Google’s enterprise value surpasses Apple’s

“Apple (AAPL) is the world’s richest and most powerful technology company. Unfortunately, while the company does command the highest market capitalization in all of tech, it is not the most valuable company on an enterprise value basis,” Ashraf Eassa writes for Seeking Alpha. “That honor, believe it or not, goes to Wall Street darling, Google (GOOG).”

“Apple’s market capitalization as of the time of writing sits pretty at $480 billion, while Google’s sits at $400 billion. However, Google has about $58 billion in net cash on the books (suggesting that the business is valued at $342 billion),” Eassa writes. “Apple, on the other hand, has about $141 billion in net cash, implying an enterprise value of $339 billion!”

“Apple trades at 7.7x EV/FCF while Google trades at 30.3x EV/FCF. Now, Google and Apple aren’t exactly operating in the same businesses, and frankly, Google’s business is “safer” than Apple’s, but this valuation gap is pretty ridiculous and indicative of one thing: the market expects Google’s free cash flow to grow ‘to da moon’ and Apple’s to, at some point, crater as a result of competitive pressures of secular headwinds,” Eassa writes. “While everyone’s gaga for Google, Apple’s opportunities are still well ahead of it.”

Read more in the full article here.

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34 Comments

  1. It’s a bit absurd that Enterprise companies trust a company that generates revenue through data mining for advertisers? Or does Google do none of that at all and we can all trust what Google does with its data mining?

    1. That is exactly what everyone should do on this site–change their search engine to someone else………… like Yahoo, and inform friends, neighbors, etc, etc, to do the same thing !!

      1. Yahoo. Umm I have noticed their predatory behavior. So not sure about them. Maybe bing for now and the. Siri on the desktop, whenever that happens. Wolfram Alpha for statistics and Wikipedia for history.

        1. Keep in mind that Bing is alive as a search engine in part because THEY use Google results too. That has been well established, surreal as it is. And, if I recall, Yahoo’s search engine is physically joined at the hip with Bing.

          Key phrase: Propped Up.

          1. I’ve been using Bing for almost 2 years now (around the time that Microsoft stopped being Apple’s biggest threat) and my life didn’t implode.

            Do I like giving MSFT business? No, but at this point is rather give no business to Google.

            I want to use Yahoo, I’m just finding that their results sometimes need a back up check with Bing.

        1. DuckDuckGo is gradually developing independence and has been accelerating its user base as personal security and privacy issues become mainstream. But it still hands off a few search queries, such as images and video, off to other search engines, especially Google.

          But it’s been DuckDuckGo for me for a couple years now. Great folks.

  2. If you twist it enough, Apple is worth nothing and Google is all. What a bunch of lame shenanigans. Apple is underpriced (Market Cap) and Google is overpriced. End of story. You can add and subtract any number of of figures and make ratios out of non-meaningful net this and that, but it doesn’t mean anything. This is just clown antics.

    1. Don’t be paranoid – they are not saying that the $141B in cash and securities count “against” Apple. What they are saying is that if you deduct cash and securities on hand from market capitalization, the market is actually valuing Google and its anticipated future profits higher than it values Apple and its future profits. Ridiculous, but that is what the current stock valuations mean in real terms.

      I do not necessarily agree that “Google’s business is “safer” than Apple’s,” as stated in the article (frankly or not). Google makes its money primarily from ads. Not only can the ad revenue go elsewhere, but the prices that Google is able to charge for ads could drop considerably going forward. Meanwhile, Apple is likely to continue selling a lot of music and apps for years to come – an increasing amount, is my bet. And iTunes alone is already roughly equal to Google.

      If people don’t like what the NSA is doing, then they should take a long, hard look at Google’s business model. Because it has a lot of similarities.

      1. What I was trying to say was that the author really had to jump through a lot of hoops to find a way to value Google above Apple. Having to subtract Apple’s cash from its valuation to arrive at a figure lower than Google’s is pretty lame. It’s well known that the market doesn’t value Apple’s cash. It never has. How many times have we all lamented how stupid that is?

    2. Get with the program. Cash is bad, lots of debt is good. Profit is bad, announcing new shiny things that may never ship is good. This is all part of Analyst 101.

      Seriously, though, this article is ludicrous. Apple is worth less because more of it is in cash? It’s just more liquid than Google. This is basic stuff here.

  3. Let’s face it…Google/GOOG has been teachers (= Wall Street) pet for years and years.

    In WS eyes they can do no wrong – lose 10 billion in a Motorola deal – and WS just pet their dog, it’s un-fu**ng-believable.

  4. Tell me, folks: Why hasn’t Apple developed a search engine to compete with Google and Microsoft Bing? Both of those companies have ripped off Apple for years, so why not turn the tables on them and compete with a new, better search engine?

    Ideas/answers welcome!

    1. Because search engines aren’t profitable?

      If your main business doesn’t earn a cent then you’ll probably need an alternate income source. That’s where Wall Street/Madison Avenue and the NSA typically come in.

        1. Advertisements within the search results. But people aren’t going to pay for ads on an unknown search engine, and even if they did, they wouldn’t get the traffic google is getting right now. So less ad clicks = a lot less revenue.

    2. Maybe Apple has developed a “Search Engine” but it’s time has just not come yet. Think about it; the current search engine choices are monetized by “stealing” user information and selling it to advertisers, et al. That does not sound like an Apple model, but users are not ready to pay directly for search results yet, they are instead willing to give up their privacy and open themselves to manipulation. Time will tell if enough users will ultimately rebel against the “free if you expose yourself” business model. If that turning point comes, Apple may be ready and waiting, just as they are ready and waiting with TV.

  5. It’s all about the Anal-ists and how they treat companies. Apple had its biggest record quarter ever and its stock plunged $50 a share. Google did not make it’s earnings and it sky rocketed $46 a share. Tell me how this makes any sense?
    Tell me how the iTunes store business alone matches some of the fortune 500 in profits to be near the top 100. Apple by itself out sold all PC makers combined! 99% of android is malware infected. Tell me how Google is safer as a company when it sells crap to its customers. Tell me how it is safer when Apple has the iTunes store selling at the top fortune 500 100 list by itself. If Apple is making that kind of profit and selling record amounts of product who is actually safer?
    I believe Apple is because it actually knows how to innovate instead of copy others. Google doesn’t give out enough details of what they sell to make them safe at all.

    1. If they did that, they would need to keep the search engine going; shutting it down would wreck dependent industries overnight. Even hobbling it by scaling back tracking and personal data collection would dynamite the rails of the cash train, because the ad formulas would show yields dropping. Without high grade user data to offer at auction, search would essentially lose its lucrative subsidy and start to look more like a liability than an asset.

      On the other hand, Apple keeping all the Google search machinery in place, including its counting houses and actuarial hatcheries, would expose its corporate culture to a poisonous influence that would alter it for the worse, and in no time Dr. Jekyll morphs into Mr. Hyde.

      Meanwhile, Apple would mull Android’s fate like Hamlet musing over Yorick’s skull. Keep the mobile OS development going, feeding its enemies like Samsung? Not bloody likely. Kill it and watch HTC and other OEMs suffocate and die? Or license Android to them but deny it to Samsung? Declare it open source and roll the dice? And what about Chrome?

      Every Apple+Google scenario, including the real-life “frenemies” version, is fubar.

    1. Yes. It truly is a house of cards. When the economy takes a sustained downturn, or even stays flat, the first thing that companies cut back on is advertising. When it happens, the pop that happens will be of gargantuan proportions.

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