Financial Analysis of Apple, Inc.

FINANCIAL ANALYSIS OF APPLE, INC.

Sarah Harris

Executive Summary

This report serves as an analysis of a leading company in the computer manufacturing industry. Apple is presently within the top five positions for being one of the top computer manufacturing companies in the world. Currently, it holds 5.8% of the market share and leads the market in fourth place.

In this report, Apple’s financials are analyzed. These figures are compared to their main competitor, Hewlett Packard, which is the industry’s top leader. In addition, also included in this report is an in-depth look at the computer manufacturing industry: trends, changes and innovations that are affecting Apple and its competitors.

By the end of this report, an insightful perspective on the financial performance of Apple and their future success or failure in their industry will have been provided.

Brief History and Current Happenings

Apple was founded on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The first computer manufactured by Apple, the Apple I, was hand-built by Steve Wozniak in the living room of Job’s parents’ home. It was sold as a mother board equipped with a CPU, RAM and basic textual-video chips. (source: Computer Manufacturing Industry Report)

Apple Products and Services

Today, Apple designs, manufactures, and markets personal computers and related software, services, peripherals, and networking solutions. It also designs, develops and markets a line of portable digital music players along with related accessories and services, including the online sale of third-party audio and video products. (source: www.wikipedia.com/appleinc)

The table below outlines each major product’s contribution to Apple’s total sales.

NET SALES BY PRODUCT (in millions)

September 30, 2006

Product Sales Contribution to Sales

Desktops (b) $ 4,020 17%

Portables (c) 6,294 26%

Total Macintosh Sales 10,314

iPod $8,305 35%

Other music related

products and services (d) 2,496 10%

iPhone and related

products and services (e) 123 1%

Peripherals and other hardware (f) 1,260 5%

Software, service, and other sales (g) 1,508 6%

Total Net Sales $24,006

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In millions, except share amounts which are in thousands)

Common Stock

Accumulated

Other

Comprehensive

Income (Loss)

Deferred Stock

Compensation

Retained

Earnings

Total

Shareholders'

Equity

Shares

Amount

Balances as of September 25, 2004 782,887 $ 2,582 $ (101 ) $ 2,597 $ (15 ) $ 5,063

Components of comprehensive income:

Net income — — — 1,328 —