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Apple's market cap surpasses Microsoft in its 1990s hey-day

CNN Money carried an interesting story on Monday entitled "Apple is now the most valuable company of all time".  Similar headlines soon abounded.

Indeed Apple, Inc. (AAPL), despite a "bad" quarter which would be cause for celebration for just about anyone else, has soared in value over the last decade with the success of the iPod, then the iPhone, and most recently the iPad.  From 2000 to present, shares increased from a market cap of $8B USD to $623B USD.  For comparison's sake gold -- typically consider a massive commodities success story -- has only ballooned from $238 USD per oz. to $1640 USD per oz. at last count.

So when Apple's soaring stock set a market capitalization record of $623B USD (at $665.15 USD/share) -- more than the $618.9B USD Microsoft was worth (according to investors) in Dec. 30 at the height of so-called "dot com bubble".

But for all the streamers and confetti, the claim that Apple is the "most valuable of all time/in all of history" isn’t accurate.  Value is based on the worth of the currency at the time.

"Siri, who is the most valuable company in all of history?" Ding ding.. "In today's dollars Microsoft in 1999 would be." [Image Source: AP Photo]

In 2010 dollars, Microsoft's $618B USD valuation would be over $820B USD.  While inflation data is still being finalized for last year, it would likely be somewhere in the ballpark of $850B USD in today's money (The Columbia Journalism Review says $856B USD in today's money, although it admits to goofing by saying that International Business Machines, Inc. (IBM) in 1967 was the most valuable, failing to realize that the data it was working off of was already adjusted).  

The headlines are particularly troubling, given that even a simple Wikipedia search would have revealed the truth (Wikipedia pegs Microsoft's peak value at $846B USD in today's money).

In other words, Apple still has to grow by another third in order to truly become the most valuable of all time.

Still, it is fair to lavish Apple with some praise.  The company was most profitable tech firm for 2011 and third in total profits.  For 2012 Apple is expected to be the most profitable American firm.

Those profits could soar even higher if Apple succeeds in its court bid to ban rival Samsung Electronics Comp., Ltd.'s (KSC:005930) devices from the American market -- the world's most lucrative and second largest smartphone market.

But Apple has a long hard road ahead to become truly the biggest company in history.  For now, it is merely in a small crowd of historic elites.

Sources: CNN Money, CJR

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Confusion about size of companies
By 91TTZ on 8/21/2012 12:02:15 PM , Rating: 5
I know that they say that companies like Microsoft and Apple are the most valuable companies, but how accurate is it to measure them like that?

Other companies are much larger and employ more people but the net profit just isn't as high.

For instance, let's compare Wal-Mart, Apple, and ExxonMobil:

Apple Computer:
Total Revenue: 108.249 billion
Total Assets: 116.371 billion
Employees: 60,400

Total Revenue: 446.950 billion
Total Assets: 193.406 billion
Employees: 2.2 million

Total Revenue: 486.429 billion
Total Assets: 349.000 billion
Employees: 83,600

It would seem to me that ExxonMobil and Wal-Mart are much larger companies. They're not as efficient of a money-making machine as Apple is, but if Wal-Mart were to vanish tomorrow it would create a much larger impact on people than if Apple were to vanish tomorrow. They have more employees, more buildings, more suppliers, deal with larger amounts of cash, etc.

As for money making opportunity, a new investor is going to invest in a company that's already at the top of their market, has strong competitors, and can't really grow much more. You'd be better off investing in a small company and hope it grows. If you invested in Apple in 1997 then you would have made a great investment. If you invest in them in 2012 then I'm not so sure.

RE: Confusion about size of companies
By Mizerable on 8/21/2012 12:31:25 PM , Rating: 3
I don't know why people don't understand this but market capitalization is the value of the company's equity, it DOES NOT INCLUDE DEBT.

Walmart and Exxon have LOTS of debt and their total assets are MUCH larger than Apple.

Again, a company could be GIANT but it could also OWE alot of money, so the debt is very high and there is no equity. But SOMEBODY (the creditors to the company) do indeed own much value in the company in the form of debt.

The key here is that Apple has very little debt while Exxon has lots of debt.

Therefore, the most important measure is ENTERPRISE VALUE, not market cap.

RE: Confusion about size of companies
By 91TTZ on 8/21/2012 1:11:48 PM , Rating: 3
Again, a company could be GIANT but it could also OWE alot of money, so the debt is very high and there is no equity. But SOMEBODY (the creditors to the company) do indeed own much value in the company in the form of debt.

Then why do people refer to the US economy as being the world's largest? If they rate government economies the same way they rate company economies, then the US would have one of the world's smallest since we have so much debt.

By Mizerable on 8/21/2012 2:36:55 PM , Rating: 2
You can't measure a country's economy like you can a company...

We measure country economic size by how much it produces in one year. by analogy for companies that would be its "profit", there are many ways to define and account for profit... but by that measure exxon is the biggest every single motherf****** year.

the reason apple's equity is worth more be because people expect apple to grow more than exxon in the future, and also because exxon has far more debt ,,

again, debt is only negative value for the EQUITY holder, debt itself is very valuable of course, wouldn't you like to own all the debt a company has outstanding ? that's a lot of money.

so for the us economy, the lenders and equity owners of all the companies in the economy together hold the value of the economy, which is indeed the largest,

By Mizerable on 8/21/2012 2:38:35 PM , Rating: 2
so in other words, the measure we call "the biggest" for companies and economies is TOTALLY different,

RE: Confusion about size of companies
By Spuke on 8/21/2012 1:26:08 PM , Rating: 2
Walmart: Total Revenue: 446.950 billion Total Assets: 193.406 billion Employees: 2.2 million
Jesus! 2.2 million employees!!! Really?

RE: Confusion about size of companies
By ilt24 on 8/21/2012 3:38:15 PM , Rating: 2
>>> but how accurate is it to measure them like that?

Very....what they are measuring is the value of the company as in how much would you have to pay to buy the company. If your more interested in another metric such as profitablility, then in 2011 Exxon was the most profitable company, with Apple at #3 and Walmart at #10.

RE: Confusion about size of companies
By Mizerable on 8/21/2012 4:05:55 PM , Rating: 2
It's important to note that it means to buy their EQUITY,
so it means if you bought a company for its market cap you would STILL need to pay all the loans and debt and bonds the company owes to other creditors.

RE: Confusion about size of companies
By ilt24 on 8/21/2012 6:09:11 PM , Rating: 2
How important depends on the company. In Apple case it's probably not that important seeing how they have no significant debt and whole bunch of cash.

By chimto on 8/21/2012 7:49:43 PM , Rating: 2
Your right on the money. For some reason people just don't understand market caps very well.

If somehow you had $600 billion dollars to spend you could buy up all Apple shares and basically own the company. With that of course you would instantly have all that cash that they have in the bank (I believe its over $100 billion) and all other assets, and of course you would also own any debt they have.

Private and state-owned companies
By Ringold on 8/21/2012 2:38:43 PM , Rating: 3
Of course this is all just for the world of public companies.

Private companies, like Mars or Bechtel, can be pretty large, and state-owned oil companies make Exxon look like a minnow. No, smaller then a minnow, more like an amoeba. Saudi Aramco might have output levels similar to some private companies, but have vastly lower costs, so I wouldn't be surprised if it had... perhaps a 2 or 3 trillion dollar market cap, if it were made public.

Norways Statoil is another huge one. Japan Post. Only Putin really knows the full picture but Gazprom is another.

So, Apple is (maybe) just the largest fish in its particular pond.

Apple Bubble
By NellyFromMA on 8/21/2012 4:13:40 PM , Rating: 2
I feel like Apple is a bubble. They got rich primarily off MP3 players and then took a profitable dip into the mobile arena. They have brand recognition that more often than not works for them but I mean that's not all that great.

They haven't actually innovated anything in the software realm that I can think of offhand. They're only notable success is in the MP3 and Mobile arena.

Their primary source of profits isn't even from innovation: its from absolute domination of the supply chain. Economic win in that dept no doubt but between that and brand recognition, one has to wonder when that bubble bursts?

Typical Mick Garbage
By macdevdude on 8/21/12, Rating: -1
RE: Typical Mick Garbage
By ritualm on 8/21/2012 1:51:16 PM , Rating: 2
Microsoft was extremely innovative before the US Department of Justice caught the company doing shady things. Now that the DOJ straitjacket was gone, MS can go back to the cutthroat competitor it used to be. Surface should be a big wake up call for anyone still convinced in MS being docile in the past decade.

Apple? Lots of copying, lots of marketing, but absolutely no innovating at all. Plus, Apple's stocks are severely overvalued. Its stock prices need to crash big time, and that date is long overdue.

Apple's software patents are an affront to everyone and need to be invalidated en masse.

You have absolutely no clue what the heck you are talking about.

RE: Typical Mick Garbage
By StevoLincolnite on 8/21/2012 10:23:42 PM , Rating: 2
Apple did however deny the trend during the financial crisis though, allot of other companies were getting hit hard and Apple just continued to grow.
So from an investor stand-point Apple was a reliable bet.

Will that continue? Probably not, it's incredibly over valued and will drop, but that doesn't mean that Apple will suddenly cease to exist.

RE: Typical Mick Garbage
By TakinYourPoints on 8/21/2012 10:44:56 PM , Rating: 2
It will certainly drop, all stocks do. However, by what metric is it overvalued? Their price multiple is near an all-time low and is in line with Microsoft and IBM's. Their stock price is a pure reflection on earnings. If it was priced as a growth stock with a 30+ PE then it'd have crossed a trillion dollar market cap ages ago.

RE: Typical Mick Garbage
By Dorkyman on 8/21/2012 1:55:32 PM , Rating: 3
Take off the blinders. Mick's point (and mine also) is that because of inflation, the numbers are constantly changing. Ten years ago a dollar was worth more, so $600B back then is MORE than $600B today.

Same principle for blockbuster movies. The movie "The Dark Knight" comes out ($600M ticket sales) and people say "Wow, a new record!" Ah, but adjust things for inflation, and it turns out Dark Knight ranks only #29, just behind "Thunderball" and just ahead of "The Jungle Book."

Go to BoxOfficeMojo and see for yourself.

RE: Typical Mick Garbage
By TakinYourPoints on 8/21/2012 10:41:28 PM , Rating: 2
Right, but the thing to note is that EVERY tech was overvalued back around 2000.

Microsoft had a price multiple of around 50 in 2001, which is insanely high for any large cap company. Even at Apple's mania in late 2007 it was at 40, and the market correctly adjusted its price down in 2008.

By comparison, Apple, Microsoft and IBM currently have reasonable very price multiples of about 15. Google is a little higher at around 20, and Amazon is in the loony stratosphere at almost 300, overvalued for sure.

Microsoft's market valuation in 2001 wasn't entirely based on profit per share, it was based on a stock bubble as shown by their insanely high price multiple. Note that their profits are up for them over the last ten years, yet the stock price is far lower than it was at its peak during the tech bubble.

The interesting thing is that Apple's price is currently driven completely by revenue and earnings, that's it. Their price multiple is actually near a historic low, the very opposite of an investor driven bubble. Microsoft's market valuation was driven completely by an investor bubble. Throw inflation in the mix and it is obviously even higher adjusted for 2012 numbers.

By melgross on 8/21/2012 12:20:18 PM , Rating: 2
Oil isn't priced like other products. It's prices are determined by political manipulation as much as any other.

Do you scream at Microsoft's overpriced products? They have a higher profit percentage than Apple does. Why should a software company that's losing billions a year in other areas still have a larger net profit without people like you complaining that their products cost twice as much as they could be sold at?

By tng on 8/21/2012 1:06:59 PM , Rating: 2
Oil isn't priced like other products.
No it is not priced like electronics at all. Oil is priced as a commodity, much like corn, orange juice, gold. The price rises and falls depending on demand, local issues with production, etc...

It's prices are determined by political manipulation as much as any other.
Well, somewhat, but the last refinery fire here in the SF Bay area of CA last week, can we blame that on Obama?:)

Apples products are overpriced, yet people are willing to pay it, so until people quit buying, the prices for the products will keep going up.

By Cheesew1z69 on 8/21/2012 2:26:12 PM , Rating: 4
The dummy is the idiot who pays 1600 for a 2 year old notebook....

By retrospooty on 8/21/2012 4:14:12 PM , Rating: 2
+1 LOL

By tng on 8/21/2012 2:49:23 PM , Rating: 2
no they are not overpriced- they are overpriced to YOU.
Oops, I forgot to say "In My Opinion".

Face it, I have seen people pay more than just $2K for a MacBook just to netsurf at Starbucks. I have home improvements that I would rather spend that money on and get more enjoyment out of.

I currently have a 5 year old Toshiba that is doing just fine and originally cost $700.00. Yes it is slower than the new stuff, but that really doesn't present any issues for me. I look at how much the computer will cost me when I replace it in a couple of years and that means it will be pretty cheap at about $100/year.

My next will probably work out to be cheaper per year. Compare that to a $2K MacBook at $285 per year and there you are. It is just all in the way you look at it I guess. I try to be a little bit "Green" in the way I look at these things, why buy a new one when there is nothing wrong with the old one?

By NellyFromMA on 8/21/2012 4:19:11 PM , Rating: 2
Apple targets a market that exists for whatever reason: families with more money to spend than they know what to do with or those who prefer sizzle over steak in general.

To quote a wise man: Can't knock the hussle.

By invidious on 8/21/2012 4:29:25 PM , Rating: 2
What are you even talking about? A comparable PC desktop would probably cost $500, And you could probably sell it for $200 pretty easily after two years. Even a PC laptop would probably only cost $1300 for someone who knows what they are doing.

But no one buys laptops with the intent of reselling them except for fooling Apple people. It's a self fullfilling profecy. People don't buy PCs because they are hip and trendy and new, they buy it to perform specific tasks. And they use it until it can't perform those tasks anymore.

Your resale argument is nothing more than a rationalization for the fact that you paid $600 extra to turn your laptop into a fassion accessory.

By StevoLincolnite on 8/21/2012 10:30:14 PM , Rating: 2
He would only get that price if it was in good condition.

Lets be honest, A Macbook looks alright when new, but after a years worth of abuse, the aluminum doesn't look too flash with all the scratches.

Personally, the Mac might look nice to some, but I personally find it a boring, bland and a dull enclosure.

Give me, LED's, Cathodes, Water Cooling loop, clear side window over a dull silver box any day.

By weskurtz0081 on 8/21/2012 2:48:44 PM , Rating: 2
What did the Obama remark have to do with the text you quoted?

By tng on 8/21/2012 6:55:35 PM , Rating: 2
What did the Obama remark have to do with the text you quoted?
Yeah, that. Well to put it plain and simple, he said that oil prices were mainly fixed by political manipulation, so I thought I would blame the recent refinery fire here in the Nor Cal area on the top politician, Obama.

If that doesn't make it more clear, then I can't help ya.

Within 2 days of the fire at the Chevron refinery here, prices went up about 30 cents.

By weskurtz0081 on 8/21/2012 11:11:43 PM , Rating: 2
I guess you were trying to make a joke. The "political manipulation" that drives oil prices higher generally occur in OPEC nations... that's most likely what he was referring to.

By NellyFromMA on 8/21/2012 4:16:43 PM , Rating: 2
In what sense does MS have a greater profit percentage?

Apple's profits almost exclusively come from supply chain domination (see term monopsony). This means primarily profits are driven from hardware with a decent enough share thereafter coming from their online sales (books music apps etc).

Microsoft has thusfar done none of that (we shall see something new with Surface however). So, I'm seeking the apples to apples (no pun intended) comparison you are trying to draw but am coming up empty at the moment.

By mocyd on 8/21/2012 12:59:33 PM , Rating: 3
Apple exist in a market where there is healthy competition and are not necessities. Typically, people purchase the product once a cycle (usually a year), and can forgo a cycle if need be.

Oil companies exists in a market where there's not healthy competition against their product, the cost of producing infrastructure and migrating energy users limits the entry of new competition, and speculation works to keep prices up on a a product that is more of a necessity to our economy. The purchase cycle is much shorter for oil (at least once a week for most poeple) and most can't forgo the purchase without suffering major financial impact.

There's a HUGE difference. Our economy is hostage to oil, so when an executive makes millions to billions in a year, yeah, everyone should be pissed because we don't have much of a choice.

Our choice with oil is on par with our choice in paying taxes. The difference is that taxes go to benefit everyone, including the rich, while oil profits only benefit oil executives and speculators.

Big effing difference.

By 91TTZ on 8/21/2012 1:38:23 PM , Rating: 2
Oil companies exists in a market where there's not healthy competition against their product,

This isn't true. There is a lot of competition in the oil and gas market. In the list of the top 10 companies by revenue there are 6 different oil and gas companies. Those are a lot of strong competitors all competing against one another.

Meanwhile in the smartphone market there are only a couple of big players. While there are many companies that sell smartphones, Apple and Samsung make 90% of all the profits. Oil is a commodity and goes for a commodity price. There isn't much brand loyalty in such markets. Buying gasoline is like buying bottled water or buying produce. Yeah, you probably need it but you can go anywhere to get it.

There's a HUGE difference. Our economy is hostage to oil, so when an executive makes millions to billions in a year, yeah, everyone should be pissed because we don't have much of a choice.

Apple- Tim Cook's 2011 compensation: $378 million
ExxonMobil- Rex Tillerson's 2011 compensation: $35 million

You have just as much choice to buy Apple's products as you do about buying ExxonMobil's products. Don't like Exxon? Go to the BP station across the street. Don't like either of them? Go to the Sunoco station down the block.

The fault in your entire argument is that you're treating oil companies like they're all the same company just because they all sell oil and fuel. They're merely competitors in the same market. Blaming Exxon for your dislike of BP is like blaming Samsung for your dislike of Apple.

By Dorkyman on 8/21/2012 1:46:06 PM , Rating: 2
Disagree with some of your points.

There is a tremendous amount of competition within the oil industry; I can assure you that BP would LOVE to increase their market share at Exxon's expense. Outside that industry I guess you can argue that there isn't much competition (solar, wind) but that's because oil is a remarkable substance, a densely-packed yet relatively inexpensive energy source that is useful for thousands of applications. And the delivery infrastructure has been in place for many decades.

Oil prices are set by the interaction of numerous market forces including availability, quality, risk of supply interruption, delivery cost, and demand.

As to your belief that taxes "benefit everyone." I'm guessing you a Big Government guy, where all us little people are cared for and protected by an all-knowing and wise bureaucracy--right? And your notion that oil profits "only benefit oil executives and speculators.." Sounds like something lifted out of Pravda.

By ritualm on 8/21/2012 2:00:58 PM , Rating: 2

There is little competition, in fact you are crazy to increase production - and thus, supply - for a necessary commodity when you can make more money with less produced. Consumers hate high spot prices for gasoline, but what other choices do they have? EVs are barely viable as is, and only good for those rich enough to afford detached housing with their own electrical outlets to top up their motorized babies overnight.

High oil prices deal more damage than a roundhouse kick to the money books of oil-consuming nations everywhere, and the only folks who benefit are 1) oil producing states, 2) oil companies, and 3) speculative commodity traders. All three want oil prices as high as possible without risking total financial meltdown.

You are the one smoking crack.

By Ringold on 8/21/2012 2:27:11 PM , Rating: 2
There is little competition, in fact you are crazy to increase production

Yep, which is why they plough hundreds of billions of dollars in investment in hostile environments in odd corners of the planet. Maybe it's a little more complicated, huh?

Then look at our domestic gas market.

In a competitive market, and oil with its number of different actors is competitive, supply will expand until price equals marginal cost. Thats what we see domestically, and internationally one of the only countries with any slack capacity is Saudi Arabia, and its debated how much they have. The rest of OPEC in theory has slack, but in practice appear to pumping flat-out, OPEC production quotas be damned.

Some people just can't see past their own indoctrinated hate.

The only caveat to all this is that the worlds largest oil producers are state-owned, and light-years behind private firms in efficiency and technology. But still, you don't know what you're talking about.

By ritualm on 8/21/2012 2:37:54 PM , Rating: 2
Care to explain how many new oil refineries were built in the past decade?

The answer? You can figure out with your fingers alone.

Why produce more supply when you're already laughing all the way to the bank?

By weskurtz0081 on 8/21/2012 3:37:14 PM , Rating: 2
So, you think the oil companies haven't made new refineries because they are trying to keep the price of oil high?

By Ringold on 8/21/2012 7:09:47 PM , Rating: 2
Notice too another sign he doesn't know what he's talking about: lumping oil companies in with refiners. In a lot of cases, oil majors have spun off their refinery operations over the last couple decades, so they two groups are fairly distinct sectors. Independent refiners would love cheap oil to get unloaded at their terminals. But all he knows is he hates capitalism and traditional energy sources, he doesn't know any details.

By Ringold on 8/21/2012 7:04:42 PM , Rating: 2
Care to explain how many new oil refineries were built in the past decade?

Thanks for asking! Fantastic question! Why don't you tell me how many NEW refineries were attempted to be built in the US over the past decade, but failed in the face of environmental protests?

I know of at least 2 large ones. You apparently know of none, otherwise you'd of not asked such a retarded question. You don't know what it is you propagandize on.

Furthermore, refiners are hardly laughing all the way to the bank of a regular basis. They've mostly been tooled for light-sweet crude, of which we're able to get our hands on less of, so they've had expensive upgrade costs to handle more sulfur-laden oil. The crack spreads between a barrel of oil and what they can get for its resulting distillates has many times over the last 10 and 20 years been awful.

And despite all that, we export a small amount of refined product, so they make enough to satiate local demand, if not be a major exporter. We have the technical expertise so could easily be a major exporter, but again, missed opportunity -- economic green terrorists.

Again, you appear to not know anything besides what some 30-second left-wing attack ad might've told you, or some Marxist at Huffington Post. Got any other ridiculous assertion though, or give up?

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