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Businesses Software The Almighty Buck Apple

Which Company Is the Largest? 378

Fudge Factor 3000 writes "Apple and Exxon are fighting it out to be the company with the largest market cap. Tuesday, Apple pulled ahead. It is hard to believe a tech company can beat out an oil giant, but is the market cap really the measure of the size/influence of a company? It is certainly the simplest metric to consider. Ars is running an excellent article on how to measure the size of a company. They discuss different metrics such as cash balance, revenue, number of employees, etc."
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Which Company Is the Largest?

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  • Who cares? (Score:5, Insightful)

    by Anonymous Coward on Sunday August 14, 2011 @01:05PM (#37087172)

    Does it really matter? Honestly, who gives a shit what company is the biggest?

    I only care about the products/services they produce.

  • only gadgets (Score:4, Insightful)

    by Anonymous Coward on Sunday August 14, 2011 @01:11PM (#37087236)

    what is the future of a civilisation whose most capitalised stock is gadget manufacturer?

    • by am 2k ( 217885 )

      I prefer that to a company whose business is making the planet inevitably inhabitable.

      • I prefer that to a company whose business is making the planet inevitably inhabitable.

        Your modern lifestyle and that of almost every other person currently living on this planet is made possible by relatively cheap access to hydrocarbons. If nothing else, remember this:

        1. Be careful what you wish for, lest you actually receive it.

        2. Don't bite the hand that feeds you.

        • by am 2k ( 217885 )

          While this is true, there's a quickly closing time window where it might be possible to keep that lifestyle while still having a planet to live on, by switching to alternative power sources when they're sufficiently developed.

          At one point in the past, stone-based tools allowed humans to improve their lifestyle. As soon as better alternatives were developed, a switch occurred. This isn't any different (except for the irreparable implications of not making the switch soon).

          • While this is true, there's a quickly closing time window where it might be possible to keep that lifestyle while still having a planet to live on, by switching to alternative power sources when they're sufficiently developed.

            At one point in the past, stone-based tools allowed humans to improve their lifestyle. As soon as better alternatives were developed, a switch occurred. This isn't any different (except for the irreparable implications of not making the switch soon).

            That's a bloody big exception. So what happens if the new technology is not developed at all or even delayed? We just keep on destroying what we have until its gone?

      • by khallow ( 566160 )

        I prefer that to a company whose business is making the planet inevitably inhabitable.

        Curious typo. It's also a bit ironic since oil companies do help make the planet more inhabitable by providing the energy medium that the construction and transportation infrastructure mostly depends on.

    • by bazorg ( 911295 )

      A future where more people have more time dedicated to the top parts of Maslow's pyramid rather than the bottom sections.

    • Re: (Score:3, Interesting)

      by ScentCone ( 795499 )

      what is the future of a civilisation whose most capitalised stock is gadget manufacturer?

      They're not a gadget manufacturer (though they are also that). They are mostly an entertainment company. Just like the good old days of RCA, when they ran broadcasts, and sold televisions too ... to make sure that people could get their broadcasts.

      It's not at all surprising that a company that makes money delivering entertainment, services, and other IP-ish stuff (iTunes, the App Store, etc) is huge. Because the US has a huge hunger for that sort of stuff. And that stuff is hugely more marked up than ar

  • But I thought... (Score:2, Interesting)

    by TWX ( 665546 )

    ...Apple was dying...

    I've heard that for the last 20 years from dozens of tech magazines and from numerous Slashdotters...

    • I think you mean ten years ago not 'the last twenty years'.
    • by ultramk ( 470198 )

      20 years? I've personally been hearing it since the IBM PC was introduced, and that was '81... so 30 years?

  • by Doc Ruby ( 173196 ) on Sunday August 14, 2011 @01:12PM (#37087248) Homepage Journal

    It is hard to believe a tech company can beat out an oil giant, but is the market cap really the measure of the size/influence of a company?

    Of course it isn't. If it were, then the gyrations of the DJIA would mean that the total size of the representative corporations in the stock market have grown and shrunk across a 10% margin over the past couple of weeks. Those companies, and by extension the rest of publicly traded corps, and indeed business in general, have clearly not been growing and shrinking that much in any size except solely their market cap. The market cap is undeniably a contrived measure that is primarily an artifact of nothing but finance. Which in the past generation has become almost completely independent of underlying business, and even independent of any underlying reality except preferential treatment by the powerful.

    • Market cap is not an indication of size at all. It's an indication of, well, present market value.

      For size, there are few things you can look at it: there is size based on net worth, total number of employees, total sales in dollars, total unit sales, etc. Most of these are only useful when comparing to companies within the same industry, however. In fact, most useful statistics are really only useful when comparing companies within the same industry. That's why so many people focus on market capitaliz

      • by JimboFBX ( 1097277 ) on Sunday August 14, 2011 @03:25PM (#37088462)

        EPS is only relevant for a company with no foreseeable change in demand.

        Every tech company has a high uphill to remain relevant. Apple's iPhone was/is pretty cool, the Motorola RAZR was pretty cool, the blackberry was cool, Windows XP was pretty cool, Windows 95 was cool... etc etc You can't just sit on what you have and make money. Your against the clock

        An oil company similarly has limited oil supplies and must keep exploring, but those don't deplete nearly as fast as relevance depletes does for a tech company (also don't forget oil companies are becoming 'energy' companies as they move away from oil).

        Apple's iPhone is already feeling... dated to me. Its weird but when I hold my wife's iPhone 4 it just feels old compared to my Atrix even though the iPhone does many key features better than the atrix and motoblur isn't exactly the spiffiest interface out there. Her home button issues don't help at all (randomly quits working). Eventually she'll get like me and say "well, I'm not buying another Apple product again" after she gets fed up with all its quirks and shortcomings like I did with my iPhone 3G.

        Apple's market capital is driven by speculation, but its probably the wrong kind. Some people buy into apple because they think it has a future, others buy into it because it seems to be more resistant against market swings as a large-cap stock and because it's had a long-term growth trend. The rest are bots running an algorithm that will continually drive up the price of the stock until something triggers them to decide the stock is going to go down... Then those bots will drive down the price of the stock when they go bearish on it. It is likely Apple's price/share is too high given their long term viability, but you do have to give credit to the fact Apple has built their long-term income on their iTunes store which people will probably keep on using well beyond when they decide Apple's hardware just isn't the best item to buy with their money.

        However, when someone major starts selling songs cheaper than apple while at the same time giving more money to the creators of the content being sold, then I would say apple is in trouble. At that point, creators may stop using apple as a distribution source

  • Carrying value (Score:5, Insightful)

    by SnowDog74 ( 745848 ) on Sunday August 14, 2011 @01:16PM (#37087274)

    Market cap is a completely nonsensical way of saying "what's the largest company". Market cap is simply whatever irrational price the market has placed upon a company, and has zilch to do with its actual value as a cash generating engine.

    For that, one has to look at book value or intrinsic value, as defined by Graham, Dodd, Buffett and others in the value investing fold. Book value (or carrying value) is simply assets minus liabilities minus intangibles (e.g. goodwill, the paid in capital during acquisition of other companies in excess of their book value). Intrinsic value, more or less, includes the net present value of discounted cash flows looking probably five or six quarters forward (any more than that is pure speculation as companies tend not to forecast out more than a year or two from the known inputs into their business).

    A third way of looking at it is net working capital plus net operating cash flows... paring it down to inventories on the balance sheet side (working capital) and cash flows related directly to the sale of their goods/services, and not via financing activities, acquisition, etc. This is a really strong measure of how powerful a business is. By almost all of these measures, Apple is pretty strong, but their market capitalization seems to have them overvalued several times relative to what their future cash generating ability truly is.... which is why you won't see any offers for acquisition any time soon, not that Apple would entertain any of them anyway.

    • No, the biggest reason nobody has offered to buy Apple is because no single entity has the nearly half a trillion US dollars just lying around that it would take to buy them.
      • Re:Carrying value (Score:4, Interesting)

        by CodeBuster ( 516420 ) on Sunday August 14, 2011 @02:45PM (#37088098)
        It's highly doubtful that Steve Jobs would be amenable to a buyout in any case, even if someone had cash. In any case, the Apple board will follow Steve's lead and any attempt at a hostile takeover would almost certainly fail or else destroy the value of Apple in the process. Like it or not Apple is Steve Jobs and he is Apple. Without Steve, Apple would be just another me-too tech company; long since acquired by the likes of HP, IBM or even Microsoft.
    • The two methods of valuation you presented give the current value of a company. Market cap takes into account expectation for future growth. So yeah market cap is a poor way to figure out what's the largest company, but it's not completely irrational either.
  • How about volatility (Score:5, Interesting)

    by dimeglio ( 456244 ) on Sunday August 14, 2011 @01:19PM (#37087308)

    Although Apple is on top at the moment, they have a very volatile stock. This tend to discourage long-term investments generally accounts for less than 15% of a well balanced portfolio. Microsoft and also Exxon on the other hand have a stable stock price and they both tend to play it generally safe. It might not please stock holders who were looking to make money quickly but perhaps is how a company can achieve more maturity.

    So yeah, they are big now but they might be tiny in a few months.

    • Exxon and I believe Microsoft pays a dividend to its shareholders, unlike Apple.
    • by Anubis IV ( 1279820 ) on Sunday August 14, 2011 @02:05PM (#37087746)

      What do you mean about volatility? Aside from Steve Jobs announcing his first medical leave to get a liver transplant in January 2008 and the economic recession hitting later that year, there haven't been any major drops in Apple's stock price. With the exception of the two cases I mentioned, you could have bought Apple stock at any point in the last five years, sold it a year later, and come out well ahead (and in those two cases, holding it for two years would have meant a major profit). It hasn't been a monotonic increase, but it's certainly on an upward trend at the moment, so even if there are fluctuations on a day-to-day basis, holding onto it for even a month or two is almost always enough to see a return on your investment.

      http://finance.yahoo.com/q/bc?s=AAPL&t=5y&l=off&z=l&q=l&c= [yahoo.com]

      • I mean from the inception of the company to today, Apple has been relatively volatile compared to Exxon or even Microsoft. Unlike Exxon and Microsoft, Apple doesn't really have a long term cash cow. Exxon has oil, Microsoft has MS Office. Apple has recently been very successful with the iPod and iPad but competition is lurking. There is no guarantee they will remain leaders 4 years from now. It's likely but this uncertainty is what makes it more volatile.

    • Well MS and Exxon has more stable stock prices; however, MS stock has been stagnant the last decade whereas Exxon has grown slightly. That's probably the major complaint of MS shareholders; they don't expect the stock to double or triple in value but some growth would have been nice.
  • by kmdrtako ( 1971832 ) on Sunday August 14, 2011 @01:29PM (#37087404)

    Is that SJ and Tillerson duking it out, mano a mano?

    Are they launching missiles at each other's corporate HQs?

    No, I didn't think so. They're just minding their businesses and the stock market is setting a price on their shares. Hardly what I'd call battling it out. Strange metaphor.

  • by art123 ( 309756 ) on Sunday August 14, 2011 @01:31PM (#37087434)

    Here is another way to think about it.

    What if the company disappeared over night? How "important" are these companies?

    If Apple disappeared, people wouldn't have their toys and music anymore and people who actually get work done with Apple products (like designers or movie editors) would have to migrate to other platforms like Linux or Windows.

    If Exxon disappeared, the world would have a temporarily huge reduction in the available oil until competitors could pick up the slack which could take a long time in which case the whole world will fall apart (only slightly exaggerating).

    So I say that Exxon is way more important than Apple.

    By that metric, Microsoft, IBM, and Oracle are also way more important than Apple.

    • By that metric, Fox TV is more important than all of those companies. Within 45 minutes of it's demise the majority of the American population would start to go through a slow, unpleasant and eventually fatal withdrawal.

    • If Redmond and all its outstantions were nuked from orbit tomorrow, people would rapidly reverse engineer the licensing and continue to use and deploy the products while transitioning to replacements. There would be hardly any downside. IBM itself, on the other hand, along with Oracle and HP, provide massive support operations to critical systems which would fall over.

      Visa/Mastercard > Exxon >= {Oracle|IBM|HP} > Microsoft > Apple.

    • I don't think so. By your own account Apple is more important than Oracle. What would happen if Oracle were to disappear overnigth? Think it twice. Yeah: absolutly nothing. Running databases still running, new deployed ones by copying from somewhere else's without the BSA minding... At least in the case of Apple I would be unable to buy a new iPhone.

      • by PPH ( 736903 )

        At least in the case of Apple I would be unable to buy a new iPhone.

        And your old one would suddenly no longer work?

        Unless you are addicted to having a new shiny object in your pocket, it should be no big deal.

  • by linumax ( 910946 ) on Sunday August 14, 2011 @01:33PM (#37087456)
    With the recent spurt in the stock price, Microsoft's market capitalization has reached nearly $600 billion, putting it back in first place ahead of General Electric's $475 billion market cap. [cnet.com]

    Tech stocks are a bit more volatile than that of oil companies. Back then, Microsoft looked even better than Apple does today, virtually unstoppable.
    • Translation: Apple's won't be at the top forever, any more than Microsoft's was.

      Everyone wants to know what happens when SJ leaves. I suspect a lot of people will be shorting AAPL big time when he does.

      And I don't wish for it, but there's no denying that SJ's health issues are in the forefront of everyone's thoughts.

      • Agreed; Apple has never established a monopoly in the way that Microsoft did. Once you've built your entire enterprise and customized software around Windows, they own you. By contrast, Apple is in a much more tenuous position - they'll going down the minute they stop being better than the competition.
  • C'mon, this is a repackaged duplication. http://apple.slashdot.org/story/11/08/10/1928206/Wall-Street-Software-More-Valuable-Than-Oil [slashdot.org]

    And THAT one was really not adding much to this. http://slashdot.org/index2.pl?fhfilter=apple+exxon [slashdot.org] Slashdot, make another pot of coffee.

  • by RichPowers ( 998637 ) on Sunday August 14, 2011 @01:37PM (#37087490)

    This sentence from the last page sums it up nicely:

    Most pundits would say that Exxon is the larger company by far in every comparison that matters, particularly when you're thinking about who does or does not drive the American economy.

    I would go a step further and say that fossil fuel extraction is the most important sector of the economy, at least from the perspective of what makes industrial civilization possible and allows human beings to number over 7 billion. After all, the last few centuries of technological progress and human biomass growth can largely be attributed to how we've creatively employed the vast armies of energy slaves liberated by the combustion of fossil fuels to do things like power generators, run combines and tractors, and make plastics and fertilizers. And human biomass proliferated in the 20th century largely due to our ability to convert stocks of low entropy stored solar energy into edible calories and fertilizers. The energy sector (which is dominated by fossil fuels) subsidizes other service and production sectors and makes our highly complex society possible (1).

    So Apple or some bank may be largest or "most important" based on some metric employing fiat currency (that's being inflated away by the Federal Reserve) or the Wall Street casino's latest valuation based on pixie dust, but energy (or more precisely, exergy) is what really matters for civilization; everything else is just playing with your food.

    (1) Joseph Tainter, "Complexity, Problem Solving, and Complex Societies."
    http://www.oilcrash.com/articles/complex.htm [oilcrash.com]

    See also:

    Ayres and Warr, "Accounting for Growth: The Role of Physical Work."
    http://www.fraw.org.uk/files/economics/ayres_2005.pdf [fraw.org.uk]

    • by mortonda ( 5175 )

      I would go a step further and say that fossil fuel extraction is the most important sector of the economy,

      If Apple just stopped existing, would it hurt Exxon? Probably not. If Exxon suddenly stopped, would Apple notice? Most certainly...

  • So yah a tech company making shiny things for the masses will be on top till the masses revolt.

  • Okay then, which one pays/evades/avoids the most corporate taxes?

  • The important thing is the profits, not how 'big' they are. If you doubt it, imagine if the country of Congo were a company. Clearly Congo would be bigger than any company in the world (what company has land holdings the size of Congo?), but they would be making $11 billion a year (GDP). Not really good.

    The fundamental reason for a stock having a particular price is the profit (or, future profit.....no one wants to hold stock in a company that makes less each year).

    There is no doubt that Exxon is bigge
    • by Arlet ( 29997 )

      Their current profit is a lot closer, with 30 billion for Exxon and 14 billion for Apple, and on current trend, Apple will close that distance within three years.

      Or not. Technology trends can be fickle. There comes a point in time where everybody already has a phone, a music player and a tablet computer. Especially when the economy goes south, spending a few hundred buck to upgrade a perfectly fine black phone with a white version may not be as appealing anymore. On the other hand, energy is a pretty basic

      • It's impossible to predict the future, right? If the economy goes south, demand for oil will drop as well, and Exxon will make less profit. Lots of things can happen.

        But Apple's been pretty consistently improving its profit, which obviously can't go on forever, but do you have a reason to believe it will stop now, instead of in three, or five, or ten years?
        • by Arlet ( 29997 )

          No particular reason, but look at Cisco. In 2000, their stock price was more than 3x times what it is now, and people thought it was justified because their earnings would grow rapidly.

          • Yep, but saying, "some other company was big and didn't get bigger, thus company B will do the same" is poor analysis. You need to find some other determiner, because sometimes it will be true, sometimes it won't.
            • by Arlet ( 29997 )

              Sure, but extending their trend for the next 3 years by drawing a straight line is equally poor analysis. Sales have been high because of a lot of first-time buyers of Apple products. At some point in time, the market becomes saturated, and sales will drop, unless they can keep coming up with newer and better stuff that people want, and can afford to buy. I have no idea whether that point is 3, 5 or 10 years from now, though.

              • And yet, if you always extrapolate current trends, then you will be right more often than not.

                In my original post, I wrote some analysis explaining why I think the trend will continue, but I deleted it because it didn't seem relevant to my main point.

                If you want to know, here it is: the (world) market for the PC, and smartphones, in general isn't saturated yet. Apple will benefit from this fact. On top of that, the Mac has only 10% of the marketshare. That is a lot of room for growth, there is no indica
  • First of all, would it have killed them to update their fucking metrics? Hello? Does anybody in journalism do anything other than repeat old articles anymore? This is ridiculous.

    Second of all, this:

    Sending Microsoft or Google into bankruptcy might disrupt your personal life in a more direct way than losing Goldman Sachs or Barclays, but technology treats systemic damage as a fault and routes around it. Someone else would quickly step up to fill the gap, and our children would think of Microsoft Office or

  • Largest, in terms of average belt size.

  • "Market cap" of bid shares is bogus. What happens after the first 10% (or 1% or less) of shares get sold? The price goes down. This is especially true for volatile, speculative, or foward-looking stocks where there are comparatively few buyers who are willing to bid a high price, as opposed to a company like Exxon that has reserves in the ground and the price is more readily and more universally agreed upon and the bids have "depth" that strongly support a price not much less than the highest bid price,

  • Which CEO thinks he has the biggest dick? It's about as relevant.

    Hypothetically, what if it was GM? And what would change if GM was just a holding company and Chevrolet, Buick and Cadillac were listed separately?

     

  • by LynnwoodRooster ( 966895 ) on Sunday August 14, 2011 @07:26PM (#37090040) Journal
    Try to live 6 months without your Macbook, smartphone, or iPod. Now try the same without petroleum based products. 'nuf said.

So you think that money is the root of all evil. Have you ever asked what is the root of money? -- Ayn Rand

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