AAPL Apple Inc Sector Information Technology Analyst by jennyyingdi


									AAPL                                               Apple Inc.                                                     6/7/2011
Sector: Information Technology                                                                      Analyst: Barry Purnell
                           Current Data (from Reuters 06/7/2011)
Current Price                 $ 333.24        Market Cap              $318.60B            5 Yr Hist EPS Growth Rate      57.58%
52 Week Range           235.56-364.90         Sales Growth (TTM)        71.06%            Gross Margin (TTM)             39.07%
Price / TTM                      16.11        ROE                       38.78%            Dividend Yield                  0.00%

                                                     Portfolio Holdings
                        Shares held:           Most recent transaction date                    Most recent transaction:
CFASP Portfolio              40                        3/21/2011                              Sold 10 shares @ $336.13
Davidson Portfolio           50                        6/12/2009                            Purchased 50 shares @ $137.02

                                                    Business Description
 Apple Inc. designs and manufactures consumer electronics, computer software, and personal computers. Apple sells its
products through its 284 retail stores, online, and through third party channels. Besides just the consumer markets Apple also
sells to educational and government organizations with direct sales. Recently Apple has started competing in consumer
electronics market by developing the iPod, iPhone, and iPad. Apple made 35% of its revenues from Computers, 26% from
iPhones, 20% from iPods, and 10% from its iTunes store.
The companies strong brand image allows them to charge a premium price for its products. Intense competition in the
smartphone market, tablet PC, and digital music player threaten to erode some of the market share of the company.

                                         Original Reasons For Purchase (3/09/09)
1. All 3 business lines are growing and gaining market share.
2. Consistent record of innovation and successful new product launches.
3. Strong balance sheet with >$28 billion in cash and short-term investments, and no long-term debt.
4. Excellent marketing operation – the Apple brand commands a premium price point.
5. Many potential catalysts (see list below).

                                            Current Reasons for Hold (6/7/11)
 1. Apple continues to reinvent itself with new products while maintaining a loyal customer base.
 2. Apple is positioned well in multiple product categories, to include handset phones and PC’s.

Risks and Issues                                                 Catalysts
1. Increasing competition in each market                         1. Continued growth in iPhone (esp. international growth)
2. Loss of CEO Steve Jobs due to health issues                   2. Continued growth in Mac market share
3. Failure to innovate and launch successful new products        3) New product releases

                                                        Price Target
      Target:          $405*                          Method      Multiple used:            Value
  % to Target          21.5%                             DCF                               350.56       Prior manager estimation
                                                      Relative                               405        *Yahoo Finance Analyst
                                                                                                       Mean November 29th 2010

                                    Comparable Valuation Summary (June 2011)
Company Name                    Ticker      Dividend Yield       P/E TTM     Price/BV                          ROE (TTM)
Hewlett-Packard                  HPQ                   0.90%                       7.13             1.88           21.71%
Microsoft                       MSFT                   2.67%                       9.52             3.79            43.96
Research in Motion              RIMM                    N/A                        6.12             2.28           41.24%

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