1.333B
1.109B
Selling, Admin. And General, Expense
10.04B
7.599B
5.517B
4.149B
3.761B
Depreciation and Amortization
Operating Interest Expense
Operating Income Expense
Total Operating Expenses
74.46B
46.84B
31.16B
29.16B
Operating Income
55.24B
33.79B
18.38B
11.74B
8.327B
Non-Operating Income
Pretax Income
55.76B
34.20B
18.54B
12.07B
8.947B
Provision for Income Taxes
14.03B
8.283B
4.527B
3.831B
2.828B
Income after Tax
41.73B
25.92B
14.01B
8.235B
6.119B
Minority Interest
Equity In Affiliates
Income Before Disc. Operations & Extraordinaries
41.73B
25.92B
14.01B
8.235B
6.119B
Investment Gains or Losses
Other Incomeor Charges
Income from Discontinued Operations
Net Income
41.73B
25.92B
14.01B
8.235B
6.119B
One of the importantly aspects of Apple R & D. is the use of cloud computing to engage in research and development. The cloud computing technology is the use of computing resources to deliver services over the internet network. Typically, Apple has been able to coordinate its global business units using cloud computing technology, and the company has been able to involve its global business units in the R&D. Using this strategy, Apple has been able to derive a superior performances from R&D at lower costs.
"Apple's success, on the other hand, has been well publicized. With lean R&D investments of about $2 billion in 2011, Apple's R&D as a percent of sales is only 2.7%-less than a quarter of that spent by Nokia. However, smart investments and a clear market vision by the late CEO Steve Jobs helped Apple to rise within the past five years and become the first or second largest industrial company in the world. Apple succeeded with smart R&D, close attention to the marketplace and the user, and an emphasis on quality-not just relying on large amounts of R&D or a position as technological leader." (R&D Magazine, 16).
Moreover, Apple has been able to record super performances in its financial outcomes because the company has embarked on e-training for its employee globally. The e-training strategy adopted by the company has assisted in increasing the company the total assets within few years.
Overview of the Apple Inc. balance sheets shows that the electronic technologies that the company used for its business operations tremendously increased the company total assets between 2008 and 2012. In 2008, the total assets of Apple Inc. was $36 Billon, however, the company total assets increased 176 Billion in 2012 revealing 389% increase between 2008 and 2012.
Apple Inc. Balance Sheet
Apple Inc. Balance Sheet
Assets
2012
2011
2010
2009
2008
Cash and Short-Term Investments
29.13B
25.95B
25.62B
23.46B
22.11B
Receivables
18.69B
11.72B
9.924B
5.057B
2.422B
Inventory
1.051B
Prepaid Expenses
Other Current Assets
6.458B
4.529B
3.447B
1.444B
3.92B
Total Current Assets
57.65B
44.99B
41.68B
31.56B
30.01B
Gross Property, Plant and Equipment
21.89B
11.77B
7.234B
4.667B
3.747B
Accumulated Depreciation
6.435B
3.991B
2.466B
1.713B
1.292B
Net Property, Plant and Equipment
15.45B
7.777B
4.768B
2.954B
2.455B
Long-Term Investments
92.12B
55.62B
25.39B
10.53B
2.379B
Goodwill and Intangibles
5.359B
4.432B
1.083B
Other Long-Term Assets
5.478B
3.556B
2.263B
2.011B
Total Long-Term Assets
71.38B
33.50B
15.95B
6.165B
Total Assets
75.18B
47.50B
36.17B
Liabilities
2012
2011
2010
2009
2008
Current Portion of Long-Term Debt
Accounts Payable
21.18B
14.63B
12.02B
5.601B
5.52B
Accrued Expenses
11.41B
9.247B
5.723B
3.852B
4.224B
Deferred Revenues
5.953B
4.091B
2.984B
2.053B
1.617B
Other Current Liabilities
Total Current Liabilities
38.54B
27.97B
20.72B
11.51B
11.36B
Total Long-Term Debt
Deferred Income Tax
Other Long-Term Liabilities
16.66B
10.10B
5.531B
3.502B
1.745B
Total Long-Term Liabilities
19.31B
11.79B
6.67B
4.355B
2.513B
Total Liabilities
57.85B
39.76B
27.39B
15.86B
13.87B
Shareholder's Equity
2012
2011
2010
2009
2008
Common Shares Outstanding
Preferred Stock
Common Stock, Net
16.42B
13.33B
10.67B
8.21B
7.177B
Additional Paid-in Capital
Retained Earnings
62.84B
37.17B
23.35B
15.13B
Treasury Stock
Other Shareholder's Equity
Minority Interest
Shareholder's Equity
76.62B
47.79B
31.64B
22.30B
Total Liabilities and Shareholder's Equity
75.18B
47.50B
36.17B
The study uses ratio analysis to provide the greater understanding on the impact of internet on the company profitability for the past years.
Ratio Analysis
The paper uses the key ratios such as profitability, financial health and efficiency ratio to enhance greater understanding on the impact of internet on the company financial performances. The ratio analysis is a quantitative tool to evaluate a company financial health. The profitability ratio table reveals that Apple gross margin increases yearly between 2008 and 2012. Gross margin reveals the amount of income that a firm realize from every dollar invested. From the data presented, it is revealed that Apple Inc. has been able to efficiently use its resources to generate profits. The company gross profit margin was 34.31% in 2008 and the company was able to increase its gross margin to 41.91% in 2012.
Similarly, the company-operating margin increased from 19.32% in 2008 to 33.46% in 2012. The operating margin reveals the extent the company has been able to control its operating expenses. The ROA (return on asset) reveals the profitability of a company with reference to its total assets. The ROA reveals the efficient method that a company employs to generate returns from its assets. Apple has been able to increase its ROA since 2008. The company ROA in 2008 was 14.89% and it increased to 24.94% in 2012. Similarly, the ROE (return on equity) increased 27.19% in 2008 to 38.41% in 2012. Moreover, Apple net profit margin also increased from 14.88% in 2008 to 25.35% in 2012 revealing that the company was able to generate profitability during the period.
Apple Inc. Profitability Ratios
Margins % of Sales
TTM
2012
2011
2010
2009
2008
Revenue
COGS
58.09
56.13
59.52
60.62
59.86
65.69
Gross Margin
41.91
43.87
40.48
39.38
40.14
34.31
SG&A
6.24
6.42
7.02
8.46
9.67
11.58
R&D
2.21
2.16
2.24
2.73
3.11
3.41
Other
Operating Margin
33.46
35.30
31.22
28.19
27.36
19.32
Net Int Inc. & Other
0.51
0.33
0.38
0.24
0.76
1.91
EBT Margin
33.98
35.63
31.60
28.42
28.12
21.23
Profitability
TTM
2012
2011
2010
2009
2008
Tax Rate %
25.40
25.16
24.22
24.42
31.75
29.89
Net Margin %
25.35
26.67
23.95
21.48
19.19
14.88
Asset Turnover (Average)
0.98
1.07
1.13
1.06
0.99
1.00
Return on Assets %
24.94
28.54
27.07
22.84
18.92
14.89
Financial Leverage (Average)
1.54
1.49
1.52
1.57
1.50
1.88
Return on Equity %
38.41
42.84
41.67
35.28
31.27
27.19
Return on Invested Capital %
38.41
42.84
41.67
35.28
31.27
27.19
Interest Coverage
Analysis of the company profitability ratio reveals that Apple has been to generate profitability from internet technologies. It is revealed from the company financial data that Apple is one of the top Hi-tech companies that efficiently utilizes the internet technologies to achieve competitive market advantages. With application of internet technologies, the company has also been able to enhance its growth rates within the last 5 years.
Growth Rates
Analysis of Apple growth rates reveals that the company recorded the negative growth rates around 2003 and 2004. (Apple growth rates are presented in the Apple growth rate table). In 2003, the 3-year average of the company net income was negative, -55.56% and the EPS was also -55.66%. Revenue growth rate in 2003 for 3-year average was also negative -8.05%. The major factor leading to the negative growth of the company during the period was that Apple did not fully integrate internet technologies in its business portfolio. The negative growth rates that the company recorded during the period made Apple to launch iTune in April 2003 to full take advantages of internet technologies.
To take advantages of digital internet technologies, Apple signed contract in 2003 with big music companies such as Warner, Universal Music Group (UMG), Sony, and BMG. Typically, Apple made their music available in the iTune store, where customer could download this music at small fees. It was not surprising that 18 hours after the service went live; Apple had sold approximately 275,000 tracks. The media soon provided promotional platform for Apple, which made the business to achieve an incredible success. The success of the iTune made Apple to launch the service globally in 2004. Typically, Apple iTune stores was launched in the United Kingdom, Canada, Germany, France, Austria, Belgium, Luxembourg, Italy, Portugal, Finland, Netherlands, Spain, and Greece.
Apple Inc. Growth Rates Table
Latest Quarter
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Revenue %
Year over Year
17.65
65.96
52.02
32.10
35.30
24.29
38.65
68.27
33.38
8.10
3-Year Average
49.37
39.54
30.48
32.60
42.60
45.99
34.37
15.57
-8.05
5-Year Average
41.16
36.17
38.97
39.23
33.12
29.21
11.78
6.18
0.88
10-Year Average
35.05
23.37
21.47
18.52
12.99
6.98
2.33
-1.04
-2.48
Operating Income %
Year over Year
-0.75
83.79
56.60
87.09
42.32
79.74
48.67
3-Year Average
75.28
60.96
68.52
56.09
5-Year Average
68.97
61.96
25.88
-1.91
10-Year Average
42.78
41.73
37.44
9.21
-4.60
Net Income %
Year over Year
84.99
70.16
70.36
38.27
75.77
48.99
6.15
3-Year Average
75.03
58.85
60.57
53.56
-55.56
5-Year Average
67.11
60.03
97.22
11.18
-14.41
-25.91
10-Year Average
33.39
29.92
31.65
12.15
-1.16
-2.25
EPS %
Year over Year
-0.43
59.50
82.71
66.85
69.40
36.39
73.13
45.51
5.56
3-Year Average
69.41
72.85
56.80
58.74
50.90
-55.66
5-Year Average
62.22
64.90
57.56
91.24
7.43
-17.02
-28.96
10-Year Average
85.81
30.11
25.97
26.15
6.11
-5.94
-6.45
After 2004, Apple iTune Digital music became the most widespead digital music in the world. With iTune digital music, Apple celebrated its achievements over the years:
Apple sold 70 million songs in the first year with iTune digital music.
One million music videos sold within 20 days after it was introduced in 2005.
In 2006, Apple sold one billion songs and gained 88% of market shares on downloaded music in the U.S.
In 2007, the iTune stores became the most popular store to download movies and music.
In 2008, Apple announced that customer downloaded over 4 billion songs from iTune stores globally, which made the company to be the second largest retailer of digital music in the U.S.
In 2010, customer downloaded over 10 billion songs.
In 2011, 15 billion apps downloaded.
The success of the company iTune stores is vividly revealed in the company growth rates. Since 2004, Apple has recorded a tremendous success. In 2004, the company revenue, net income and the EPS growth rate keep increasing.
The paper also evaluates the company financial health to enhance greater understanding on the impact of internet and globalization on the company financial performances.
Analysis of the Apple Financial Health Ratio
This study uses the data from Apple balance sheet to analyze the company financial health ratio. Overview of the company balance sheet in percentages reveals that the company total current assets decline between 2008 and 2012. However, the company long-term assets increased between 2008 and 2012. The long-term assets ratio was 4.89% in 2008 and increased to 52.26% in 2012. Typically, the company believes in investing in the long-term investments than the short-term investments. Moreover, the company current liabilities declined between 2008 and 2012. The company long-term liabilities also declined between 2008 and 2012. The company long-term liabilities ratio was 11.25% in 2008. However, the company long-term liabilities declined to 10.97% in 2012.
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