For investors, a company’s past returns are not indicative of future performance. However, looking back at companies that have thrived while others have languished gives insight into how successful companies employ competitive advantages to reward shareholders. In addition to identifying successful traits of quality management, looking back a decade also helps to put the day-to-day chatter in proper perspective. In short, learning the past will help you become a better investor.
Over the last decade, there has arguably been no company more successful than Apple (NASDAQ: AAPL ) . As such, here are 10 surprising facts about Apple a decade ago, taken from its fiscal 2004 annual report.
No. 1: Can you spare a dime please?
If any single balance sheet item defines current-day Apple, it would be the company’s enormous cash pile. At $178 billion, Apple’s cash hoard is a testament to its ability to turn sales into cash and gives the tech giant great flexibility to invest in new products, buy back stock, or pay dividends (repatriation issues notwithstanding).
But it wasn’t always that way: On the balance sheet dated Sept. 25, 2004, Apple’s cash pile (cash and short-term investments) was just $5.4 billion. Over the last decade Apple has grown its cash by approximately 42% annually.
No. 2: The PowerBook?
If you follow Apple today, you know the company relies heavily on the iPhone for both revenue and profit; in the last fiscal year the product provided 56% of the company’s total revenue. But the phone was introduced in 2007, so the company’s only “mobile” product a decade ago was the iPod — its leading product by sales in its consumer-electronics division.
In the Macintosh division — and overall — the leading revenue provider was the PowerBook, a forerunner to Apple’s current MacBook line of computers. With a revenue haul of $1.6 billion, the PowerBook narrowly edged out the Power Macintosh’s $1.4 billion and the iPod’s $1.3 billion.
No. 3: As per revenue, things have changed
Furthermore, Apple booked $8.3 billion in total revenue a decade ago. For proper perspective, last quarter Apple sold roughly $820 million of iPhones alone every day. Applying simple math, Apple produced more revenue from its iPhone in two weeks last quarter than it produced all year a decade ago.
No. 4: Apple’s China strategy? It really didn’t exist
When it comes to Apple’s global strategy, it is hard to image the Mac maker not having a substantive business in China. Last quarter, the company produced $16.1 billion in revenue from its “Greater China” segment, which came in a close third behind Europe and the Americas. But 10 years ago China was a footnote, wrapped within the Asia-Pacific segment.
What’s more, the greater Asia-Pacific market wasn’t individually reported cited Apple’s geographical operating segment list. Instead, the company reported the region in the catchall operating bucket of “other segments.”
No. 5: Tim Cook’s salary was 602,631% higher than Steve Jobs’
Tim Cook’s name shows up eight times in the decade-old annual report, mostly related to compensation. At the time, as the executive vice president of worldwide sales and operations, he was second-in-command to then-CEO Steve Jobs. In 2004, Cook received a salary of $602,632, while Jobs took home his legendary salary of $1. However, Jobs was awarded $75 million in restricted stock, compared to Cook’s $7.7 million. For further comparison, Cook’s total compensation in fiscal 2014 came in at $9.2 million.
No. 6: Gross margin was good, but not comparable to today
Today, Apple’s gross margin percentage is intensely scrutinized. As a high-end consumer electronics company, the gross margin percentage is the best figure to ascertain whether Apple’s premium pricing strategy is working. Even a decade ago, Apple had a great gross margin percentage for a company operating in the increasingly commoditized personal computer space: 27.3%. That said, last quarter Apple’s gross margin percentage was 12.6 percentage points higher at 39.9%.
No. 7: U.S. retail store growth, good; international growth, amazing
Last year, Apple hired Angela Ahrendts from Burberry to run Apple’s retail operations — a business segment that is already the envy of the industry, pulling in more sales per square foot than any other U.S.-based retailer, according to recent data from eMarketer. The company boasted 259 U.S. stores and 178 International locations as of its last annual report, as opposed to 84 U.S. stores and two international retail sites a decade ago. Apple was in the nascent phases of international store growth in 2004, with both stores in Japan.Its count of international stores has grown 88-fold since then.
No. 8: Apple as a job creator
Although Apple derives a substantive amount of revenue per employee — roughly $2 million — that hasn’t stopped the company from adding to its employment rolls. In 2004, Apple employed 11,700 nontemporary employees; that number was 92,600 in the last fiscal year. While critics might note the majority of growth has been in the lower-pay retail unit that now totals 46,200 employees, Apple does pay above-average wages for retail employees.
No. 9: Apple’s stock symbol was APPLE
Apple was listed on multiple exchanges. Investors in Tokyo could find Apple listed as APPLE on the Tokyo Stock Exchange, and German investors could find Apple listed as APCD on the Frankfurt Stock Exchange. Although both have since been delisted, it does give insight into Apple’s capital and sales strategy 10 years ago — when combined with its retail footprint, it appears the company was strongly interested in Japan as a business partner in 2004.
No. 10: A long-term buy-and-hold strategy would have make you a lot of money
As always, the stock price of any company will vacillate in the short term as it seeks to find its long-term value. Apple has been no exception. During fiscal 2004 the stock stood as high as $38.01 and as low as $19.70 — split-adjusted totals of $5.43 and $2.81, respectively. For a visual representation, here’s the chart:
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