Apple Now The Most Valuable Company In The World(techcrunch.com)
techcrunch.com
Apple Now The Most Valuable Company In The World
http://techcrunch.com/2011/08/09/apple-exxon-valuable-company/
47 comments
Apple has about $76 billion in cash after the last quarter. Not sure where you got $28.4 billion from.
Also, I'm not sure why you say that Apple is unlikely to maintain it's advantage in the smartphone and tablet industry. I'd say they are very likely to maintain an advantage, especially when it comes to profits. No other manufacture has an entire ecosystem in place for it's customers quite like the way Apple does (digital stores, iCloud, Retail stores, etc).
Also, I'm not sure why you say that Apple is unlikely to maintain it's advantage in the smartphone and tablet industry. I'd say they are very likely to maintain an advantage, especially when it comes to profits. No other manufacture has an entire ecosystem in place for it's customers quite like the way Apple does (digital stores, iCloud, Retail stores, etc).
I understand why you may be confused, because this was pretty poorly reported recently and I was not completely specific in my post.
Some Miscellaneous References:
http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii
http://finance.yahoo.com/q/ks?s=AAPL+Key+Statistics
http://www.apple.com/pr/library/2011/07/19Apple-Reports-Thir...
Apple does not have 76 billion in cash. It has 76 billion in cash, cash-equivalents, and long-term marketable securities. There is a significant difference.
For clarification, please see here:
http://seekingalpha.com/article/258268-debunking-the-myths-o...
This post does not constitute investment advice.
Some Miscellaneous References:
http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii
http://finance.yahoo.com/q/ks?s=AAPL+Key+Statistics
http://www.apple.com/pr/library/2011/07/19Apple-Reports-Thir...
Apple does not have 76 billion in cash. It has 76 billion in cash, cash-equivalents, and long-term marketable securities. There is a significant difference.
For clarification, please see here:
http://seekingalpha.com/article/258268-debunking-the-myths-o...
This post does not constitute investment advice.
Thanks for the clarification. I've just never heard anyone be as specific about it as you, and I appreciate it. Almost everyone (non-financial sites and reports) considers it all "cash" and reports it as such.
Yes, the $76 billion includes $47.7 billion of long term investments, and possibly in there are the value of the supplier agreements that Apple is so famous for.
On the other hand... potato, po-tah-to?
While I'm acutely aware of the vast difference between $28 billion and $76 billion, can anyone name the largest acquisition Apple has ever completed?
More importantly, can anyone recall the amount?
Apple is one of the most acquisition-averse large companies I've ever seen. What they will do with $28 billion--let alone $76 billion--is beyond me.
On the other hand... potato, po-tah-to?
While I'm acutely aware of the vast difference between $28 billion and $76 billion, can anyone name the largest acquisition Apple has ever completed?
More importantly, can anyone recall the amount?
Apple is one of the most acquisition-averse large companies I've ever seen. What they will do with $28 billion--let alone $76 billion--is beyond me.
I'm pretty sure MrHobbes was just waiting to jump on someone for that. Although Apple doesn't have $76 billion in "cash and cash equivalents", it's not as if those extra assets are suddenly rendered valueless because they're harder to convert to cash. As you surmise, they provide a lot of leverage.
Hello ellyagg,
No, I was not waiting to jump on someone for that, and I would hope that my response was not agressive in tone. That really was not intentional, but I apologize to jmreid if that was the case.
I actually up-voted jmreid's post (before typing my response) because he raised an extremely important point.
If I may share something? I like to keep this in mind as I move around online. With the lack of faces and tone of voice to help, I find that it is helpful to remember: http://www.paulgraham.com/randomness.html
No, I was not waiting to jump on someone for that, and I would hope that my response was not agressive in tone. That really was not intentional, but I apologize to jmreid if that was the case.
I actually up-voted jmreid's post (before typing my response) because he raised an extremely important point.
If I may share something? I like to keep this in mind as I move around online. With the lack of faces and tone of voice to help, I find that it is helpful to remember: http://www.paulgraham.com/randomness.html
Those $28 billion are excluding long-term marketable securities, the $76 billion include them.
Cash hoard: Maybe they will buy their own hardware manufacturing facilities, right down to silicon foundries. They like vertical integration, and they don't like their manufacturers (e.g. Samsung) becoming competitors.
Long term: although Apple is defending its current properties, I think it is setup to routinely create new categories of products. This is where Apple's talents are most valuable (especially combining hardware and software to push the envelope), when new things are still difficult; they don't seem to be good at commodities (e.g. cheaper phones) nor want to be. They've gone iPod, iPhone, iPad. They're also trying TV hardware. What's next? Maybe a game console; a watch; a much smaller smart phone; an ARM/iOS laptop or desktop; or something I haven't imagined.
But yes, the question is whether they can manage it without Jobs.
Long term: although Apple is defending its current properties, I think it is setup to routinely create new categories of products. This is where Apple's talents are most valuable (especially combining hardware and software to push the envelope), when new things are still difficult; they don't seem to be good at commodities (e.g. cheaper phones) nor want to be. They've gone iPod, iPhone, iPad. They're also trying TV hardware. What's next? Maybe a game console; a watch; a much smaller smart phone; an ARM/iOS laptop or desktop; or something I haven't imagined.
But yes, the question is whether they can manage it without Jobs.
Apple has not demonstrated any interest in buying its own manufacturing facilities. Doing so would not provide the company with the flexibility and agility required to stay ahead of the market. Instead, Apple uses cash incentives to allow its manufacturing partners to invest in new technologies earlier than market demand would have otherwise made feasible. In exchange, Apple signs deals for exclusive purchasing rights to these new technologies.
By providing incentives to third parties instead of assuming the manufacturing risk internally, Apple can accomplish the same goals with comparable payoff while taking on much less risk.
This strategy is, in part, one of the reasons why Apple is able to offer tech like the retina display in the iPhone 4 long before its competitors.
By providing incentives to third parties instead of assuming the manufacturing risk internally, Apple can accomplish the same goals with comparable payoff while taking on much less risk.
This strategy is, in part, one of the reasons why Apple is able to offer tech like the retina display in the iPhone 4 long before its competitors.
I was thinking bigger.. how about a new car? electric of course. Completely different from what we know. A mobile computer we can travel in.
Please let it be a watch (dead serious).
The current iPod Nano with bluetooth would have been killer. Wireless headphones tied to your watch... now that's wearable computing.
As a watch wearer I agree. I would love for someone to really reinvent the product into something better.
They use the hoard, in part, to lock up supply of components that they think will be strategic in the near to medium term future. They had a strangle on the supply of NAND flash leading up to and through the christmas season when the first ipod nano's came out, for example.
http://www.tuaw.com/2011/04/26/apple-lays-out-11-billion-in-...
http://allthingsd.com/20110124/tk-3/
http://www.quora.com/What-would-be-a-good-use-of-Apples-76-2...
http://www.tuaw.com/2011/04/26/apple-lays-out-11-billion-in-...
http://allthingsd.com/20110124/tk-3/
http://www.quora.com/What-would-be-a-good-use-of-Apples-76-2...
"Something else to consider is their cash hoard. What exactly do they intend to do with that $28.4 Billion dollars in cash? That is a mystery that I would love to know the answer to."
Apple has long held a huge rainy-day fund. For example this reason: "With that said, it is perhaps unlikely that Apple will be able to maintain its current advantage in the smartphone and tablet markets over the long-term."
This approach is pretty much what got them through the Jobless 90s.
Apple has long held a huge rainy-day fund. For example this reason: "With that said, it is perhaps unlikely that Apple will be able to maintain its current advantage in the smartphone and tablet markets over the long-term."
This approach is pretty much what got them through the Jobless 90s.
Isn't Apple's problem that a lot of this money is overseas, from overseas operations, and could not easily be bought back into the US?
My understanding is that repatriating the money to the USA would cause it be taxed, even if it's already been taxed in the country of origin. I believe that the USA is one of the few countries that is prepared to tax extra-territorial earnings, but I am not a tax accountant.
In short, this is generally true.
In long form, this might or might not be true, depending on tax-treaties and jurisdictions.
Back to short form, smarter people than you or me have worked out all the angles for Apple on this already.
In long form, this might or might not be true, depending on tax-treaties and jurisdictions.
Back to short form, smarter people than you or me have worked out all the angles for Apple on this already.
> Back to short form, smarter people than you or me have worked out all the angles for Apple on this already.
Exactly.
Exactly.
How hard would it be for them to run a graph of the market cap of APPL and XOM throughout the day, rather than the related, but misleading %change throughout the day, which makes it look like they started equal and diverged from there.
I know that it's not something that's screen capturable with broswing to finance.google, but a little effort people.
I know that it's not something that's screen capturable with broswing to finance.google, but a little effort people.
Here's a 5-year chart of market caps for Apple, Exxon-Mobil, and Microsoft: http://ycharts.com/companies/AAPL/market_cap#zoom=5&comp...
even better if you run the chart back to 2002, when apple was hurting.
http://ycharts.com/companies/AAPL/market_cap#zoom=&compC...
http://ycharts.com/companies/AAPL/market_cap#zoom=&compC...
Those thin lines make the chart really hard to read.
What's amazing is that Apple still managed to grow its profit 125% year over year last quarter. A huge company, hugely profitable, and still hugely growing.
I personally figure it's the Apple Tax, aka very comfortable profit margins, plus the short life cycle of technology.
Yeah, you guys are probably right. Apple's profit margins probably don't have much to do with their profitability.
Unless the margins have grown dramatically, they are unlikely to accounts for Apple's growth this past year. If the margins, high as they are, remain the same, the growth comes from expanding the number of customers they have.
Wait, Exxon has a P/E of 8.86 that's rediculusly for such a stable company IMO. Am I missing something obvious or is it a great buy right now?
Stable, non-growth companies typically have much lower P/Es. There's absolutely no chance that Exxon will double in revenue in the next couple of years; that's entirely possible for Apple.
I agree. Most people are already Exxon customers. Most people aren't Apple customers.
I haven't had the time to look at the numbers myself recently, but I have heard from some oil industry friends that I know that Exxon is currently in a state of slow-motion liquidation.
From what they are saying, exploration and expansion has not really taken a high priority within the company in recent years, and the emphasis seems to be more on maintenance.
I don't really know about the extent to which this is true, but if this is the case then it could possibly explain the low p/e ratio.
Personally, I think that the problem with Exxon is that it is an oil company and oil prices are connected with world economic outlook. (Most economic activity requires energy, which oil just happens to be a great source of.)
World economic outlook is a bit grim right now, so Exxon's outlook is as well. When economic activity heats up again then oil prices will rise, and, at that point, I am quite sure that Exxon will be doing quite well again.
This post does not constitute investment advice.
From what they are saying, exploration and expansion has not really taken a high priority within the company in recent years, and the emphasis seems to be more on maintenance.
I don't really know about the extent to which this is true, but if this is the case then it could possibly explain the low p/e ratio.
Personally, I think that the problem with Exxon is that it is an oil company and oil prices are connected with world economic outlook. (Most economic activity requires energy, which oil just happens to be a great source of.)
World economic outlook is a bit grim right now, so Exxon's outlook is as well. When economic activity heats up again then oil prices will rise, and, at that point, I am quite sure that Exxon will be doing quite well again.
This post does not constitute investment advice.
Exxon's income is highly dependent on the price of oil. See their historical numbers:
http://www.google.com/finance?q=NYSE:XOM&fstype=ii
With oil at lower prices ($80/barrel now), their net income can significantly fall.
With oil at lower prices ($80/barrel now), their net income can significantly fall.
Next on the agenda for Apple? Purchase Michael Dell.
Almost fifteen years later, and that snarky statement is still the first thing I think of when someone mentions Michael Dell: http://news.cnet.com/Dell-Apple-should-close-shop/2100-1001_...
Can't imagine how awkward a meeting between Jobs and Dell would be--at least for Dell.
Can't imagine how awkward a meeting between Jobs and Dell would be--at least for Dell.
I think both would have a good laugh. Dell was wrong, Jobs not only saved Apple but turned it into one of the largest companies in the planet.
Being slightly wrong is boring. Being so completely wrong is fun.
Being slightly wrong is boring. Being so completely wrong is fun.
That was fun to read the article AND the comments over last 14 years.
They're actually swapping places back and forth, since the market hasn't closed yet (as of 2:54 EST).
One day people will learn that price != value. Apple is definitely one of the most valuable companies in the world, but you can't say it's the most valuable because it has the largest market cap - not unless you believe in efficient market theory, but that's a debate for another day :)
Price is the best metric I've ever seen for value. Sure emotion, hype and misinformation can make price diverge from value for a time, but it inevitably converges to value.
You have something better?
You have something better?
Price is the best metric, but a metric is a standard for measurement, not an accurate measurement. Apple went from $392 a share on April 4th to as low as $353 just before yesterday's close. Are you telling me that apple lost $36 billion in value over a period of 5 days, or that it gained $5 billion in value today?
The market is a voting machine in the short term and a weighing machine in the long run. Saying that Apple is now the world's most valuable company is a stupid statement because it's based entirely on today's market cap.
The market is a voting machine in the short term and a weighing machine in the long run. Saying that Apple is now the world's most valuable company is a stupid statement because it's based entirely on today's market cap.
Most people understand that Stock Price relates to current assets AND expected future returns. What most people miss, is that the value of future returns vary's based on the price of other investments. Conciser if 3 year US treasury bonds had a yield of 17% then the value of most stocks would tank as their future earnings become less valuable today.
So, when the market crashed the value of Apple stock drops even if their future earnings are unaffected.
So, when the market crashed the value of Apple stock drops even if their future earnings are unaffected.
You are right, we are much better using color rather than price. Apple is the most colorful company in the world.
Is there any point in arguing about price and value without suggesting an alternative? This is an old argument.
Is there any point in arguing about price and value without suggesting an alternative? This is an old argument.
Sensational headline now most sensational in the world!
Marketwatch.com already listed in HN but with less sensational headline and more accurate content.
With that said, it is perhaps unlikely that Apple will be able to maintain its current advantage in the smartphone and tablet markets over the long-term.
On the other hand, at a P/E ratio of roughly 14 Apple does not exactly seem to be overvalued at this point in time.
Something else to consider is their cash hoard. What exactly do they intend to do with that $28.4 Billion dollars in cash? That is a mystery that I would love to know the answer to.
Personally, if I were Apple, I would be supplying investors with a dividend at this point in time. The fact that they are not indicates that they are either stubborn or they believe they are still capable of significant growth.
Let's assume they believe they are still capable of significant growth. The cynic in me doubts that this is the case - just because of the significant amount of competitive pressure that they are facing. The optimist in me thinks that it just may be possible for Apple to still expand.
Apple's history encourages the optimist in me. Apple is one company that, historically, it has always been a serious mistake to count out. However, how much of this amazing resiliency depends on Apple having Steve Jobs. Well... That's another wildcard.
I just don't know. It should be a very interesting next decade for Apple customers, investors, and competitors.
This post does not constitute investment advice.