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2019 Vault Rankings

At a Glance

Uppers

Working for a top brand that helps influence people's daily life

Working with the best and the brightest

Downers

Some employees say that promotion and finding a career path can be challenging

Negative press over supply chain issues in China and elsewhere

Demanding culture of perfectionism

The Bottom Line

You don't choose to work for Apple; the company chooses you-small wonder given that Apple is widely recognized as one of the most desirable companies in the world to work for.

About Apple Inc.

Ask Siri to name the most successful company in the world and it might respond: Apple. And it's not just out of familial pride. Apple consistently ranks highly in profit, revenue, market capitalization, and consumer cachet. In 2018, the company became the first reach a trillion dollar market capitalization, however briefly. The iPhone, in its 11th year, has been the company's golden goose, generating tens of billions in revenue and profit. Other familiar Apple products and services include Mac computers and iPad tablets, as well as iTunes, the App store, and Apple Music. Primarily a consumer-oriented company, Apple has inked alliances with Accenture, General Electric, and IBM to deepen its penetration of the enterprise market. About 60% of revenue comes from outside the Americas.

Operations

Apple has come to rely on the iPhone for more than 60% of sales, while its other hardware products, the iPad and the Mac desktop and notebook computers, account for about 10% each. Services, which includes the App Store, iCloud, Apple Music, and Apple Pay mobile payment, is the second biggest revenue producer, supplying about 15% of revenue. The Other Products segment, which include the AppleWatch and HomePod, makes up the remaining sales.

Apple's hardware products are tightly integrated with the company's software, which helps its devices work smoothly, but in some ways limits its market reach and can frustrate users who would like to have access to more third-party products including hardware. The company's operating systems are iOS for mobile devices, MacOS for computers, Apple WatchOS for the watch, and tvOS for Apple TV. The company generally releases generational updates of its operating systems once a year.

Apple conducts virtually all research and development in the US. As for manufacturing, the company outsources substantially all production to contractors located mainly in Asia (China, Korea, and Japan), while some Mac components are made in the US and Ireland.

Geographic Reach

Apple, based on Cupertino, California, generates 40% of sales in the Americas market, which includes the US, while Greater China and Europe contribute about a quarter of revenue and a fifth of revenue, respectively.

The company has more than 500 Apple retail stores in the US and some two dozen countries. Australia, China, Canada, and the UK are among the company’s largest retail store markets outside the US.

Sales and Marketing

Apple sells its products through its own retail stores and website, as well as through a direct sales force. In addition, the company distributes through indirect channels, such as third-party retailers such as Best Buy, resellers, and cellular network carriers such as Verizon, AT&T, Sprint, and T-Mobile. Indirect channels account for about 70% of Apple's revenue.

Financial Performance

The popularity of the iPhone fueled Apple's strong revenue and earnings growth in the past decade. The company's revenue and profit hit all-time highs in 2015, coming in at $234 million and $53 million, respectively. Revenue and earnings fell back in 2016 with weaker iPhone sales. Growth resumed in 2017 and 2018, when it posted record revenue and profit.

In 2018 (ended September), Apple's revenue increased 16% to $265.6 billion, about $36 billion more than 2017 revenue. Sales of the iPhone (up 18%), Services (up 24%), and Other Products (up 35%) drove the gain. The iPad and Mac categories posted declines of 2% and 1%, respectively, in 2018 from 2017.

The higher iPhone revenue was driven by the higher prices the company charged for models released in 2017; it sold just 966,000 units more in 2018 than it did in 2017. The company credited higher App Store and licensing revenue for the gain in the Services segment. Sales increases in geographic regions matched the overall growth rate, except for Japan's 23% increase.

Apple's profit rose 23% to $59.5 billion in 2018 from $48.3 billion the year before as it maintained most costs at 2017 levels as a percentage of sales.

The company's coffers held about $237.1 billion in cash, equivalents, and short-term securities in 2018 compared to $268.9 billion in 2017. Operations generated $77 billion in cash and investing activities provided about $16 billion while financing activities used about $88 billion.

Strategy

Apple has two priorities: maintain the popularity of the iPhone and come up with a new world-changing product.

In 2018 Apple released another round of iPhones with the new iPhone XS and iPhone XS Max. They run on an Apple-designed chip that uses machine learning for dealing with photos, gaming, augmented reality, and other functions and features. The cost is about $1,000 and up.

Apple has been encouraged by the 2018 performances of its Services and Other Products segments. Services, which encompasses Apple Music, the App Store, and Apple Pay, grew 24% in 2018 from 2017, and accounts for a higher percentage of overall sales than the iPad and Mac segments. 

The company also introduced the HomePod, its entry in the home digital assistant race against Amazon's Alexa and Google's Google Home. The HomePod runs about $350 compared to less than $200 for the competitors' products, but it has better sound, according to Apple. Revenue from Other Products (HomePod, Apple Watch and Apple TV) rose 35% year-to-year. The company changed the name of the segment to Wearables, Home and Accessories.

With its 2019 financial reporting, Apple said it would no longer disclose the number of phones, computers, and tablets sold, and, instead, rely on sales figures to convey its performance.

AR is the foundation for solving the second priority, innovation. The AR capabilities in the latest versions of the iOS make the operating system the world's largest platform for augmented reality and developers have created more than 1,000 apps with AR features. AR could provide phone users with more information about where they are and what they're doing. The company's history of innovation has led the media, analysts, and customers to expect big products from Apple on a regular basis. They're disappointed when it fails to deliver.

Looking to increase its foothold in corporations, Apple has partnered with IBM, Salesforce, Accenture, and General Electric to develop business uses for the iPhone and iPad. With IBM, Apple developed a MobileFirst for iOS app and has signed some 240 deals with companies. It also developed offerings involving IBM's Watson and cloud technologies.

Apple is working with Salesforce and developers to build their native mobile apps for Salesforce products. Apple also has made inroads with airlines with apps and devices designed for pilots, customer service, and maintenance. It claims more than 450 airlines have adopted iOS devices.

Apple has money to develop new products and services. At the end of 2018 (ended September), it has about $237 billion in cash, equivalents, and short-term securities. The company has promised shareholders it would return cash to them through stock buybacks and dividends, but it should still have enough money for R&D and manufacturing.

 

Mergers and Acquisitions

In 2019 Apple agreed to buy a majority stake Intel's smartphone modem business for about $1 billion. The deal includes about 2,200 Intel employees and some 17,000 wireless technology patents. The acquisition gives Apple control over developing modem chips for its 5G smartphones. Apple has been using Qualcomm chips and will continue to do so for six years, according to a 2019 agreement with Qualcomm chips. That should give Apple time to develop its own chips. The Intel deal is expected to close by the end of 2019.

In 2018 Apple made several acquisitions to strengthen and expand several parts of its business.

Apple brought much of the hardware that manages power in iPhones and Apple Watches in-house in a deal worth $600 million with Dialog Semiconductor. Dialog has supplied Power Management Integrated Circuits (PMICs) to Apple since the iPhone was introduced. In the deal, Apple paid $300 million for the 300-member Dialog engineering team that works on Apple's PMICs, PMIC patents, and offices in the UK, German, and Italy. The other $300 million went to lock in a three-year supply of PMICs and other chips.

Apple's plans for augmented and virtual reality-based products took another step when the company bought Akonia Holographics, a privately held company in Longmont, Colorado. The company's holographic lens technology could be used to develop eyeglasses that show information to the wearer. The deal could advance Apple's efforts to develop a product line around augmented reality technology.

Apple, in another 2018 transaction, closed its acquisition of Shazam, the music identification application for smartphones. When a user opens the Shazam app while music is playing, the app identifies the song and artist. Shazam, based in the UK, has operated since 2012 and was an early offering on Apple's app store with more than a billion downloads since.

Also in 2018 Apple acquired Texture, which offers digital subscriptions to about 200 magazines for a monthly fee. The acquisition slots into Apple's services segment, which includes Apple Music. Magazines available on Texture, which has been called the Netflix of magazines, include the New Yorker, Men's Health, Time, Rolling Stone, Real Simple, and Cosmopolitan. Texture's parent company, Next Issue Media LLC, is owned publishers Condé Nast, Hearst, Meredith, and Rogers Media, and private equity firm, KKR.

Other 2018 acquisitions were of Platoon, a developer of analytics tools to provide musicians with the functions record labels used to handle, and Silk Labs, which develops artificial intelligence for digital assistants, to further develop the HomePod and Siri.

Company Background

College dropouts Steve Jobs (1955-2011) and Steve Wozniak founded Apple in 1976 in California's Santa Clara Valley. After Jobs' first sales call brought an order for 50 units, the duo built the Apple I in his garage and sold it without a monitor, keyboard, or casing. Demand convinced Jobs there was a distinct market for small computers, and the company's name (a reference to Jobs' stint on an Oregon farm) and the computer's user-friendly look and feel set it apart from others.

The company's Macintosh made a splash in the mid-1980s, driven by its Super Bowl commercial in 1984. As the company grew, Jobs was forced from the company. Apple never matched the IBM PC in total sales, but it had a cultural cachet and ease-of-use that led to its foothold in education, publishing, and other creative industries.

In the 1990s, a succession of CEOs tried different strategies to increase sales, including licensing the company's technology to third-parties to produce Apple clones. The strategy never paid off.

Jobs returned in the late '90s as Apple was on the brink of bankruptcy. He slashed the company's bloated product portfolio and introduced a line of eye-catching Macintosh computers. Then came the iPod music player, which led to the iPhone, which became one of the world's most successful products, and the iPad tablet. More than 2 billion devices running on Apple's mobile operating system, iOS, have been sold. While iPhone sales have been surpassed by Android devices, the premium Apple charges for its products have driven record sales and profitability.

Jobs died in 2011 from pancreatic cancer. His successor, Tim Cook, has run the company since.

Apple Inc.

1 APPLE PARK WAY
Cupertino, CA 95014-0642
Phone: 1 (408) 996-1010

Stats

Employer Type: Publicly Owned
Stock Symbol: AAPL
Stock Exchange: , NASDAQ
Chairman: Arthur D. Levinson
SVP and CFO: Luca Maestri
COO: Jeffrey E. Williams
Employees (This Location): 2,000
Employees (All Locations): 132,000

Major Office Locations

Cupertino, CA

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