Recommended Stocks in Berkshire Hathaway's Investment Portfolio
"... common stocks are subject to irrational and excessive price fluctuations in both directions ..."
—Benjamin Graham
Berkshire Hathaway Stocks
Recommended Stocks in Berkshire Hathaway's Investment Portfolio:
- American Express AXP
- Coca Cola KO
- Johnson & Johnson JNJ
- Procter & Gamble PG
- Wal-Mart Stores WMT
Undervalued-Stock.com issues BUY rating for GILEAD SCIENCES, INC. (GILD)
Undervalued-Stock.com issues a BUY rating for one or more of the following reasons:
- earning history is stable
- Price to earnings (P/E, PE) ratio is below its average PE ratio for the last 10 years
- selling at a price below its book value
- trailing 3-years earnings have risen over the past 10 years
- credit rating is AAA, AA, or A
- did not have a loss during the last recession
- Price to book ratio is below its historical average
- long term earnings growth increase
- strong competitive position
- successful business execution
- business type and size
Gilead Sciences, Inc. (Gilead, we or us), incorporated in Delaware on June 22, 1987, is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. With each new discovery and experimental drug candidate, we seek to improve the care of patients suffering from life-threatening diseases around the world. Gilead’s primary areas of focus include human immunodeficiency virus (HIV)/AIDS, liver diseases such as hepatitis B and C and serious cardiovascular/metabolic and respiratory conditions. Headquartered in Foster City, California, we have operations in North America, Europe and Asia Pacific. We continue to seek to add to our existing portfolio of products through our internal discovery and clinical development programs and through a product acquisition and in-licensing strategy.
Over the past year, we executed our philosophy and strategy to bring best-in-class drugs to market. In keeping with this strategy, we completed several acquisitions and licensing transactions to enhance our pipeline. We also expanded our single-tablet regimen product offerings for the treatment of HIV with the launch of Complera/Eviplera (emtricitabine/rilpivirine/tenofovir disoproxil fumarate) and the anticipated 2012 launch of Quad, which combines four of our HIV medicines in a once-daily single-tablet regimen and is pending Food and Drug Administration (FDA) approval.
Our largest transaction was the acquisition of Pharmasset, Inc. in January 2012 for $11.1 billion. For several years, we have focused a large proportion of our research and development effort on discovering and advancing direct-acting antivirals for the treatment of chronic hepatitis C virus (HCV). The HCV therapeutic market has been and continues to be vastly underserved. Due to the limitations of available therapies, only a small fraction of individuals who are infected with HCV are diagnosed, and an even smaller fraction of those patients are treated. Prior to May 2011, when the first protease inhibitors were approved, only about half of the patients responded to the standard of care combination of pegylated interferon and ribavirin. The addition of protease inhibitors to the standard of care has resulted in incremental response rates for patients with genotype 1 infection; however, this regimen causes substantial side effects such as fatigue, bone marrow suppression, potentially debilitating rash, anemia and neuropsychiatric effects. As such, discontinuation rates with these triple therapy combinations have significantly increased.
GILEAD SCIENCES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
| Year Ended December 31, | ||||||||||||||||||||
| 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME DATA: | ||||||||||||||||||||
Total revenues | $ | 8,385,385 | $ | 7,949,420 | $ | 7,011,383 | $ | 5,335,750 | $ | 4,230,045 | ||||||||||
Total costs and expenses (1) | $ | 4,595,544 | $ | 3,987,198 | $ | 3,482,162 | $ | 2,657,209 | $ | 2,065,538 | ||||||||||
Income from operations | $ | 3,789,841 | $ | 3,962,222 | $ | 3,529,221 | $ | 2,678,541 | $ | 2,164,507 | ||||||||||
Provision for income taxes | $ | 861,945 | $ | 1,023,799 | $ | 876,364 | $ | 702,363 | $ | 635,355 | ||||||||||
Net income attributable to Gilead | $ | 2,803,637 | $ | 2,901,257 | $ | 2,635,755 | $ | 1,978,899 | $ | 1,584,902 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income per share attributable to Gilead common stockholders—basic | $ | 3.62 | $ | 3.39 | $ | 2.91 | $ | 2.15 | $ | 1.71 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Shares used in per share calculation—basic | 774,903 | 856,060 | 904,604 | 920,693 | 929,133 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income per share attributable to Gilead common stockholders—diluted | $ | 3.55 | $ | 3.32 | $ | 2.82 | $ | 2.06 | $ | 1.64 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Shares used in per share calculation—diluted | 790,118 | 873,396 | 934,109 | 958,825 | 964,356 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| As of December 31, | ||||||||||||||||||||
| 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
| CONSOLIDATED BALANCE SHEET DATA: | ||||||||||||||||||||
Cash, cash equivalents and marketable securities | $ | 9,963,972 | $ | 5,318,071 | $ | 3,904,846 | $ | 3,239,639 | $ | 2,722,422 | ||||||||||
Working capital | $ | 11,403,995 | $ | 3,243,132 | $ | 2,940,927 | $ | 3,057,416 | $ | 2,271,344 | ||||||||||
Total assets (2) | $ | 17,303,134 | $ | 11,592,630 | $ | 9,698,559 | $ | 6,936,831 | $ | 5,731,055 | ||||||||||
Other long-term obligations | $ | 147,736 | $ | 27,401 | $ | 35,918 | $ | 21,462 | $ | 11,604 | ||||||||||
Convertible senior notes and unsecured senior notes (3) | $ | 7,605,734 | $ | 3,477,564 | $ | 1,155,443 | $ | 1,098,025 | $ | 1,043,998 | ||||||||||
Retained earnings | $ | 1,776,760 | $ | 1,183,730 | $ | 1,995,272 | $ | 300,314 | $ | 198,775 | ||||||||||
Total stockholders’ equity | $ | 6,867,349 | $ | 6,121,837 | $ | 6,505,158 | $ | 4,465,583 | $ | 3,752,630 | ||||||||||
Undervalued-Stock.com issues BUY rating for Exxon Mobil Corp (XOM)
Energy : Oil& Gas - Integrated
Undervalued-Stock.com issues a BUY rating for one or more of the following reasons:
- earning history is stable
- Price to earnings (P/E, PE) ratio is below its average PE ratio for the last 10 years
- selling at a price below its book value
- trailing 3-years earnings have risen over the past 10 years
- credit rating is AAA, AA, or A
- did not have a loss during the last recession
- Price to book ratio is below its historical average
- long term earnings growth increase
- strong competitive position
- successful business execution
- business type and size
Exxon Mobil Corporation was incorporated in the State of New Jersey in 1882. Divisions and affiliated companies of ExxonMobil operate or market products in the United States and most other countries of the world. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. ExxonMobil is a major manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. ExxonMobil also has interests in electric power generation facilities. Affiliates of ExxonMobil conduct extensive research programs in support of these businesses.
Exxon Mobil Corporation has several divisions and hundreds of affiliates, many with names that include ExxonMobil, Exxon, Esso or Mobil. For convenience and simplicity, in this report the terms ExxonMobil, Exxon, Esso and Mobil, as well as terms like Corporation, Company, our, we and its, are sometimes used as abbreviated references to specific affiliates or groups of affiliates. The precise meaning depends on the context in question.
Throughout ExxonMobil’s businesses, new and ongoing measures are taken to prevent and minimize the impact of our operations on air, water and ground. These include a significant investment in refining infrastructure and technology to manufacture clean fuels as well as projects to monitor and reduce nitrogen oxide, sulfur oxide, and greenhouse gas emissions and expenditures for asset retirement obligations. ExxonMobil’s 2011 worldwide environmental expenditures for all such preventative and remediation steps, including ExxonMobil’s share of equity company expenditures, were $4.9 billion, of which $3.2 billion were included in expenses with the remainder in capital expenditures. The total cost for such activities is expected to remain in this range in 2012 and 2013 (with capital expenditures approximately 45 percent of the total).
The energy and petrochemical industries are highly competitive. There is competition within the industries and also with other industries in supplying the energy, fuel and chemical needs of both industrial and individual consumers. The Corporation competes with other firms in the sale or purchase of needed goods and services in many national and international markets and employs all methods of competition which are lawful and appropriate for such purposes.
Operating data and industry segment information for the Corporation are contained in the Financial Section of this report under the following: “Quarterly Information”, “Note 17: Disclosures about Segments and Related Information” and “Operating Summary”. Information on oil and gas reserves is contained in the “Oil and Gas Reserves” part of the “Supplemental Information on Oil and Gas Exploration and Production Activities” portion of the Financial Section of this report.
ExxonMobil has a long-standing commitment to the development of proprietary technology. We have a wide array of research programs designed to meet the needs identified in each of our business segments. Information on Company-sponsored research and development spending is contained in “Note 3: Miscellaneous Financial Information” of the Financial Section of this report. ExxonMobil held approximately 10 thousand active patents worldwide at the end of 2011. For technology licensed to third parties, revenues totaled approximately $129 million in 2011. Although technology is an important contributor to the overall operations and results of our Company, the profitability of each business segment is not dependent on any individual patent, trade secret, trademark, license, franchise or concession.
The number of regular employees was 82.1 thousand, 83.6 thousand and 80.7 thousand at years ended 2011, 2010 and 2009, respectively. Regular employees are defined as active executive, management, professional, technical and wage employees who work full time or part time for the Corporation and are covered by the Corporation’s benefit plans and programs. Regular employees do not include employees of the company-operated retail sites (CORS). The number of CORS employees was 17.0 thousand, 20.1 thousand and 22.0 thousand at years ended 2011, 2010 and 2009, respectively.
Years Ended December 31, | ||||||||||||||||||||
| 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
(millions of dollars, except per share amounts) | ||||||||||||||||||||
Sales and other operating revenue (1) | $ | 467,029 | $ | 370,125 | $ | 301,500 | $ | 459,579 | $ | 390,328 | ||||||||||
(1) Sales-based taxes included | $ | 33,503 | $ | 28,547 | $ | 25,936 | $ | 34,508 | $ | 31,728 | ||||||||||
Net income attributable to ExxonMobil | $ | 41,060 | $ | 30,460 | $ | 19,280 | $ | 45,220 | $ | 40,610 | ||||||||||
Earnings per common share | $ | 8.43 | $ | 6.24 | $ | 3.99 | $ | 8.70 | $ | 7.31 | ||||||||||
Earnings per common share - assuming dilution | $ | 8.42 | $ | 6.22 | $ | 3.98 | $ | 8.66 | $ | 7.26 | ||||||||||
Cash dividends per common share | $ | 1.85 | $ | 1.74 | $ | 1.66 | $ | 1.55 | $ | 1.37 | ||||||||||
Total assets | $ | 331,052 | $ | 302,510 | $ | 233,323 | $ | 228,052 | $ | 242,082 | ||||||||||
Long-term debt | $ | 9,322 | $ | 12,227 | $ | 7,129 | $ | 7,025 | $ | 7,183 | ||||||||||
Undervalued-Stock.com issues BUY rating for Apple Inc (AAPL)
Company Background
Apple Inc. and its wholly-owned subsidiaries (collectively “Apple” or the “Company”) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple TV®, a portfolio of consumer and professional software applications, the iOS and Mac OS® X operating systems, iCloud®, and a variety of accessory, service and support offerings. The Company also sells and delivers digital content and applications through the iTunes Store®, App StoreSM, iBookstoreSM, and Mac App Store. The Company sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In addition, the Company sells a variety of third-party iPhone, iPad, Mac and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals, through its online and retail stores. The Company sells to consumers, small and mid-sized businesses (“SMB”), and education, enterprise and government customers. The Company’s fiscal year is the 52 or 53-week period that ends on the last Saturday of September. Unless otherwise stated, all information presented in this Form 10-K is based on the Company’s fiscal calendar. The Company is a California corporation established in 1977.
Business Strategy
The Company is committed to bringing the best user experience to its customers through its innovative hardware, software, peripherals, and services. The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative design. The Company believes continual investment in research and development and marketing and advertising is critical to the development and sale of innovative products and technologies. As part of its strategy, the Company continues to expand its platform for the discovery and delivery of third-party digital content and applications through the iTunes Store. As part of the iTunes Store, the Company’s App Store and iBookstore allow customers to discover and download applications and books through either a Mac or Windows-based computer or through “iOS devices,” namely iPhone, iPad and iPod touch®. In January 2011, the Company opened the Mac App Store to allow customers to easily discover, download and install applications for their Macs. The Company also supports a community for the development of third-party software and hardware products and digital content that complement the Company’s offerings. The Company’s strategy also includes expanding its distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.
1
Consumer and Small and Mid-Sized Business
The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company’s products and services greatly enhances its ability to attract and retain customers. The Company sells many of its products and resells third-party products in most of its major markets directly to consumers and businesses through its retail and online stores. The Company has also invested in programs to enhance reseller sales by placing high quality Apple fixtures, merchandising materials and other resources within selected third-party reseller locations. Through the Apple Premium Reseller Program, certain third-party resellers focus on the Apple platform by providing a high level of product expertise, integration and support services.
The Company’s retail stores are typically located at high-traffic locations in quality shopping malls and urban shopping districts. By operating its own stores and locating them in desirable high-traffic locations, the Company is better positioned to ensure a high quality customer buying experience and attract new customers. The stores are designed to simplify and enhance the presentation and marketing of the Company’s products and related solutions. To that end, retail store configurations have evolved into various sizes to accommodate market-specific demands. The Company believes providing direct contact with its customers is an effective way to demonstrate the advantages of its products over those of its competitors. The stores employ experienced and knowledgeable personnel who provide product advice, service and training. The stores offer a wide selection of third-party hardware, software, and other accessories and peripherals that complement the Company’s products.
Education
Throughout its history, the Company has been committed to delivering solutions to help educators teach and students learn. The Company believes effective integration of technology into classroom instruction can result in higher levels of student achievement and has designed a range of products, services and programs to address the needs of education customers. The Company also supports mobile learning and real-time distribution and accessibility of education related materials through iTunes U™, a platform that allows students and teachers to share and distribute educational media online. The Company sells its products to the education market through its direct sales force, select third-party resellers and its online and retail stores.
Enterprise and Government
The Company also sells its hardware and software products to enterprise and government customers in each of its geographic segments. The Company’s products are deployed in these markets because of their power, productivity, ease of use and the simplicity of seamless integration into information technology environments. The Company’s products are compatible with thousands of third-party business applications and services, and its tools enable the development and secure deployment of custom applications as well as remote device administration.
Business Organization
The Company manages its business primarily on a geographic basis. Accordingly, the Company has determined that its reportable operating segments, which are generally based on the nature and location of its customers, consist of the Americas, Europe, Japan, Asia-Pacific and Retail. The results of the Americas, Europe, Japan and Asia-Pacific reportable segments do not include the results of the Retail segment. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as the Middle East and Africa. The Asia-Pacific segment includes Australia and Asian countries, other than Japan. The Retail segment operates Apple retail stores worldwide. Each reportable operating segment provides similar hardware and software products and similar services. Further information regarding the Company’s operating segments may be found in Part II, Item 7 of this Form 10-K under the subheading “Segment Operating Performance,” and in Part II, Item 8 of this Form 10-K in Notes to Consolidated Financial Statements in Note 8, “Segment Information and Geographic Data.”
2
Products
The Company offers a range of mobile communication and media devices, personal computing products, and portable digital music players, as well as a variety of related software, services, peripherals, networking solutions and third-party hardware and software products. In addition, the Company offers its own software products, including iOS, the Company’s proprietary mobile operating system; Mac OS X, the Company’s proprietary operating system software for the Mac; server software and application software for consumer, SMB, and education, enterprise and government customers. The Company’s primary products are discussed below.
iPhone
iPhone combines a mobile phone, an iPod, and an Internet communications device in a single handheld product. Based on the Company’s Multi-Touch™ user interface, iPhone features desktop-class email, web browsing, searching, and maps and is compatible with both Macs and Windows-based computers. iPhone automatically syncs content from users’ iTunes libraries, as well as contacts, bookmarks, and email accounts. iPhone allows customers to access the iTunes Store to download audio and video files, as well as a variety of other digital content and applications. In October 2011, the Company launched iPhone 4S, its latest version of iPhone, which includes Siri™, a voice activated intelligent assistant. In addition to the Company’s own iPhone accessories, third-party iPhone compatible accessories are available through the Company’s online and retail stores and from third parties.
iPad
iPad is a multi-purpose mobile device for browsing the web, reading and sending email, viewing photos, watching videos, listening to music, playing games, reading e-books and more. iPad is based on the Company’s Multi-Touch technology and allows customers to connect with their applications and content in a more interactive way. iPad allows customers to access the iTunes Store to download audio and video files, as well as a variety of other digital content and applications. In March 2011, the Company introduced iPad 2, its second-generation iPad. In addition to the Company’s own iPad accessories, third-party iPad compatible accessories are available through the Company’s online and retail stores and from third parties.
Mac Hardware Products
The Company offers a range of personal computing products including desktop and portable computers, related devices and peripherals, and third-party hardware products. The Company’s Mac desktop and portable systems feature Intel microprocessors, the Mac OS X Lion operating system and the iLife® suite of software for creation and management of digital photography, music, movies, DVDs and websites.
The Company’s desktop computers include iMac®, Mac Pro and Mac mini. The iMac desktop computer has an all-in-one design that incorporates a display, processor, graphics card, storage, memory and other components inside a single enclosure. The Mac Pro desktop computer is targeted at business and professional customers and is designed to meet the performance, expansion, and networking needs of the most demanding Mac user. The Mac mini is a desktop computer in a compact enclosure.
The Company’s portable computers include MacBook® Pro and MacBook Air®. MacBook Pro is a portable computer designed for professionals and consumers. MacBook Air is an ultra-slim portable computer designed for professionals and consumers.
iPod
The Company’s iPod line of portable digital music and media players includes iPod touch, iPod nano®, iPod shuffle® and iPod classic®. All iPods work with iTunes. In addition to the Company’s own iPod accessories, third-party iPod compatible accessories are available, through the Company’s online and retail stores or from third parties.
3
The iPod touch, based on iOS, is a flash-memory-based iPod with a widescreen display and a Multi-Touch user interface. iPod touch allows customers to access the iTunes Store to download audio and video content, as well as a variety of digital applications. The iPod nano is a flash-memory-based iPod that features the Company’s Multi-Touch interface allowing customers to navigate their music collection by tapping or swiping the display. The iPod nano features a polished aluminum and glass enclosure with a built-in clip. The iPod shuffle is a flash-memory-based iPod that features a clickable control pad to control music playback and VoiceOver technology enabling customers to hear song titles, artists and playlist names. The iPod classic is a hard-drive based portable digital music and video player.
iTunes®
iTunes is an application that supports the purchase, download, organization and playback of digital audio and video files and is available for both Mac and Windows-based computers. iTunes 10 is the latest version of iTunes and features AirPlay® wireless music playback, Genius Mixes, Home Sharing, and improved syncing functionality with iOS devices.
iTunes is integrated with the iTunes Store®, a service that allows customers to discover, purchase, rent, and download digital content and applications. The iTunes Store includes the App Store™ and iBookstore. The App Store allows customers to discover and download applications, and the iBookstore features electronic books from major and independent publishers and allows customers to preview and buy books for their iOS devices. Customers can access the App Store through either a Mac or Windows-based computer or through an iOS device. The iBookstore is accessed through the iBooks® application on an iOS device.
Mac App Store
In January 2011, the Company opened the Mac App Store allowing customers to discover, download and install applications for their Macs. The Mac App Store offers applications in education, games, graphics and design, lifestyle, productivity, utilities and other categories. The Company’s Mac OS X operating system software and iLife and iWork® application software are also available on the Mac App Store.
iCloud
In October 2011, the Company launched iCloud, its new cloud service, which stores music, photos, applications, contacts, calendars, and documents and wirelessly pushes them to multiple iOS devices, Macs and Windows-based computers. iCloud’s features include iTunes in the Cloud, Photo Stream, Documents in the Cloud, Contacts, Calendar, Mail, automatic downloads and purchase history for applications and iBooks, and iCloud Backup. Users can sign up for free access to iCloud using a device running iOS 5 or a Mac running Mac OS X Lion.
Software Products and Computer Technologies
The Company offers a range of software products for consumer, SMB, education, enterprise and government customers, including the Company’s proprietary iOS and Mac OS X operating system software; server software; professional application software; and consumer, education, and business oriented application software.
Operating System Software
iOS
iOS is the Company’s mobile operating system that serves as the foundation for iOS devices. In October 2011, the Company released iOS 5, which supports iCloud and includes new features such as Notification Center, a way to view and manage notifications in one place; iMessage™, a messaging service that allows users to send text messages, photos and videos between iOS devices; and Newsstand, a way to purchase and organize newspaper and magazine subscriptions.
4
Mac OS X
Mac OS X, the operating system for Macs, is built on an open-source UNIX-based foundation. Mac OS X Lion is the eighth major release of Mac OS X and became available in July 2011. Mac OS X Lion includes support for new Multi-Touch gestures; iCloud integration; system-wide support for full screen applications; Mission Control™, a way to view everything running on a user’s Mac; the Mac App Store; Launchpad™, a new home for a user’s applications; and a redesigned Mail application.
Application Software
iLife
iLife ’11 is the latest version of the Company’s consumer-oriented digital lifestyle application suite included with all Mac computers. iLife features iPhoto®, iMovie®, iDVD®, GarageBand®, and iWeb™. iPhoto is the Company’s consumer-oriented digital photo application and iMovie is the Company’s consumer-oriented digital video editing software application. iDVD is the Company’s consumer-oriented software application that enables customers to turn iMovie files, QuickTime files, and digital pictures into interactive DVDs. GarageBand is the Company’s consumer-oriented music creation application that allows customers to play, record and create music. iWeb allows customers to create online photo albums, blogs and podcasts, and to customize websites using editing tools.
iWork
iWork ’09 is the latest version of the Company’s integrated productivity suite designed to help users create, present, and publish documents, presentations, and spreadsheets. iWork ’09 includes Pages® ’09 for word processing and page layout, Keynote® ’09 for presentations, and Numbers® ’09 for spreadsheets. The Company also has a Multi-Touch version of each iWork application designed specifically for use on iOS devices.
Other Application Software
The Company also sells various other application software, including Final Cut Pro®, Logic Studio®, Logic® Express 9, Logic Studio® Pro, and its FileMaker® Pro database software.
Displays & Peripheral Products
The Company manufactures the Apple LED Cinema Display™ and Thunderbolt Display. The Company also sells a variety of Apple-branded and third-party Mac-compatible and iOS-compatible peripheral products, including printers, storage devices, computer memory, digital video and still cameras, and various other computing products and supplies.
Apple TV
Apple TV allows customers to watch movies and television shows on their high definition television. Content from iTunes, Netflix, YouTube, and Flickr as well as music, photos, videos, and podcasts from a Mac or Windows-based computer can also be wirelessly streamed to a television through Apple TV. With the release of iCloud in October 2011, content purchased on Apple TV can be re-downloaded on iOS devices.
Product Support and Services
AppleCare® offers a range of support options for the Company’s customers. These options include assistance that is built into software products, printed and electronic product manuals, online support including comprehensive product information as well as technical assistance, and the AppleCare Protection Plan (“APP”). APP is a fee-based service that typically includes two to three years of phone support and hardware repairs and dedicated web-based support resources.
5
Markets and Distribution
The Company’s customers are primarily in the consumer, SMB, and education, enterprise and government markets. The Company uses a variety of direct and indirect distribution channels, such as its retail stores, online stores, and direct sales force, and third-party cellular network carriers, wholesalers, retailers, and value-added resellers. The Company believes that sales of its innovative and differentiated products are enhanced by knowledgeable salespersons who can convey the value of the hardware and software integration, and demonstrate the unique solutions that are available on its products. The Company further believes providing direct contact with its targeted customers is an effective way to demonstrate the advantages of its products over those of its competitors and providing a high-quality sales and after-sales support experience is critical to attracting new and retaining existing customers. To ensure a high-quality buying experience for its products in which service and education are emphasized, the Company continues to expand and improve its distribution capabilities by expanding the number of its own retail stores worldwide. Additionally, the Company has invested in programs to enhance reseller sales by placing high quality Apple fixtures, merchandising materials and other resources within selected third-party reseller locations. Through the Apple Premium Reseller Program, certain third-party resellers focus on the Apple platform by providing a high level of integration and support services, and product expertise.
No single customer accounted for more than 10% of net sales in 2011 or 2010. One of the Company’s customers accounted for 11% of net sales in 2009.
Competition
The markets for the Company’s products and services are highly competitive and the Company is confronted by aggressive competition in all areas of its business. These markets are characterized by frequent product introductions and rapid technological advances that have substantially increased the capabilities and use of mobile communication and media devices, personal computers, and other digital electronic devices. The Company’s competitors who sell mobile devices and personal computers based on other operating systems have aggressively cut prices and lowered their product margins to gain or maintain market share. The Company’s financial condition and operating results can be adversely affected by these and other industry-wide downward pressures on gross margins. Principal competitive factors important to the Company include price, product features, relative price/performance, product quality and reliability, design innovation, a strong third-party software and peripherals ecosystem, marketing and distribution capability, service and support, and corporate reputation.
The Company is focused on expanding its market opportunities related to mobile communication and media devices. These industries are highly competitive and include several large, well-funded and experienced participants. The Company expects competition in these industries to intensify significantly as competitors attempt to imitate some of the features of the Company’s products and applications within their own products or, alternatively, collaborate with each other to offer solutions that are more competitive than those they currently offer. These industries are characterized by aggressive pricing practices, frequent product introductions, evolving design approaches and technologies, rapid adoption of technological and product advancements by competitors, and price sensitivity on the part of consumers and businesses.
The Company’s digital content services have faced significant competition from other companies promoting their own digital music and content products and services, including those offering free peer-to-peer music and video services. The Company believes it offers superior innovation and integration of the entire solution including the hardware (iPhone, iPad, Mac, and iPod), software (iTunes), and distribution of digital content and applications (iTunes Store, App Store, iBookstore and Mac App Store). Some of the Company’s current and potential competitors have substantial resources and may be able to provide such products and services at little or no profit or even at a loss to compete with the Company’s offerings.
The Company’s future financial condition and operating results depend on the Company’s ability to continue to develop and offer new innovative products and services in each of the markets it competes in.
6
Supply of Components
Although most components essential to the Company’s business are generally available from multiple sources, a number of components are currently obtained from single or limited sources, which subjects the Company to significant supply and pricing risks. Many components are at times subject to industry-wide shortages and significant commodity pricing fluctuations. In addition, the Company has entered into various agreements for the supply of components; however there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all. Therefore, the Company remains subject to significant risks of supply shortages and price increases that can materially adversely affect its financial condition and operating results.
The Company and other participants in the mobile communication and media device, and personal computer industries compete for various components with other industries that have experienced increased demand for their products. The Company also uses some custom components that are not common to the rest of these industries, and new products introduced by the Company often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased. If the Company’s supply of components for a new or existing product were delayed or constrained, or if a key manufacturing vendor delayed shipments of completed products to the Company, the Company’s financial condition and operating results could be materially adversely affected. The Company’s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers concentrated on the production of common components instead of components customized to meet the Company’s requirements.
Substantially all of the Company’s hardware products are manufactured by outsourcing partners primarily located in Asia. A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations. Certain of these outsourcing partners are the sole-sourced suppliers of components and manufacturer for many of the Company’s products. Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments. The Company’s purchase commitments typically cover the Company’s requirements for periods up to 150 days.
Research and Development
Because the industries in which the Company competes are characterized by rapid technological advances, the Company’s ability to compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace. The Company continues to develop new technologies to enhance existing products and to expand the range of its product offerings through research and development, licensing of intellectual property and acquisition of third-party businesses and technology. Total research and development expense was $2.4 billion, $1.8 billion and $1.3 billion in 2011, 2010 and 2009, respectively.
Patents, Trademarks, Copyrights and Licenses
The Company currently holds rights to patents and copyrights relating to certain aspects of its iPhone, iPad, Mac and iPod devices, peripherals, software and services. The Company has registered or has applied for trademarks and service marks in the U.S. and a number of foreign countries. Although the Company believes the ownership of such patents, copyrights, trademarks and service marks is an important factor in its business and that its success does depend in part on the ownership thereof, the Company relies primarily on the innovative skills, technical competence and marketing abilities of its personnel.
7
The Company regularly files patent applications to protect inventions arising from its research and development, and is currently pursuing thousands of patent applications around the world. Over time, the Company has accumulated a large portfolio of issued patents in the U.S. and worldwide. The Company holds copyrights relating to certain aspects of its products and services. No single patent or copyright is solely responsible for protecting the Company’s products. The Company believes the duration of its patents is adequate relative to the expected lives of its products. Due to the fast pace of innovation and product development, the Company’s products are often obsolete before the patents related to them expire, and sometimes are obsolete before the patents related to them are even granted.
Many of the Company’s products are designed to include intellectual property obtained from third parties. While it may be necessary in the future to seek or renew licenses relating to various aspects of its products and business methods, based upon past experience and industry practice, the Company believes such licenses generally could be obtained on commercially reasonable terms; however, there is no guarantee that such licenses could be obtained at all. Because of technological changes in the industries in which the Company competes, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible that certain components of the Company’s products and business methods may unknowingly infringe existing patents or intellectual property rights of others. From time to time, the Company has been notified that it may be infringing certain patents or other intellectual property rights of third parties.
Foreign and Domestic Operations and Geographic Data
The U.S. represents the Company’s largest geographic market. Approximately 39% of the Company’s net sales in 2011 came from sales to customers inside the U.S. Final assembly of the Company’s products is currently performed in the Company’s manufacturing facility in Ireland, and by outsourcing partners, primarily located in Asia. The supply and manufacture of a number of components is performed by sole-sourced outsourcing partners in the U.S., Asia and Europe. Single-sourced outsourcing partners in Asia perform final assembly of substantially all of the Company’s hardware products. Margins on sales of the Company’s products in foreign countries, and on sales of products that include components obtained from foreign suppliers, can be adversely affected by foreign currency exchange rate fluctuations and by international trade regulations, including tariffs and antidumping penalties. Information regarding financial data by geographic segment is set forth in Part II, Item 7 and Item 8 of this Form 10-K and in Notes to Consolidated Financial Statements in Note 8, “Segment Information and Geographic Data.”
Seasonal Business
The Company has historically experienced increased net sales in its first fiscal quarter compared to other quarters in its fiscal year due to increased holiday seasonal demand. This historical pattern should not be considered a reliable indicator of the Company’s future net sales or financial performance.
Warranty
The Company offers a limited parts and labor warranty on most of its hardware products. The basic warranty period is typically one year from the date of purchase by the original end-user. The Company also offers a 90-day basic warranty for its service parts used to repair the Company’s hardware products. In addition, consumers may purchase the APP, which extends service coverage on many of the Company’s hardware products in most of its major markets.
Backlog
In the Company’s experience, the actual amount of product backlog at any particular time is not a meaningful indication of its future business prospects. In particular, backlog often increases in anticipation of or immediately following new product introductions as customers anticipate shortages. Backlog is often reduced once customers
8
believe they can obtain sufficient supply. Because of the foregoing, backlog should not be considered a reliable indicator of the Company’s ability to achieve any particular level of revenue or financial performance.
Employees
As of September 24, 2011, the Company had approximately 60,400 full-time equivalent employees and an additional 2,900 full-time equivalent temporary employees and contractors.
Available Information
The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), are filed with the U.S. Securities and Exchange Commission (the “SEC”). Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website atwww.apple.com/investor when such reports are available on the SEC website. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.
| 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
Net sales | $ | 108,249 | $ | 65,225 | $ | 42,905 | $ | 37,491 | $ | 24,578 | ||||||||||
Net income | $ | 25,922 | $ | 14,013 | $ | 8,235 | $ | 6,119 | $ | 3,495 | ||||||||||
Earnings per common share: | ||||||||||||||||||||
Basic | $ | 28.05 | $ | 15.41 | $ | 9.22 | $ | 6.94 | $ | 4.04 | ||||||||||
Diluted | $ | 27.68 | $ | 15.15 | $ | 9.08 | $ | 6.78 | $ | 3.93 | ||||||||||
Cash dividends declared per common share | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
Shares used in computing earnings per share: | ||||||||||||||||||||
Basic | 924,258 | 909,461 | 893,016 | 881,592 | 864,595 | |||||||||||||||
Diluted | 936,645 | 924,712 | 907,005 | 902,139 | 889,292 | |||||||||||||||
Total cash, cash equivalents and marketable securities | $ | 81,570 | $ | 51,011 | $ | 33,992 | $ | 24,490 | $ | 15,386 | ||||||||||
Total assets | $ | 116,371 | $ | 75,183 | $ | 47,501 | $ | 36,171 | $ | 24,878 | ||||||||||
Total long-term obligations (a) | $ | 10,100 | $ | 5,531 | $ | 3,502 | $ | 1,745 | $ | 687 | ||||||||||
Total liabilities | $ | 39,756 | $ | 27,392 | $ | 15,861 | $ | 13,874 | $ | 10,347 | ||||||||||
Total shareholders’ equity | $ | 76,615 | $ | 47,791 | $ | 31,640 | $ | 22,297 | $ | 14,531 | ||||||||||
Undervalued-Stock.com issues BUY rating for Sysco Corp (SYY $26.70)
Undervalued-Stock.com stock ratings use the following factors:
- a stable earnings history
- price to earnings (P/E) ratio is below 10-year average
- earnings growth over the past 10 years
- credit rating
- recession performance
- price to book ratio is below historical average
- competitive position
- market share
- successful business executions
- business type and size
Sysco Corporation (SYY) is the global leader in marketing and distributing food products to restaurants, healthcare and educational facilities, hotels and inns, and other foodservice and hospitality businesses. The company is headquartered in the Energy Corridor district of Houston, Texas. Sysco, an acronym for Systems and Services Company, servicing over 400,000 customers which include a wide array of clientele, is the world's largest broadline food distributor. Management consulting is also an integral part of their services. As of July 2, 2005, the company operated 170 facilities throughout the United States and Canada. Most recently, Sysco expanded its operation into Ireland with the purchase of a local food distribution firm. The company was founded by Herbert Irving and John F. Baugh in 1969. The company became public on March 3, 1970. On July 20, 2009, Fortune magazine ranked Sysco #204 in the annual Fortune 500 companies in world based on sales volume. On May 3, 2010, Fortune Magazine ranked Sysco as the 7th largest Fortune 500 Company in Texas and 55th largest in the US by total revenue. Sysco competes with national distributors U.S. Foodservice, Performance Food Group, and Edward Don and Company, as well as regional companies such as Gordon Food Service, Ben E. Keith, Maines Food and Paper, and local foodservice distributors. Sysco is also the largest non-oil related company in Houston and the 3rd largest non-oil related company in Texas (Behind AT&T and Dell). Source: Wikipedia
ANNUAL REPORT (10-K) EXCERPT
Overview
Sysco Corporation, acting through its subsidiaries and divisions, is the largest North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. We provide products and related services to approximately 400,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers.
Founded in 1969, Sysco commenced operations as a public company in March 1970 when the stockholders of nine companies exchanged their stock for Sysco common stock. Since our formation, we have grown from $115.0 million to $39.3 billion in annual sales, both through internal expansion of existing operations and through acquisitions.
| Item 6. | Selected Financial Data |
| Fiscal Year | ||||||||||||||||||||
| 2010 |
||||||||||||||||||||
| 2011 | (53 Weeks) | 2009 | 2008 | 2007 | ||||||||||||||||
| (In thousands except for per share data) | ||||||||||||||||||||
|
Sales |
$ | 39,323,489 | $ | 37,243,495 | $ | 36,853,330 | $ | 37,522,111 | $ | 35,042,075 | ||||||||||
|
Operating income |
1,931,502 | 1,975,868 | 1,872,211 | 1,879,949 | 1,708,482 | |||||||||||||||
|
Earnings before income taxes
|
1,827,454 | 1,849,589 | 1,770,834 | 1,791,338 | 1,621,215 | |||||||||||||||
|
Income taxes |
675,424 | 669,606 | 714,886 | 685,187 | 620,139 | |||||||||||||||
|
Net earnings |
$ | 1,152,030 | $ | 1,179,983 | $ | 1,055,948 | $ | 1,106,151 | $ | 1,001,076 | ||||||||||
|
Net earnings: |
||||||||||||||||||||
|
Basic earnings per share
|
$ | 1.96 | $ | 1.99 | $ | 1.77 | $ | 1.83 | $ | 1.62 | ||||||||||
|
Diluted earnings per share
|
1.96 | 1.99 | 1.77 | 1.81 | 1.60 | |||||||||||||||
|
Dividends declared per share
|
$ | 1.03 | $ | 0.99 | $ | 0.94 | $ | 0.85 | $ | 0.74 | ||||||||||
|
Total assets |
$ | 11,385,555 | $ | 10,313,701 | $ | 10,148,186 | $ | 10,010,615 | $ | 9,475,365 | ||||||||||
|
Capital expenditures
|
636,442 | 594,604 | 464,561 | 515,963 | 603,242 | |||||||||||||||
|
Current maturities of long-term
debt |
$ | 207,031 | $ | 7,970 | $ | 9,163 | $ | 4,896 | $ | 3,568 | ||||||||||
|
Long-term debt |
2,279,517 | 2,472,662 | 2,467,486 | 1,975,435 | 1,758,227 | |||||||||||||||
|
Total long-term debt
|
2,486,548 | 2,480,632 | 2,476,649 | 1,980,331 | 1,761,795 | |||||||||||||||
|
Shareholders’ equity
|
4,705,242 | 3,827,526 | 3,449,702 | 3,408,986 | 3,278,400 | |||||||||||||||
|
Total capitalization
|
$ | 7,191,790 | $ | 6,308,158 | $ | 5,926,351 | $ | 5,389,317 | $ | 5,040,195 | ||||||||||
|
Ratio of long-term debt to
capitalization |
34.6 | % | 39.3 | % | 41.8 | % | 36.8 | % | 35.0 | % | ||||||||||
Stock to Buy: Target Corp (TGT $49.34)
Target Corporation, doing business as Target, is an American retailing company headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, behind Walmart. The company is ranked at number 30 on the Fortune 500 as of 2010 and is a component of the Standard & Poor's 500 index. Its bullseye trademark is licensed to Wesfarmers, owners of the separate Target Australia chain. Unknown to many, Target Furniture is an official Target store. The company was founded in 1902 as the Dayton Dry Goods Company, though its first Target store was opened in 1962 in nearby Roseville, Minnesota. Target grew and eventually became the largest division of Dayton Hudson Corporation, culminating in the company being renamed as Target Corporation in August 2000. On January 13, 2011, Target announced its expansion into Canada. Target will operate 100 to 150 stores in Canada by 2013, through its purchase of leaseholds from the Canadian chain Zellers. Source: Wikipedia
Undervalued-Stock.com stock ratings use the following factors:
- a stable earnings history
- price to earnings (P/E) ratio is below 10-year average
- earnings growth over the past 10 years
- credit rating
- recession performance
- price to book ratio is below historical average
- competitive position
- market share
- successful business executions
- business type and size
CISCO SYSTEMS, INC. stock selling near 52-week low
Cisco Systems, Inc. (NASDAQ: CSCO, SEHK: 4333) is an American-based multinational corporation that designs and sells consumer electronics, networking, voice, and communications technology and services. Headquartered in San Jose, California, Cisco has more than 70,714 employees and annual revenue of US$ 40.0 billion as of 2010. The stock was added to the Dow Jones Industrial Average on June 8, 2009, and is also included in the S&P 500 Index, the Russell 1000 Index, NASDAQ 100 Index and the Russell 1000 Growth Stock Index.[4] By most measures (e.g., revenue, market capitalization, number of employees) Cisco is one of the world's biggest technology corporations.
TESORO CORPORATION ANNUAL REPORT 2010
| ITEM 6. | SELECTED FINANCIAL DATA |
| Years Ended December 31, | ||||||||||||||||||||
| 2010 | 2009 | 2008 | 2007(a)(b) | 2006(b) | ||||||||||||||||
| (Dollars in millions except per share amounts) | ||||||||||||||||||||
|
Statement of Operations Data
|
||||||||||||||||||||
|
Total Revenues
|
$ | 20,583 | $ | 16,872 | $ | 28,416 | $ | 21,976 | $ | 18,061 | ||||||||||
|
Net Earnings (Loss)(c)
|
$ | (29 | ) | $ | (140 | ) | $ | 278 | $ | 566 | $ | 801 | ||||||||
|
Net Earnings (Loss) Per Share:
|
||||||||||||||||||||
|
Basic
|
$ | (0.21 | ) | $ | (1.01 | ) | $ | 2.03 | $ | 4.17 | $ | 5.89 | ||||||||
|
Diluted
|
$ | (0.21 | ) | $ | (1.01 | ) | $ | 2.00 | $ | 4.06 | $ | 5.73 | ||||||||
|
Weighted Shares Outstanding (millions):
|
||||||||||||||||||||
|
Basic
|
140.6 | 138.2 | 136.8 | 135.7 | 136.0 | |||||||||||||||
|
Diluted
|
140.6 | 138.2 | 139.2 | 139.5 | 139.8 | |||||||||||||||
|
Dividends per share
|
$ | 0.00 | $ | 0.35 | $ | 0.40 | $ | 0.35 | $ | 0.20 | ||||||||||
|
Balance Sheet Data
|
||||||||||||||||||||
|
Current Assets
|
$ | 2,928 | $ | 2,223 | $ | 1,646 | $ | 2,600 | $ | 2,811 | ||||||||||
|
Property, Plant and Equipment, Net
|
$ | 5,170 | $ | 5,190 | $ | 5,081 | $ | 4,780 | $ | 2,687 | ||||||||||
|
Total Assets
|
$ | 8,732 | $ | 8,070 | $ | 7,433 | $ | 8,128 | $ | 5,904 | ||||||||||
|
Current Liabilities
|
$ | 2,496 | $ | 1,889 | $ | 1,441 | $ | 2,494 | $ | 1,672 | ||||||||||
|
Total Debt(d)
|
$ | 1,995 | $ | 1,841 | $ | 1,611 | $ | 1,659 | $ | 1,046 | ||||||||||
|
Stockholders’ Equity
|
$ | 3,215 | $ | 3,087 | $ | 3,218 | $ | 3,052 | $ | 2,502 | ||||||||||
|
Current Ratio
|
1.2:1 | 1.2:1 | 1.1:1 | 1.0:1 | 1.7:1 | |||||||||||||||
|
Working Capital
|
$ | 432 | $ | 334 | $ | 205 | $ | 106 | $ | 1,139 | ||||||||||
|
Total Debt to Capitalization(d)
|
38 | % | 37 | % | 33 | % | 35 | % | 29 | % | ||||||||||
|
Common Stock Outstanding (millions of shares)
|
143.2 | 140.4 | 138.4 | 137.0 | 135.8 | |||||||||||||||
|
Book Value Per Common Share
|
$ | 22.45 | $ | 21.99 | $ | 23.25 | $ | 22.28 | $ | 18.42 | ||||||||||
|
Cash Flows From (Used In)
|
||||||||||||||||||||
|
Operating Activities
|
$ | 385 | $ | 663 | $ | 716 | $ | 1,322 | $ | 1,139 | ||||||||||
|
Investing Activities
|
(295 | ) | (436 | ) | (610 | ) | (2,838 | ) | (430 | ) | ||||||||||
|
Financing Activities(d)
|
145 | 166 | (109 | ) | 553 | (163 | ) | |||||||||||||
|
Increase (Decrease) in Cash and Cash Equivalents
|
$ | 235 | $ | 393 | $ | (3 | ) | $ | (963 | ) | $ | 546 | ||||||||
|
Capital Expenditures
|
$ | 287 | $ | 401 | $ | 619 | $ | 789 | $ | 453 | ||||||||||
| (a) | Our financial results include the results of our Los Angeles refinery and Shell and USA Gasoline retail stations since acquisition in May 2007. | |
| (b) | Share and per share amounts have been adjusted to reflect our May 2007 two-for-one stock split. | |
| (c) | Net earnings (loss) included the following pre-tax items that affect the comparability of the periods presented. During 2010, we recorded approximately $67 million from insurance recoveries and $27 million in charges directly related to the April 2, 2010 incident at our Washington refinery and a $48 million gain from the elimination of postretirement life insurance benefits for current and future retirees. During 2009, we incurred a $43 million goodwill write-off in our refining segment and reduced inventories resulting in a last-in-first-out (“LIFO”) liquidation or reduction in cost of sales of $69 million. During 2008, we incurred a $91 million bad debt charge, reduced inventories resulting in a LIFO liquidation or reduction in cost of sales of $138 million and received net refunds of $50 million from the Trans Alaska Pipeline System associated with our protest of prior year intrastate rates. During 2006, we incurred charges of $28 million for termination of a delayed coker project at the Washington refinery. | |
| (d) | During 2009, we issued $300 million in senior notes for general corporate purposes and during 2007 we issued $500 million in senior notes primarily to fund the acquisition of the Los Angeles refinery. Total debt includes capital lease obligations. |
Kenneth Fisher Provides Insightful Analysis of Stock Market (Video)
http://www.bloomberg.com/video/65780868/