Company Profile - Apple - Q4 201205 Nov 2012 Unite d State s Consume r Ele ctronics Apple

Domestic Company ProfilesCompany OverviewLeading designer and manufacturer of consumer electronics devices , personal computers and computer software. The company's best-known consumerelectronics products inc lude the iPod, iPhone and iPad, as well as Macintosh computers . Beginning to move into supplementary software-as-a-service (SaaS)sectors through the launch of Apple iCloud, iTunes, App Store and Apple TV platforms.Recent DevelopmentsQuarterly sales volumes of iPhones and iPads continue to lead the industry. In the quarter ended June 25 2011 (Q3 FY2011), Apple sold 20.34mn iPhones and9.25mn iPads, y-o-y increases of 142% and 183% respectively. The company also sold 3.95mn Macs (up by 14% y-o-y) and 7.54mn iPods (down by 20% y-o-y).Continued robust growth in Mac sales was notable in a period when sales of mass market personal computers were generally in decline. iPod sales ,meanwhile, are affected by the multimedia capabilities of iPhones and iPads, as well as tablets and smartphones from other vendors.The iPhone 4 was launched in selected markets through selected carriers around the world in June 2010. The fifth-generation iPhone is widely expected to belaunched in October 2011, although at the time of writing, Apple had neither confirmed the existence of the device or a timetable for its launch.The first-generation Wi-Fi-only iPad was launched in April 2010 and a 3G vers ion followed quickly. A second-generation model, iPad 2, was launched in March2011 and it is widely expected that iPad 3 will debut early in 2012 (Apple has yet to confirm plans for iPad 3 and no launch date been set at the time ofwriting). Rival Amazon.com is expected to launch an Android-based tablet/e-reader device in Q411. It would not be surpris ing if Apple were to disrupt theeffect of that launch by bringing forward the introduction of iPad 3.As with the iPhone, the first iPads were initially only available from a s ingle carrier partner in each country around the world. However, in 2011 Apple launcheda CDMA vers ion of the iPhone for use on the Verizon Wireless network in the US, breaking AT&T's exc lus ivity. Similarly, iPhone 5 is expected to be launched inpartnership with Sprint Nextel, the US' third largest mobile network operator. These moves will help Apple s ignificantly grow its iPhone and iPad sales , whileencouraging greater usage of its iTunes and App Store digital media stores.Apple founder and CEO Steve Jobs res igned in late August 2011 due to continued ill health. The move had been expected for some time and although Apple'sshare price took a short sharp hit as a result, the installation of Tim Cook as Jobs ' successor was well received. Jobs ' death in early October 2011 had ashort term negative impact on the company's share price. However, the company's product pipeline has been fixed and so we see little impact in the nearterm. Apple's share price more than doubled in the first eight months of the year and the company has amassed more than US$73bn, which it can use tomake strategic business and technology acquis itions vital to continued growth. The company has also launched an assault on the wireless technologypatents market, firstly by buying thousands of patents formerly owned by Nortel Networks and secondly by launching a series of devastating legal challengesto many of its competitors in the personal computing and smartphone markets . The latter has already prevented key tablet and smartphone rival Samsungfrom selling hotly-awaited new products in certain high profile markets . Other patent disputes have found in favour of Apple against vendors such as HTCand it is expected that this defensive manoeuvre will help Apple remain a market leader for some time.Future PlansApple is notoriously secretive regarding its future plans. The iPhone 4S arrived in Q411 and that iPad 3 will debut in early-2012 unless , it is fast-tracked to fendoff potential competition from Amazon's new Kindle tablet. New CEO, Tim Cook, is a long-time protg of Jobs and with Apple product development plansrunning to two or three years in advance, it seems likely that there will be little change in product and business strategy for the foreseeable future.Prior to Jobs ' departure, rumours abounded that Apple was looking to resusc itate its Apple TV hardware and software platform and the termination of avideo rental service through iTunes in Q411 suggests that the company will make another attempt to crack the consumer TV market, possibly through anApple-branded smart TV set with an Apple TV/iTunes application at the heart of the embedded electronic programme guide.There are also reports that a 'nano' vers ion of the popular iPhone could be introduced soon. Following the introduction of iPod nano, this would be a budgetvers ion of the standard iPhone, most likely with reduced functionality and fewer features. Lower pric ing would also expose Apple to the medium and lowerends of the handset market for the first time as iPhones have traditionally been marketed as luxury high-end devices with commensurately high price tags.However, as has been seen at other smartphone vendors , the introduction of low- and mid-range smartphones has affected customers ' expectations ofpric ing for high-end models , causing sales of those devices to fall sharply and thus hitting revenue. Apple has previously shown little desire to be a true massmarket vendor, so the possible introduction of an iPhone nano will be carefully scrutinised.Apple's quest in 2011 to buy potentially useful wireless patents developed by others or to c laim ownership of more generic device design and functionalitypatents through the courts suggest an aggress ive defensive approach to future business. The company is particularly sensitive to comparisons of itsproprietary operating system (OS) with Android, the upstart open source OS developed by Google. Its pursuit of Samsung through the courts over the designof that vendor's Galaxy-branded tablet computers and smartphones hint of further action against other vendors in the future and may even ultimately end uptargeting Android.

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Apple is also moving into the c loud computing market by launching a comprehensive suite of c loud storage and c loud computing services under the iCloudbrand. Essentially, this will result in the company bringing a suite of previously disparate services - such as Mobile Me - into a s ingle package. iCloud will allowusers to store data such as music and video for remote download to multiple devices such as iPhones, iPods, iPads and Apple Macs. It can also act as adata synching centre for email, contacts , calendars , bookmarks, notes , etc .PerformanceIn July 2011 Apple announced financial results for its fiscal 2011 third quarter, ended June 25 2011. The company posted record quarterly revenue ofUS$28.57bn and record quarterly net profit of US$7.31bn. These results compare to revenue of US$15.70bn and net quarterly profit of US$3.25bn one yearearlier. Gross margin was 41.7% compared to 39.1% a year earlier. International sales accounted for 62% of revenue in the quarter. During the fourth quarterof fiscal 2011, ending late September, Apple expects revenue of approximately 25bn.PresenceApple is a US multinational with its headquarters in Cupertino, California, and around 35,000 global employees.SectorsIn the third quarter of its fiscal 2011, Apple reported that it sold 3.95mn Macintosh computers , up around 14% y-o-y. Meanwhile, Apple sold around 20.34mniPhones in the quarter, up from 8.40mn one year earlier and ahead of analyst expectations, due to hot sales of its iPhone 4 and increased exposure to the USand Chinese markets .Apple's iPod has been fading as a standalone business due to competition from converged devices , but the company still managed to sell 7.54mn iPodsduring the quarter. iPad sales totalled 9.25mn in the quarter, up from just 3.27mn a year earlier.

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Company Profile - Apple - Q4 2012