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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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Typical Mick Garbage
By macdevdude on 8/21/2012 1:37:09 PM , Rating: -1
quote:
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).
Yea, except you don't mention that in 1999 Microsoft was overvalued and headed downhill fast. It was innovating.

Today Apple is worth far more than the numbers of paper indicate because it is innovating so much and is growing so much.

But of course biased 'ol mick doesn't see that. No offense to the author, but his article is sh!t.

Apple is the most valuable company of all time. CNN Money was right. Mick was wrong.




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.


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