Managing in Troubled Times Case Study

Apple Computer: Grappling with Challenges

OR

Abstract:

In the second half of 2006, Apple computer Inc. (Apple) was engulfed in controversies. At first, some irregularities were revealed in stock options grants made between 1997 and 2001, creating a furore among Apple shareholders. Secondly, in August, it announced the recall of 1.8 million batteries fitted in its laptops, saying that the batteries could, in rare cases, overheat and burst into fire. Though Apple said that the recall would not have any financial impact on the company, the announcement panicked the customers as well as shareholders. While the company was busy settling both the issues, analysts wondered how Apple was going to save its reputation with customers and calm the shareholders.

The case deals with the problems that Apple is facing and the steps taken by the company to overcome them.

Pedagogical Objectives:

• To discuss the problems facing Apple Computer
• To analyse the accounting and financial implications arising out of the problems
• To understand the corrective measures taken by Apple Computer to overcome the problems
• To debate whether Apple would be able to win customer as well as shareholder confidence.

Keywords : Apple Computer; Apple battery recall; Stock options; Li-Ion Battery; Backdating; Managing in Troubled Times Case Study; CPSC (Consumer Product Safety Commission); Notebook market share; Dell; Sony; Rechargeable lithium battery; Laptop computer; Steve Jobs; iPod; Securities and Exchange Commission

Contents:

• The Making of Apple
• Apple: Facing the Heat
• Dealing with the Problems