Apple may soon be the U.S.‘s largest company

“Apple is suddenly America’s third-largest company by stock market value. Over the past three years, its shares have more than doubled in price, while those of No. 2 Microsoft and No. 1 Exxon Mobil have fallen slightly,” Jack Hough reports for SmartMoney. “If that trend continues, Apple will be America’s largest company by year’s end.”

MacDailyNews Take: What Steve Jobs has accomplished is breathtaking. He just might be the greatest CEO ever.

Hough continues, “That is surely one of the most dramatic corporate turnarounds in history. Cupertino, Calif.-based Apple wasn’t quite near bankruptcy, as is sometimes said, when Steve Jobs returned 13 years ago as its chief executive and a $150 million investment by Microsoft provided the company with fresh operating cash. But its future was much in doubt.”

MacDailyNews Take: Okay, this again. We’ve heard it all, right on up to “Microsoft bought Apple.” Here are the facts: That $150 million investment in non-voting shares was a show of faith, symbolic in nature. Apple didn’t need that cash, Apple had $1.2 billion in cash on-hand at the time. The deal also including a commitment by Microsoft to continue producing Office for the Mac for a period of five years (which they still do, and quite profitably, too) and the settlement of a long-standing dispute over whether Microsoft’s Windows operating system infringed on any of Apple’s patents, along with a broad patent cross-licensing agreement. As part of the deal, Apple also agreed to make Microsoft’s Internet Explorer the default browser for the Macintosh platform – gack!

Hough continues, “‘I’d shut it down and give the money back to the shareholders,’ said Michael Dell in 1997 to an audience of several thousand information technology managers. Today, the computer maker that bears Dell’s name ranks No. 78 among U.S. companies by stock market value. Roughly speaking, Apple is worth eight Dells.”

MacDailyNews Take: And, the All-Time Foot-In-Mouth Award (ATFIMA) goes to… Michael Dell!

Hough continues, “To some, Apple shares look too expensive. But not to Wall Street’s prognosticators. According to a Thomson poll, 37 of 43 analysts who publish recommendations on the stock currently advise investors to buy. Among those fans are 15 who strongly recommend a purchase.”

“Previous No. 1 companies were vital to making America’s mainframes whir, its telephones ring, its cars rumble and its sea of home and business computers speak a common language,” Hough writes. “On the other hand, Apple makes it a little easier and a lot cooler to browse the Internet, manage media and make telephone calls. The marvel isn’t just that a computer maker that rivals had counted out is now nearly the largest company in the land. It’s that it became so by selling indulgences rather than needs.”

Full article here.

MacDailyNews Take: Life is short and people who realize that feel they deserve the best. Why settle for frustration when you can have a superior experience that more than repays the difference in the long run? That’s not so much of an indulgence as it is a product of critical thinking and practicality. People who think for more than a second understand that Macs are unbelievable deals.

[Thanks to MacDailyNews Reader “JES42” for the heads up.]

32 Comments

  1. A shining example worth studying and emulating on how to build a business for the future for sure. The key is building one great, useful product at a time, while keep your R and D on the future. But how many real visionaries are there besides Jobs? Most CEOs and organization leaders out there are just all talk but hav no clue. They all seem to think their one time accidental or ripped off success mean they can do anything. Wrong.

  2. The vast majority of things that Americans consider to be needs are actually indulgences.

    Sit in a house in Houston after being hit by a late summer hurricane (Ike) with no power or water, streets filled with debris, and no functioning grocery stores, restaurants, or gas stations in the local area, and you will then better understand “needs.” Eventually, you will also be grateful that you simply have a house that is still standing and relatively undamaged by wind or water, unlike many people in New Orleans and surrounding areas after Hurricane Rita.

  3. Misleading headline. Most lists of the largest companies would do it be revenues, operating profits, or some other accounting measure. Stock price is not relevant to the size of the company only what a psychological measure of what someone would pay for the share.

    Come on MDN. Your cheerleading is becoming a bit pathetic.

  4. @Arnold. You’re an idiot. Pumping and dumping is for penny stocks, not for something as large as Apple. The price swings have a lot to do with the economy and is probably a result of institutional buy and sales as they try to keep their basket of stocks with positive growth.

    Now, go back to your mommy’s basement, and STFU about stuff about which you have no clue.

  5. KingMel –

    You’re right of course, but in the sense that our needs tend to reflect our circumstances.

    Once survival is take care of, then priorities usually change too.

    Many people indulge themselves when they can, but there are millions who earn a living using a Mac (me included), where neither indulgence or contradiction is involved.

  6. @KingMel – Well said. We are relatively clueless about the dividing line between wants and needs. That said, MDN is also right, life is short, if you’re going to have something, don’t waste your time with crap.

  7. Market cap is the market expectation of the NPV of future earnings. So, market cap is highly correlated to profits. Apple is expected to earn $13Billion or more this year. That’s huge by any standards.

  8. One of the comments in the original article was that Apple has spent the last 14+ years developing and optimizing the OS system. That’s given them a edge over competitors and led to the development of the mobile OS.

    Apple is different from other electronic manufacturers in that they have long R&D;programs and aren’t content with shipping out crap for the hell of it.

    We all know that Apple kept on X186 build of OSX going in parallel with the PPC version. When the time was right Apple did switch to Intel. Their machines are significantly faster, cooler and cheaper to build as a result. Their sales also skyrocketed with that move.

    We also know it took them 3 years to complete development of the iPhone. That wait was worth it because the iPhone has been a resounding success.

    @LeftCoastDude – Apple’s stock swings are much greater than any other company of its size so I doubt it is just institutional trading. My belief is that is it used by brokers to pump and dump given the large amount of hype that surrounds Apple’s products.

    I agree that the stock valuation is not the best measure for a company. I actually prefer profit as the criteria rather than revenue. For example a company can have high revenue but make minimal profit. Any reduction in revenue or margin will result in losses in that case. Good examples of this are Dell and the majority o the auto makers.

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