We are going to enter July 2021 soon. Today, let’s talk about a behemoth, APPLE INC.
APPLE INC.
Apple was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in year 1976 in a garage. When they started Apple, they only have one intention, i.e. to sell their Apple 1 personal computer. Apple was then incorporated by Steve Jobs and Steve Wozniak as Apple Computer, Inc. in year 1977.
To cut the story short, in year 1983, Jobs invited John Sculley (former CEO of Pepsi Cola) to become the CEO of Apple. But along the way, Sculley and Jobs both had different vision for Apple. In year 1985, Jobs left Apple. In year 1997, Jobs retuned to Apple, the company that he founded. He focused on bringing the company back to its glory and profitability.
Subsequently, he launched iPod, iMac, iTune etc, which became huge success for Apple. Believe it or not, I owned a iPod during my college year and I still kept it in my drawer till now though, it is still functioning well, I rarely use it.
NOW
Apple started with Apple 1 personal computer in year 1976. Today, we all know Apple has been growing to a behemoth of the world having wide range of innovative products and software which changed the world.
BUSINESS
Apple basically has two (2) business segment: -
1. Products; and
2. Services.
Products consist of iPhone, Mac, iPad, Wearables, Home and Accessories. Products are still the main source of revenue (about 80%) of Apple.
WHAT I LIKE ABOUT APPLE
What I like about Apple is its strong brand. On top of that, Apple managed to maintain its high profit margin based on premium pricing and also its ability to adjust the price in certain market condition. Apple has an effective innovation technological capability. Some features in Apple products or devices are exclusive and once you have get used to the interface and usage of Apple products (like iPhone) you may have difficulties of changing them to any other brand product.
Apple has no competitors? Not quite so. If you look at the innovative products and devices of Apple, it seems that Apple is applying the Blue Ocean strategy where they have gone beyond the competitive markets by entering into a new unexplored market. iTune, iPod and iPad are the great examples. They developed and created new features along their products to make an eco-system out of them.
GOING FORWARD
Going forward, investing in Apple, I started to think whether or not Apple can still have its following strength in currently economic environment: -
1. Strong brand;
2. High profit margin; and
3. Effective innovation products and service.
Tim Cook has been leading Apple since year 2009 where he took over the role of Chief Executive Officer from Steve Jobs. In an interview, this what Tim Cook had said in year 2009:-
“We believe that we are on the face of the earth to make great products and that's not changing. We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don't settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we're wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.”
Has he kept his vision and promise? Has he walked to the talk? I will let you to decide.
PORTFOLIO PERFORMANCE
No investment from me in June. Since the inception of our fund in May 2020, we have been up close to 42.33%. We are still able to maintain our risk level at 4 as can be seen from the “average risk score”.
Stay safe.
Norman Liew
MNMLH
29.06.2021
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