Apple Case Study - Société Générale Acquisition

This presentation is a collaborative work by ISC Students: Fabiola Kelel, Hela Bessaies, Renald
Kerkusha, Rodrigo Estrada and supervised by Pr. Faten Ben Bouheni for the Quantitative Budgeting
course of the Masters of Business Management.
 Summary

1. Companies Presentation : Apple and Société Générale.

2. Financial Analysis: Financial statements and their ratios.

3. Apple Your Future Bank: Acquisition project.

4. Société Générale Valuation Project.

 About Apple

Headquarters Market Capital*

Cupertino, California, USA 1 084 Trillion Dollars

CEO Employees
Tim Cook 137 000

Areas
Year Founded served
1976 509 retail stores in 25
countries and online
stores in over 100
countries

* Number in March 2020

 About Apple
Industries served
Computer Hardware (iMac, iMac Pro, MacBook, MacBook Pro,
MacBook Air)
Software (iOS, iPadOS, MacOS, watchOS, tvOS, Safari, iWork,
iMovie)
Consumer electronics (iPhone, iPad, Apple TV, Apple Watch,
AirPods, HomePod, Beats)
Internet Services (iCloud, Apple Pay, App Store, Mac App Store,
TV App Store, Book Store, Apple Music)

Main Competitors
Samsung Electronics
Google Inc.
Amazon.com, Inc.
Huawei Technologies
International Business Machines Corporation
Cisco Systems, Inc.
Microsoft Corporation
Dell Inc.
LG Electronics
Lenovo Group Limited
Sony Corporation

* Number in March 2020

 Apple Business Model
Key Partners Key Activities Value Customer Customer
Propositions Relationship segments
Subsidiaries Research and
Development of Privacy is a priority Use – friendly Mass Market
Suppliers and
Hardware and Technology that products Various
manufacturers
software works Loyalty programs Enterprises
Sellers
Designing Diversification and bonuses Professional and
World Wide Fund
Customer Support Believe in making Switching costs educational
For Nature (WWF)
and Consulting change users
Logistics and Different thinking Channels
networking Electronic Retail
Branding Stores
Online Stores like
Key Resources IOS App Store or
Mac App Store
Apple Brand
The official website
iTunes Software
iTunes store
iPad Hardware
offers through
Staff
emails or gift cards
Cost structure Revenue Streams
Advertising and designs
R&D Large Hardware Revenue
Manufacturing and outsourcing costs Online and Media Sales
Marketing and Sales Online Subscriptions and services
Employees and Operations
 Apple SWOT

Unique ability to design and develop proprietary

hardware, software, applications and services
Powerful brand supported by strong advertising and Premium Pricing
marketing capabilities
Dependency on other few products
One of the most loyal customer base in every major
product market where the company operates. Lack of competition
Brand Identity Incompatibility

S W

T O
Customer growth
Counterfeit Products
Qualified professional
Laptop Competition
Use of artificial intelligence
Rising labor costs in other countries
Expend distribution network
Market penetration
Apple electric car

LEGAL RISK
Laws and regulations in
many countries related to
mobile communications and
software security
requirement usually change
including the restrictions on
production, manufacture,
which pose negative effect
on company`s productions
design and application
experience.
ECOLOGICAL RISK
Appearance of new
purchasing behavior
Apple Risk Factors
PESTEL
TECHNOLOGICAL RISK
ECONOMIC RISK
Presence of constant
competition The bad global economic
conditions could decrease
Design Defects the demand of company’s
products and services
SUPPLY RISK
The company remains subject to
significant risks of supply
shortages and price increases
SOCIAL RISK
Raw material risk
Appearance of new
purchasing behavior
SUB-CONTRACTOR RISK
Apple future performance
depends on support from third
party software developers
POLITICAL RISK
Countries political
uncertainties influence sales
 Headquarters Industry
About Société Paris, France Banking and Financial
Services
Générale
CEO Employees
Frédéric Oudea 148 300

Year Founded Areas

1864 served
Worldwide

Market Capital* Products

13,92 Billion Euros Retail, Private
investment and
corporate banking;
insurance; investment
management

* Number in 2019 Annual Report

 Five Complementary activities that constitute a
guarantee of financial strength
Société
Générale
Main Activity Three pillars
1• French retailing banking
2• International retail banking

3• Corporate and Investment banking

Two complementary core activities

1• Private Banking, Global Investment,

Management and Services
2• The specialized financial services and
insurance
Société
Générale Group
Structure

* Source: Société Générale Website

 Société Générale Global Presence

* Source: Société Générale Website

 Société Générale SWOT

Integrated into a new secure online

payment solution, supported by five
banks (BNP Paribas, Société Undergoes economic slowdown in France
Générale, Banque Postale, Crédit
Mutuel Arkéa and Crédit Agricole). •
Reinforced regional focus (17
Business Units and 10 Service Units,
directly attached to General
Management).
S W

T O
Exceptional tax on banks Support from the FBF for the
communication campaign for "the week of
Separation between retail banks and employee savings"
investment banks
Employee savings plans currently concern
8.7 million employees and represent 10.2
million accounts for an outstanding
amount of 122.5 billion euros IV
Apple Financial
Statement
Analysis
 Income Statement
Analysis
• Total net sales decreased 2%
or $5.4 billion during 2019
compared to 2018, driven by
lower net sales of iPhone,
partially offset by higher net
sales of Wearables, Home and
Accessories and Services in all
geographic operating
segments. The weakness in
foreign currencies had a
significant unfavorable impact
on net sales during 2019.

• Operating expenses have

shown a tendency to rise in the
last five years.

• Apple doesn’t pay just one tax

rate due to selling in several
countries.
Apple Financial Statement
Analysis
Apple Financial Statement Analysis
 Balance Sheet
Analysis
• High liquidity, high
investment in Marketable
securities. The Company
typically invests in highly
rated securities, with the
primary objective of
minimizing the potential
risk of principal loss.

• Low inventories, which

are measured using the
first-in, first-out method.

• Low level of intangibles.

• Capital structure is
composed by high share
of debt compared to
equity. (73,26%)
Liquidity Ratios
Capital Structure & Enterprise Value
Operating Returns
Cash Flow Analysis

• There was an increase in

cash, cash equivalents
and restricted cash of
24,311 millions in 2019.
• Apple cash ratios are in
the median between the
companies found in the
Information
Technology sector in
the United States of
America
Cash Ratios
Société Générale
Financial
Statement
Analysis
• Société Générale’s capital structure is mostly composed
by debt.
• Société Générale is also acquiring debt to invest later.
• Société Générale’s biggest assets are the financial assets
and the loans and receivables from customers at
amortized cost.
• Société Générale’s net banking income, and net profit
have been decreasing for the last five years, getting a
mild recovery on 2018, but decreasing again in the last
exercise.
Banks Key Ratios
Apple
Your Future Bank
Past Experience: Apple ft. Goldman
Sachs
In August 2019, Apple and Goldman Sachs launched the Apple card.

Apple Card has Apple's branding and is issued through Goldman Sachs and runs on
Mastercard's network. Goldman Sachs is the issuer of the card and is responsible for
underwriting, customer service, the underlying platform and all matters related to
regulatory compliance through Goldman Sachs Bank USA

As of September 30, Goldman Sachs had lent out about $10 billion to apple card users , and
customers had $736 million in loan balances. Interests on loans are between 13-24%,
 Features of the Apple card

Titanium card Privacy and Financial

Minimal fees Daily cash
The card has no card security wellbeing
number, CVV
A unique card Apple Card does 3.0% for purchases One of the core
security code,
number is created not charge late, cash from Apple tenets of Apple Card
expiration date, or
for each device and advance, 2.0% for purchases is to provide users
signature printed on
is stored in the international, made using Apple with
the card
device's secure overdraft, or annual Pay at any other easy-to-understand
element, a credit card fees, merchant, including information on their
tamper-resistant except for applicable apps and websites. spending
security chip used by interest charges Users can view their
when carrying a 1.0% for purchases
Apple Pay to handle historical spend with
balance, and any made using the
transactions and weekly and monthly
interchange fees, physical titanium
on-device activity summaries
which are charged to card.
cryptographic and receive
functions. the vendor. intelligent
recommendations
on how best to pay
off their balance
 Targeting the European Union countries, with the ambition of an
expansion in Eastern Europe and Africa.

The banking system in Europe is old and very conservative. Apple

can bring a much needed innovation and provide clients with
adapted solutions that match their needs. They can identify those
needs using the data technology already in their possession .

Instead of paying a large fee in order to have a license we propose

European
European
to buy a bank that already provides an online service and is present
in many European countries with an ownership structure that would
make it possible to buy.

Strategy
Strategy We believe that Apple should target Société Générale. In this way,
they also acquire a popular online banking system with more than 2
million clients (Boursorama).
They can handle the financial European regulations through Societe
Generale and transform Boursorama into Apple card which would
also mean transferring all the technology, data and clients of
Boursorama into Apple card.

Apple has gained experience in the banking systems and

regulations, which will facilitate the process and give access to a
huge market (EU).
Apple will appoint a CEO to Societe Generale in order to run all
the short term banking operations in behalf of Apple.
 Société Générale is present in 64
countries worldwide which gives Apple an
opportunity to extend its banking system
beyond Europe.

It has a strong presence in Africa, so

Apple will have the opportunity to
World become a leader in technology and
banking
Strategy
Africa has one of the youngest
populations and there aren’t many
competitors in the market, so if Apple
chooses to introduce the online banking
system, they will have no real competition
.
 Advantages:

Cash-back for every purchase on

Benefits to all the existing Societe
The loyalty of the Apple fanbase
Apple products and Societe
Generale clients that already
Generale would make it easier to
possess an iPhone and will also
take a loan to buy Apple
attract all the iPhone users to
products for business and average
Societe Generale .
consumers at low interest fees.

Commission fees cut in half for

business that provide apple pay
Apple will use the same titanium Societe Generale will have the
and apple card for the first 3 years
card used in US which is a very advantage of using the Apple
in order to attract new clients and
safe card technology
businesses into société générale
and apple card
 There are three main ways banks make money: by charging interest on
money that they lend, by charging fees for services they provide and by
trading financial instruments in the financial markets.

The online banking system that will provide the apple card will charge no
banking fees.

Increase in the sales of the Apple products in Europe, considering the

Societe Generale consumers that already use Apple products

Short-Term Apple plans to give loans at a 3-6% interest rate

Profit
Apple card service will make most of its revenues by charging interest on
money they lend and will charge no fees for every transaction inferior than
2000 dollars on the trading market.

Delving into banking can give tech firms valuable insight into what their
clients are spending money on. That information can then be used to shape
future business strategies and defend against threats
Long-term vision and profit

Personal Banking, 24 / 7 Global over local

Money is just a form of

Nobody will use cash. data, and Apple has
It’s unlikely we’ll have been great at managing
ATMs and retailers access to data. They’ll
won’t have cashiers. take the same approach
to money over time
 Long term vision and profit

Will I be able to
Lend credit or loans
Will it be easier to via my Apple Will Apple products
engage with my products? allow me to make
bank on a day to payments anywhere
day basis via an at anytime?
apple product?
YES TO ALL

Will Apple be able to

Can apple products recognize my spending
perform my banking data, predict the next
activities and help item I’ll need and
me manage my suggest the best one
money? rated by most users
within Apple banking
application?
Final
remarks
★ Even though the price tag is very high (165B) we
believe that this acquisition can be very
profitable in the long term.

★ The acquisition of Société Générale and

Boursorama will facilitate the operations of
apple in the european market, potentially
allowing an expansion onto the global market.

★ Apple will implement its technology into the

banking system and completely change the way
we perceive banking.
?
Questions ?
Thank you for
your attention