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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
"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

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

ExxonMobil:
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
quote:
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
quote:
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.


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