Apple -Achievements of science and technology,Apple Survey,Apple, Inc. Original name Apple Computer Stock code: AAPLEstablished ：4/1/1976Founder: Steve JobsHeadquarters Location: Cupertino, California,Steve Jobs,“Apple“ computer co-founder Obtained in 1985 by President Ronald Reagan awarded the National Medal of Technology; In 1997 a “Times“ on the cover; 2009 by Fortune magazine as the best this decade, U.S. CEO. 2010 due to pancreatic cancer recurrence, once again being left,Apple Products -iPod,In 2005, the introduction of ultra-thin iPod nano digital music player,If the change in the personal computer industry, Mac, iPod changed the way people in the music world.,Apple Products -iPhone,In 2007, released the iPhone,Apple Products -Mac,In 2008, released the MacBook Air, which was the thinnest notebook,Apple Products -iPad,2010, January 27, Apple released iPad tablet PC,Apple Value-added services -iTunes,Internet sharing, a rich application platform; not only provide tangible products, but also provides value-added services, and accelerating growth trend.,06-10 years, total assets,Apples revenue,Stock price trends （2001-2010）Comparative income statement analysis,Apple stock, ten years more than 40% compound annual growth rate,Apples stock price plummeted 34% in January,2008 financial crisis,Summary,May 27, 2010, Apples market value beyond Microsoft, the worlds largest technology company by market value; February 2011, Apple breaks Nokias the first position as the worlds largest mobile phone manufacturer. August 10, 2011 Apples market value exceeds Exxon Mobil then becomes the worlds highest market value of listed companies. No doubt, both in the capital market, or in the sales side, Apple have become the benchmark for the mobile Internet era. That is why we selects Apple to recommend.,Assess the foreign exchange risk exposure of Apple,There is a risk that Apple will have to adjust local currency product pricing due to competitive pressures when there has been significant volatility in foreign currency exchange rates.,Assess the foreign exchange risk exposure of Apple,To provide a meaningful assessment of the foreign currency risk, the Company performed a sensitivity analysis using a value-at-risk (“VAR”) model to assess the potential impact of fluctuations in exchange rates. The VAR model consisted of using a Monte Carlo simulation to generate thousands of random market price paths. The VAR is the maximum expected loss in fair value, for a given confidence interval, to the Companys foreign exchange portfolio due to adverse movements in rates. The VAR model is not intended to represent actual losses but is used as a risk estimation and management tool. The model assumes normal market conditions.,Assess the foreign exchange risk exposure of Apple,Forecasted transactions, firm commitments, and assets and liabilities denominated in foreign currencies were excluded from the model. Based on the results of the model, the Company estimates with 95% confidence a maximum one-day loss in fair value of $103 million as of September 25, 2010 compared to a maximum one-day loss in fair value of $44 million as of September 26, 2009.,What hedging policy does Apple use to control foreign exchange risk?,As the nature of business becomes international,many firms are exposed tode risk of fluctuating exchange rates. Changes in exchange rates may affect the settlement of contracts,cash flows,and the firm valuation.It is thus important for financial managers to know the firms foreign currency exposure and properly manage the expousure. By doing so,managers can stabilize the firms cash flows and enhance the firms value.,Three Types of Exposure,Before we get into the important issue of how to manage transaction exposure,let us briefly discuss different types of exposure.It is conventional to classify foreign currency exposures into three types: Transaction exposure Economic exposure Translation exposure,Several methods for hedging the three exposures,Transaction exposure can be hedged by financial contracts like forward，money market，and options contracts，as well as by such operational techniques as the choice of invoice currency，lead/lag strategy，and exposure netting. Economic financial hedgeing using currency options and forward contracts. Two ways to control translation risk were presented:a balance sheet hedge and a derivatives,What hedging policy does Apple use to control foreign exchange risk?,Cash flow hedgeForeign currency instrumentsForward and option contracts,Assessment of Cash flow hedge,The Company recognized in earnings a net loss of $123 million and $133 million on foreign currency forward and option contracts not designated as hedging instruments during the year ended September 25, 2010 and September 26, 2009, respectively. These amounts represent the net gain or loss on the derivative contracts and do not include changes in the related exposures, which generally offset a portion of the gain or loss on the derivative contracts.,