Apple Passes $300B Market Cap, 2nd In the World 485
An anonymous reader writes "In May, Apple surpassed Microsoft in market capitalization to become the second largest company (by that measure) in the world. Today, with its shares riding high, Apple passed $300 billion in market cap, entering a club of two along with the still-gigantic ExxonMobile. And investors' targets could bring Apple beyond where Exxon is now (though Exxon continues to soar as well). Perhaps Wall Street is catching on that, despite the discontinuation of their underused Xserve, Apple is in fact becoming one of the key tech providers to enterprise, a position that even a year ago seemed laughable. If you consider the iPad to be a PC (which enterprise increasingly is), then suddenly you realize that Apple is expected to climb to 12% market share in 2011. Plus, of course, they have those little things called iPods, and iTunes..."
Once it was said: (Score:5, Interesting)
"We have to let go of the notion that for Apple to win, Microsoft has to lose." --Steve Jobs
All Apple had to do was stop trying to climb the fence to play in Microsofts yard, and apply some ingenuity to marketing and manufacturing. They've done well in these regards. You don't need to be an iFanboi to tip your hat here.
Apple will never replace Microsoft in the workplace, because they don't want to, there's not nearly as much money in it as replacing Microsoft in the home.
Or maybe it's even more hype (Score:4, Interesting)
Market capitalization is only one metric. There's also gross revenue (which Wal*mart wins) and net profit (which Exxon wins again). At current prices, AAPL still seems a bit overpriced compared to its peers.
Market cap? (Score:5, Interesting)
It's the same problem that sacked the mortgage market. The system is set up so that the bits of a company, called stock (or the mortgage) are entirely unconnected to the supposed underlying item of value, which is the company itself (building, property). With the stock market, people don't expect company dividends (anymore), and, even more bizarre, the supposed owners of the company aren't liable for any company crimes. Market capitalization is as meaningful as Twitter trends are.
That being said, it's interesting from a purely social point of view.
Re:Without dividends... (Score:2, Interesting)
True, but Apple has nowhere to go but up. Apple is in a position of being absolutely unable to fail.
That's some mighty fine Koolaid you're drinking there.
It's interesting: last week I was looking through an old computer magazine from 1983 because someone on Slashdot asked about 8-bit computer prices and I had the magazine lying around in the basement. After that I noticed there was a review of the new Apple III, which pretty much said that it sucked, but the conclusion was along the lines of 'good or bad, people will buy it because it's from Apple'.
Clearly they were considered 'unable to fail' back then too, yet they went through some seriously rocky periods between then and now. From what I've found out, pretty much all the things they complained about with the Apple III were The Glorious Jobs' design choices which looked good to him but didn't work in the real world.
A better bet to short for 2014? (Score:2, Interesting)
Apple has been sitting at (or around?) 4-5 billion in revenue for the better part of this last decade. They have great products, and a modest growth in sales each year, but as many have pointed out, most of the ipod/iphone sales are replacements, or selling to new (young) people just entering the market. Don't get me wrong, Apple sells fantasic products (I keep eyeing the iPad as a replacement to my dead-tree edition to the NYT), but IMO their sales will plateau soon unless the global market for Apple products expands dramatically during this global recession. Let the short term buyers drive up the price; the long game almost guarantees that after an initial run, the price will plummet back to 2009 prices. Apple is squarely in the consumer market, and I don't see them expanding in to the enterprise market in the near future (unless they release an enterprise-focused brand in the near future?). HP, Dell and the like aren't going anywhere. If you're looking for a quick buck, keep browsing biotech and Big Pharma. Technology is a mature market that's been mined out. The smart CEOs in the tech sector are going to learn from the Googles and Facebooks that one time IPOs and private investment are the right way to go. IPOs followed by split after split after split will disappear as a corporate strategy for viable companies.
Re:Redundant troll is redundant (Score:3, Interesting)
> Why does someone have to be a "chump" to pay more for it?
Because they're not actually going to get any money outside of selling the stock to someone else (see also: "no dividends").
> Those earnings... do you realize they belong to the shareholders even if they just accumulate in the company's bank account?
Unless the company loses them, gets sued, goes bankrupt, spend it on a foolish merger with a company that has lots of debt, is involved in fraud, bad accounting, and lots of other risks I can't think of right now (see also: Enron & anyone who invested in all those bad mortgages but didn't get a bailout).
In short, money in your pocket is worth more to you than money in someone company's bank account.
> Dividends are a "feel good" disbursement for companies that aren't supposed to grow.
So why didn't my portfolio of properly diversified assets with *good* P/E ratios collapse when everything else did? You remind me of the guy saying that the Dow would hit 20k before the crash. This news proves on thing to anyone sane: Apple stock is massively over-valued. But it's going to stay that way, Wile-E-Coyote style, until the masses realize that, too.
> If you want to invest in dividend paying companies go for it.
You're right that dividends aren't the only or even the best measure of value, but they're still a good one. And there's no question to me that Apple is over-valued. This is the time when smart people get fearful (Warren Buffet: "when people get greedy, be fearful; when people get fearful, be greedy" ... we're in "fearful" territory with Apple's stock). But that's just me. Any holding I have in APPL is probably part of some mutual fund and I couldn't rightfully tell you how much, if any, I have of their stock.
Re:Without dividends... (Score:4, Interesting)
that's a bit far reaching. Using US dollars is gambling that the value won't tank overnight. In fact, holding money in anything (even gold) is gambling that whatever that thing is won't suddenly depreciate in value through no action of yours.
The management of a company are ultimately investors, they can either reinvest profits into new products and grow the company, or pay out to shareholders if they figure they can't do better than the shareholders with that money. The 'worth' of a company depends on how much it honestly discloses, revenue, profits,total assets, vs costs and liabilities, and then what you expect it to be worth when you want to sell it. Lets return to the US dollar analogy. If you get paid in dollars, you are hoping that the buying power of those dollars will be unchanged when you go to spend it. But a government that lies about its financial situation (Greece), or screw it up badly (US, UK, Ireland, Italy, Spain) can significantly (and sometimes relatively rapid) change the value of their currencies, in 12 months the EURO declined about 9% vs the dollar. The pound is down I think 91% since 1971, and more than that since pre WW2 (in the case of the pound there are even a handful of days where the government decided to revalue to pound overnight).
Apple is just a company with some revenue. Whether it's worth 300 billion dollars or not is up to potential investors to decide, but it has a revenue of 65 billion dollars or so and profits of ~14 billion, but that 14 billion reinvested in the company should provide more than what 14 billion dollars would provide if paid out as a dividend and invested by shareholders. You can read their public filings as much as anyone else. If you think they're lying, or the risk of them lying (or pulling a BP and getting themselves on the hook for 40 billion dollars) exceeds their ability to pay, then you probably don't want to buy.
So, as with any company, whether they pay a dividend or not. Do you think that if when you would want to sell shares, will it pay out (dividends + value of the sold shares) more than you could get else where, or less? Apple does shiny well, it's popular with lots of important people, and they're a market leader in several areas. I don't personally think they're worth 300 billion dollars, but i don't think gold is worth 1400 bucks an ounce either, but that's irrelevant, they're both worth something. The bernie madoff frauds of the world are supposed to 1, get caught, and 2 have their assets siezed (which impressively looks like ~50% of the money is going to be recovered so far).
Stock guys have to be good at figuring out where the market is going to move, regardless of so called 'fundamentals'. Is apple really worth 200 billion dollars? That's irrelevant, what matters is if people think it's going to be worth 200 or 300 billion, and moving your money accordingly based on when you're willing to sell. If you want to invest for the next 30 years, then apple by itself isn't a good plan anyway, hence you should you know... diversify.
Re:Once it was said: (Score:4, Interesting)
Except that they're not, not really. At least on browser stats Windows is still in the 90%+ range.
And your statement there actually pretty well covers what he meant. Windows is so high on browser stats because they're used in business everywhere –same reason IE 6 is still high on browser stats. By comparison, apple grabs say 10-15% of the home market (yes, it's a guess, but probably not far off), and more importantly, grabs 60-70% of the profit that can be had from the home market.
That's called apple winning without MS needing to lose.
Re:My Apple Macbook experience... (Score:5, Interesting)
Nice isn't it? One year ago we bought a couple of macbook pros for some employees. Up until then, I haven't had much experience with apple computers. I entered the hostname of our high volume network printer, osx detected it propperly over the network and configured the appropriate drivers. It even detected the additionally installed hardware modules, a thing the vendor's driver for windows is not capable of (duh?).
Later i found out who is the main contributor of CUPS; Apple. The "Common Unix Printing System" is really really userfriendly once it gets the propper user interfaces and hardware detection (which OSX provides). CUPS with gnome is not bad but can't be compared to what OSX is capable of.
Cheers,
-S
Gee, do you think they may be overvalued? (Score:5, Interesting)
Does anyone else remember when AOL had a market cap of $222 billion, because the Internet was the new big thing and AOL, with its acquisition of Netscape and Time Warner, was sure to dominate that space forever?
http://money.cnn.com/galleries/2010/fortune/1002/gallery.biggest_losers.fortune/8.html
Yeah.
If Steve Jobs so much as sneezes Apple loses 20 percent of its market cap. Not because he's so essential, but because investors want to get out ahead of the gigantic Hype bubble deflating. We've seen this before. When will people learn?