Apple Is Now More Than Double the Size of Exxon–And Everyone Else(blogs.wsj.com)
blogs.wsj.com
Apple Is Now More Than Double the Size of Exxon–And Everyone Else
http://blogs.wsj.com/moneybeat/2015/02/23/apple-is-now-more-than-double-the-size-of-exxon-and-everyone-else/?mod=e2fb
9 comments
And yet there is room to grow. When Microsoft peaked, they had almost achieved a monopoly-sized market share. Apple on the other hand has managed to grow this large despite their most successful product having a minority market share. It is both impressive and just a little bit scary.
Here's a great post on Apple's New Market: http://stratechery.com/2015/apples-new-market/
I read your comment as implying that Apple's potential to swallow the world by increasing in size is scary. The other way of looking at it, if you're an Apple investor: Apple's lack of a "moat" is scary.
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Because MS decided virtual growth was the way forward (well... they decided it by releases shitty services and products horizontally) and Apple decided to focus almost entirely on horizontal multi-product approach to growth. The latter will always win long term.
> is a 30% stock jump from becoming the first trillion-dollar company
This is incorrect. The reason is share buybacks, which Apple has been aggressive with. Remember, when the price was $100 last (split adjusted), its market capitalization was $700 billion. Today, it's price is $130, but the market capitalization is not $900 billion, but only $765 billion. This is because the number of shares outstanding has gone down significantly.
In this scenario, the price and market capitalization will not increase by the same percentage. In fact, it is possible for Apple to have a very good price return with no increase in market capitalization at all (consider it generates a lot of free cash flow to buy back stock).
This is incorrect. The reason is share buybacks, which Apple has been aggressive with. Remember, when the price was $100 last (split adjusted), its market capitalization was $700 billion. Today, it's price is $130, but the market capitalization is not $900 billion, but only $765 billion. This is because the number of shares outstanding has gone down significantly.
In this scenario, the price and market capitalization will not increase by the same percentage. In fact, it is possible for Apple to have a very good price return with no increase in market capitalization at all (consider it generates a lot of free cash flow to buy back stock).
Market cap is calculated by outstanding shares * share price. A company buying back its shares shouldn't affect the outstanding shares figure, because it already includes it.
However now that there are less publicly available shares available on the market, the share price should go up, as long as there is demand. By how much, I don't know, perhaps it ends up making Apple more valuable.
However now that there are less publicly available shares available on the market, the share price should go up, as long as there is demand. By how much, I don't know, perhaps it ends up making Apple more valuable.
When a company buys back shares, the number of outstanding shares decreases. That's the whole reason for buying back shares. See http://www.investopedia.com/articles/investing/112013/impact... for a basic introduction to share buybacks.
I see, so even if outstanding shares is reduced, each share becomes "more valuable" as EPS will improve. So perhaps the market cap will end up balancing itself out?
In this case, size = market cap. Just thought it would be helpful to clarify which metric is being discussed.
Yea, I'd probably consider size by employees and they aren't even in the top 100 there.
Size by employees misleadingly favors retail outlets and government; just like market cap unfairly favors companies with inflated stock prices. Revenue favors companies with enormous line-item purchases (like Oil companies) and profit ratios may as well say "list of largest tech companies".
At the end of the day there's no one metric that can tell you the "size" of a company, because the term is too broad.
At the end of the day there's no one metric that can tell you the "size" of a company, because the term is too broad.
Size by employees is a terrible metric. Market cap isn't perfect but it is the company's actual value after all. Revenue and profit are more imperfect, IMO.
> Market cap isn't perfect but it is the company's actual value after all.
It's not the company's actual value, but rather the company's actual valuation. Related, but very different, concepts.
It's not the company's actual value, but rather the company's actual valuation. Related, but very different, concepts.
I'm not sure they're very different, if at all. I guess a public valuation is a bit under what you'd actually need to pay to acquire it outright.
Most simply, value is a non-fixed inherent property that can change depending on the asset / liability and the entities involved. A valuation is an actual estimated value given some conditions.
Simple example: Celery has no value to me, because I find its taste disgusting. However, I happily pay for bundles of cilantro, which in turn have no value to others that find its taste disgusting.
In the case of a publicly traded company, the conditions are "if all shares were immediately liquidated at the current price". In the case of a company buying that publicly traded company, an actual value can be arrived at, due to having a fixed set of assets, liabilities, and participating entities. And, as you pointed out, those two numbers rarely match up.
Simple example: Celery has no value to me, because I find its taste disgusting. However, I happily pay for bundles of cilantro, which in turn have no value to others that find its taste disgusting.
In the case of a publicly traded company, the conditions are "if all shares were immediately liquidated at the current price". In the case of a company buying that publicly traded company, an actual value can be arrived at, due to having a fixed set of assets, liabilities, and participating entities. And, as you pointed out, those two numbers rarely match up.
Well, I don't think it's entirely uncommon for a complete set to command a premium.
Which is ironic because Apple's relatively small amount of employees enables their profitability, which in turn enables their market cap.
And it is useful to note that the previous company in this position was also a "tech" company (IBM). The point being that "big tech company" is like "big algae bloom", at some point they run out of oxygen or iron or something and die down to a much smaller size :-)
Or maybe the Apple Car works out just in time to give us the worlds first private corporation with a multi trillion dollar valuation. ;)
I can't really tell if you are being serious, but an interesting tidbit from http://www.thepeoplehistory.com/1984.html which looks at what happened in 1984 (when IBM was bigger than Exxon) was this:
The first Apple Macintosh goes on sale
And the first class action against...
You're driving it wrong!
You're driving it wrong!
No longer "beleaguered", but still doomed. :)
Can someone explain HN's front page algorithm? This is on the front page with 0 comments & 4 points.
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https://news.ycombinator.com/item?id=1781013 although the algorithm might have changed since then. Roughly, a recent post with few points can rank higher than an old one with many points.
For example I wonder if that algorithm (which I don't understand) takes into account (or has changed to take into account) the source link of the story (in this case wsj.com). Either positive or negative. (Maybe it says that already?)
HN has domain penalties as well as keyword penalties.
Here's dang talking about the NSA and Snowden keyword penalties yesterday: https://news.ycombinator.com/item?id=9097596
Here's dang talking about the NSA and Snowden keyword penalties yesterday: https://news.ycombinator.com/item?id=9097596
> Three decades hence, the most-valuable company is worth more than 10 times that and is a 30% stock jump from becoming the first trillion-dollar company
Completely meaningless and sort of untrue, if you're willing to take the 15 seconds it takes to get your butt over to the CPI calculator.
Completely meaningless and sort of untrue, if you're willing to take the 15 seconds it takes to get your butt over to the CPI calculator.
So how does Apple navigate the Singularity? Google has more projects directed at it, some explicitly like Calico. Perhaps I'll walk into the Google uploader and drop off my Apple watch and phone.
Probably they navigate it by making products people pay large amounts of money for, while others wait for a thing some guy wrote in a book was gonna happen one day.
Apple's Singularity uploader will have a more user friendly interface and "it will just work". Although you will be limited on what compression algorithm you can use (Apple will only support Apple lossless and compressed codecs) and limited in your customization options (can't change your voice module, gender identifier, username, or global age specification).
I find the idea of lossless versus lossy uploading of sentience amusing.
I do to. If its all data why can't some be thrown out to compress the file(s) size without damaging the consciousness? Which brings up the question of how much data can be discarded before it changes the emotional or personality DNA of the consciousness. Then I wonder how much of our personality is in the data and how much of it is in our corporeal body, which we would lose by uploading our mind.
Would anyone like to try and justify this as being a good thing? I don't mind some of Apple's business practices but they have now reached the stage where they cannot be competed against.
They own or completely control their entire supply chain and can undercut every competitor as well as invest 10x as much as anyone else to beat the competitors.
What a capitalist disaster.
They own or completely control their entire supply chain and can undercut every competitor as well as invest 10x as much as anyone else to beat the competitors.
What a capitalist disaster.
Seems a bit hyperbolic. Anti-trust laws are still in place, but I don't see anyone seriously arguing that Apple engages in widespread anti-competitive behavior, much less calling for a legal remedy.
Apple certainly is in a place that they could illegally crush competitors if they were so inclined, but the fact that they're not doing so seems to make the natural read of the situation that they've been hugely rewarded for making products that customers can't wait to spend their money on. Hardly a disaster.
Apple certainly is in a place that they could illegally crush competitors if they were so inclined, but the fact that they're not doing so seems to make the natural read of the situation that they've been hugely rewarded for making products that customers can't wait to spend their money on. Hardly a disaster.
They do engage in widespread anti-competitive behavior, by making really good products that people want to buy! It really hurts their competition's ability to sell cheap plastic laptops.
All joking aside, the fact that Apple could crush anyone but has explicitly chosen not to is worthy of some amount of praise.
All joking aside, the fact that Apple could crush anyone but has explicitly chosen not to is worthy of some amount of praise.
The only reason they aren't able to crush people is because of Android and Microsoft. If you look at how the App Store was run and the general way Apple did things before Android became dominant, it was pretty scary. There were stories almost every other day about Apple just arbitrarily banning apps that might have conceivably intruded upon their corporate interests.
But they could drop the prices on their devices and corner the market overnight. If Apple offered an iPhone 6 for $99 off contract and a $299 Macbook Air... not everyone would switch, but enough would that their competitors would have a hard time staying in business. And Apple could do it. Forgetting for a second that dumping is generally illegal, selling products at a loss in order to put competitors out of business isn't unheard of.
The leadership of Apple seems still focused on dominating the "affordable status symbol" sector of IT, which I guess is something they'd want to keep doing for as long as possible because that could be a big part of why they can afford having higher margins.
I guess only time will tell what they'll do if/when that stops working, they certainly have the potential to unleash hell on their competition if they ever decide to go for market share.
I guess only time will tell what they'll do if/when that stops working, they certainly have the potential to unleash hell on their competition if they ever decide to go for market share.
Instead they were just illegally crushing employee wages and e-book markets.
> They own or completely control their entire supply chain and can undercut every competitor as well as invest 10x as much as anyone else to beat the competitors.
Huh? Apple has huge margins, and they don't undercut their competitors. Lots of companies make products that are a lot cheaper than Apple's.
As for investing, doesn't Apple actually spend less money on R&D than Google or Microsoft?
Huh? Apple has huge margins, and they don't undercut their competitors. Lots of companies make products that are a lot cheaper than Apple's.
As for investing, doesn't Apple actually spend less money on R&D than Google or Microsoft?
> They own or completely control their entire supply chain
Uh? They have OK integration and supply managemnt, but they're a very far cry from controlling their entire supply chain. If it were Samsung then yes, they do pretty literally everything under the sun (and more, they have a logistics and transportation arm, I think the only thing they don't have is mining operations).
> can undercut every competitor as well as invest 10x as much as anyone else to beat the competitors.
And yet they don't, they're usually undercut and the usual complaint about Apple is that their products are overpriced for what they are…
Uh? They have OK integration and supply managemnt, but they're a very far cry from controlling their entire supply chain. If it were Samsung then yes, they do pretty literally everything under the sun (and more, they have a logistics and transportation arm, I think the only thing they don't have is mining operations).
> can undercut every competitor as well as invest 10x as much as anyone else to beat the competitors.
And yet they don't, they're usually undercut and the usual complaint about Apple is that their products are overpriced for what they are…
We used to say that about Microsoft.
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And we were right. Microsoft's domination of the industry severely harmed it, and eventually was only broken because the industry shifted to a completely different sector.
Any domination will eventually come to an end, but it can still do bad things in the meantime.
Any domination will eventually come to an end, but it can still do bad things in the meantime.
Actually, most of what you said is incorrect. As of not that long ago Samsung (Apple's biggest competitor in mobile) is still Apple's largest LCD supplier.
Furthermore, Apple has a ton of competition on both the mobile front (from the Android ecosystem) the computer front (from the Windows ecosystem) and the entertainment front (Spotify for iTunes, ChromeCast for AppleTV etc).
There is a TON of competition in the market, but Apple just crushes everyone on marketing.
Furthermore, Apple has a ton of competition on both the mobile front (from the Android ecosystem) the computer front (from the Windows ecosystem) and the entertainment front (Spotify for iTunes, ChromeCast for AppleTV etc).
There is a TON of competition in the market, but Apple just crushes everyone on marketing.
It is not marketing, it is build quality and trust. Samsung spends multiples of Apple on marketing.
I don't understand the downvotes to your comment. It is overly simplistic to say that Apple's success is merely due to marketing. As you pointed out, Samsung spends more on marketing (not sure if it is multiples more).
About 6 years ago I switched to Apple for computing needs and now I almost never buy non-Apple products when there is an equivalent Apple product. I trust their build quality and trust the decisions they've made with regard to memory, disk space, etc. Unless they start cutting corners I'm going to be a lifelong Apple person.
I recently bought the Microsoft Band and it feels like a Microsoft product. The build quality is not good. The band does not fit well on my wrist. I'm right in the middle between two sizes. The software quality is not good and I got anomalous results. I'm guessing the Apple Watch will be better and give better results.
About 6 years ago I switched to Apple for computing needs and now I almost never buy non-Apple products when there is an equivalent Apple product. I trust their build quality and trust the decisions they've made with regard to memory, disk space, etc. Unless they start cutting corners I'm going to be a lifelong Apple person.
I recently bought the Microsoft Band and it feels like a Microsoft product. The build quality is not good. The band does not fit well on my wrist. I'm right in the middle between two sizes. The software quality is not good and I got anomalous results. I'm guessing the Apple Watch will be better and give better results.
Spending does note equate to success. Samsung Series 9 laptops are built as well or better than any Macbook. And Samsung is well-respected.
The bottom line is Apple is very, VERY good at marketing their platform, and much of that marketing stems from the massive fan base they have.
Calling it build quality and trust assumes we consumers are very smart buyers. That's establishing apps not in evidence.
The bottom line is Apple is very, VERY good at marketing their platform, and much of that marketing stems from the massive fan base they have.
Calling it build quality and trust assumes we consumers are very smart buyers. That's establishing apps not in evidence.