CS Question 1: Could Apple Computer have been as successful if it had not gone public?

When a corporation wishes to expand, it usually requires outside capital investment. One way to encourage investment is to sell stock on a public exchange. This is called a public offering, or "going public." Once outside investors purchase stock in a corporation, that corporation is considered "publicly held." Many advantages occur when a company goes public. A public offering increases its net worth. This can then increase the company's ability to borrow money or raise more capital. Publicly traded stock can also be used to finance a company's future acquisitions. Another advantage of a public offering is the visibility it provides to a company. Public offerings generate more interest from customers, suppliers and business associates. On the personal side, founders and initial investors can become very wealthy when a company goes public. Steve Jobs made millions of dollars during Apple's initial public offering, or IPO.

CS Question 2: How does going public assist a corporation's growth?

There are also disadvantages to going public. First, it is very expensive. It involves many accountants, financial planners, marketers and other specialists. On average, a company wishing to offer $10 million in shares will pay $200,000 to $500,000 for the initial public offering. An IPO also takes up many labor hours for a company's management team. An IPO distracts management from running the company's business. Once a company goes public, its private financial information becomes public record. In addition, the founders of the company risk losing control of the organization. In order to control a publicly held company, an individual must hold a majority of the stock. Through Apple's IPO, as well as later business deals and acquisitions, Steve Jobs lost his majority control of Apple's stock. Although he was still heavily invested in the company, he stepped down as CEO. Eventually, he started another company, pursuing other business interests.

CS Question 3: What are some of the major disadvantages to going public?

When Steve Jobs lost control of Apple, the company's management strategies changed. IBM had begun to produce inexpensive home computers and business computers. The Microsoft Corporation was producing the powerful Windows operating system designed for these computers. The computer market exploded, yet Apple was never able to meet or overcome the competition. In 1997 Steve Jobs returned to Apple Computer as the interim CEO. Since then, Apple has gained significant market share by introducing a new product, the iMac. Jobs hopes to return Apple to the vision of the company he once started in his garage.

CS Question 4: When Steve Jobs left Apple Computer, how did the market change?

Further Thought:

1. How does an IPO affect the founders of a company?
2. How can a company's founders prevent losing control of their company during an IPO?
3. Do you think the advantages of going public outweigh the disadvantages? Why or why not?