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Apple Inc is a technology company. It has four principal sectors they include software company, Hardware Company, Retail Company and Services Company. Apple Inc is a success story in its diverse business areas especially; it gained fame and success with the launch of the iPod which followed by i phones. It registers supernormal profits.
Since apple Inc constitutes of four departments and it is thriving at an extraordinarily high rate, other companies in the industry are not able to compete with it. Apple has vertical integration, thus; it maximizes its profits by controlling the chain of distribution. The company enjoys the sole control of the manufacturing process, and the process of selling products. Apple, as a result, enjoys high profits compared to its rival companies such as HP. Hp creates similar products as Apple Inc; however, they lack control and monopoly power over the operating system in the market (The Accountant 1874). Another source of the success story of apple Inc is in its simplicity, and the adoption of uniqueness in the market.
As a result, a difference arises in the two company’s financial analysis statement as described in this essay. Apple Inc gross margin is 42.41% in relation to the sales they make per year. On the other hand, HP’s gross margin is 44.31%.Comparing the individual company’s sales; apple Inc is making significant sales of 124.84 billion compared to its counter part company HP which on only making sales worth 2.68 billion per year. The higher the sales turn over for a company the higher the net profits. This clearly indicating the difference in the two companies’ net profit margin; Apple Company enjoys a net profit of 25.80% while HP is enjoying 17.70% as its net profits.
Every person persuasion to invest in a company is its establishments and high net profit margin. A person will always invest their portfolio in an investment that promises returns on their capital investments. Hence, there is a difference in the companies’ earnings per share in the capital market. Apple’s earning per share is 35.11 compared to that of hp which is at 4.35 earnings per share. Apple earning per share is relatively higher than that of hp, mainly because it is a highly performing company in the market, and its net profits are high compared to that of Hps. The higher the demand in the capital market, the higher price of the share capital in the market (League of California Cities 1960).
In the year 2012 first quarter, apple Inc has total assets of 138,681.0 billion, while that of Hp Company is 5,257.89 billion as per the interim reports of the sec filings. The wider asset base may be explained by the high earnings per share of apple Inc. As a result, apple Inc thriving in the market and maintaining a high record of profits, analysis by Zacks average brokerage analysts advice a moderate buy to all potential investors in the market. This is a positive compliment that persuades the potential investors to commit their investments in the Inc. On the other hand, the Hp Company after analysis of the company the zack average brokerage analyst recommends a hold in the buy of the share capital. This is a negative feedback on the company that warns potential investors to take in consideration other factors before investing their capital in the company.
From the financial analysis of the two companies operating in the same industry, Apple Inc has an upper hand in the market share, profits, capital base and developments anticipated. The main source of success is its uniqueness and simplicity in the products compared to the products of other companies in the industry. Vertical integration of the company different entities has also contributed to its superiority in the market.