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Apple hits $100 billion in market cap, retrospective and analysis
Posted May 23rd, 2007 03:00:48 PM (GMT) by Alexandros Roussos
Apple Inc. reached a market capitalization of over $100 billion for the first time of its history on Wednesday. MacScoop provides you a retrospective and a full analysis of Apple's current situation for the occasion.
The company's shares closed on an all-time high of $118.77 and continued to climb above $119 during the after hours trading session. Shares were helped by several announcements made by the company during the day. Among them, the arrival of DRM-free on iTunes, the availability of YouTube's content on the Apple TV by June and a 160GB storage option for the company's living-room appliance.
Apple also joined the S&P 100 Index today, something that usually boosts the stock of companies that are joining it, due to the fact several portfolio managers track the Index.
Why is this good news?
What means a such big market capitalization for Apple and its shareholders? The market capitalization is the value of all of its outstanding shares additionned. It gives an idea of the price another company needs to pay so as to buy 100% of Apple, though in most cases a little more than half of this is needed for a take over. This means that, the bigger Apple gets, the most difficult it is for potential predators to take it over.
The last recorded annual revenue for Apple is $21.59 billion and analysts are predicting 2007 revenue to be nearly $30 billion.
To help you realizing how big $100 billion is for a NASDAQ company, let's compare its market cap and annual revenue with other companies in the PC and consumer electronics industry and also with some Apple partners:
Notice that it's not really worth being among the first PC makers in the industry (DELL) or among the pioneers of consumer electronics (Sony). We can also see that Apple can finally be compared to the biggest names of the NASDAQ as it's not so far from HP, Intel, IBM!
However, if we take a look at the revenue and compare it to other companies of the sector, we can see that there's still some way to go for Apple before it has similar revenue to its competitors and suppliers.
Apple and Google are a good illustration of the fact that the value of a company is far from being totally linked to its annual revenue but has more to do with its outlook.
Continued... (page 1 of 3)
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Heh, the NYT article you
Heh, the NYT article you refer to sounds hilarious now!
And Dell should think twice before opening his mouth on Apple again :).
Very interesting
Very interesting analysis.
Apple's market cap is very impressive indeed. I hope they'll contrinue to grow and bring us great products.
AAPL just breached 122. Does
AAPL just breached 122. Does this mean AAPL is no longer a "Penny Stock"?
Interesting analysis.
I've got an issue with your
I've got an issue with your "weaknesses" at the end:
- "still minor player in the PC industry"
In market share only. When measuring Apple's influence, one must also look at its role as a major innovator. When Apple releases a product, the industry sits up and takes notice. What other PC manufacturer can say that?
"beginner in the mobile phones business"
True. But what a beginner! Over a million potential customers have expressed an interest in buying an iPhone, according to AT&T, and in Europe, over half of all smart phone users have expressed an interest in buying one, according to recent polls. Since January, nobody's talking about anything but the iPhone. We should all be such beginners!
"almost inexistant presence in the corporate market"
The word would be 'non-existent', I think. And this is a weakness how? The consumer market is huge; arguably much larger than the corporate market, and much more profitable, given most corporations' tendency to buy low end, cheaper machines. One could argue that this is a strength!
"workforce insufisence (though its executives do not admit this)"
Again, the word is insufficience, but you probably should use the word inadequate to make your point better. This too, is arguable, as Apple's management (Steve, specifically) has done. He made a better argument than I can.
"no presence in important markets such as Internet services"
Not true. Their service, .Mac, is an internet service. Of course, many people think it sucks, and Steve himself at his appearance with Gates last night, as much as admitted it does. He also noted that that is about to change. We'll see. Besides, as the manufacturer of a complete computer system, why does APPLE have to be there and not other PC manufacturers? Not a fair criticism.
"current offering does not address completely the markets it's in, especially the low-end part"
Define your market. Apple has defined theirs as NOT including the low end, cheap as dirt, unprofitable PC boxes. They would prefer to produce high quality merchandise, and are willing to take the heat and reap the bigger profit margins at the high end. Seen their stock price lately? Wall Street seems to agree. Again, chalk this one up to being a strength, not a weakness! (Sales figures are increasing at a rate three times faster than the rest of the market, on a year over year basis! -and have you noted their margins lately?)
"occasionnal quality glitches"
Who doesn't? Show me ONE PC or other electronics manufacturer that has a perfect quality history. Apple's customer service ratings are among the highest in the industry. It's just that nobody else ever gets the scrutiny that Apple gets when they screw up!
"depends way too much on its CEO"
This one I'll agree with. If Steve ever gets hit by a truck, Apple's got a problem. At least their shareholders will.
"Money is truthful. If a man speaks of his honor, make him pay cash." Notebooks of Lazarus Long, Robert A. Heinlein
Thanks for you're
Thanks for you're interesting input rahrens,
For some of the weaknesses, they're compensated by the strengths mentioned on the strenghs section above.
Maybe should I present things differently. For example, highlighting the fact that Apple is beginner in the mobile phone business can be compensated by the following strengths:
- partnerships
- brand power
- strong position in digital music market
We may also note Apple's experience with Motorola which makes of it more than a beginner.
After reading myself again, I've also made some little changes on the "opportunities" section because I was focusing too much on the "from now to year end" perspective when I started writing this. I corrected it to reflect the rest of the analysis which is more long term oriented.
As for the quality issues, I think this should be present on any mainstream electronics maker's analysis, this may happen to anyone but it remains a risk and an unexcusable weakness for any company. Besides, unlike a company as Acer, Apple has a strong quality brand image and even a minor quality issue can hurt it a lot.
You make some valid points
You make some valid points in your answer, and if I got the changes right in your opportunities section, I agree there, too.
It is true that, however unfair it may be, quality failures hit Apple hard. I've been a customer of theirs since 1987, and like many such, expect Apple to do better, and am sometimes very disappointed by their failures in that aspect of their business. I keep hoping that they will learn from their mistakes and improve.
I hope one of those improvements is to their .Mac service - it could be MUCH better than it is!
"Money is truthful. If a man speaks of his honor, make him pay cash." Notebooks of Lazarus Long, Robert A. Heinlein
enjoyed reading this ,thanks
enjoyed reading this ,thanks