“Apple can’t grow like this forever. No company can,” Jeff Sommer reports for The New York Times. “Apple’s market capitalization — the value of all of the shares of its stock — is more than $758 billion, greater than any other company’s. Yet the Wall Street consensus is that Apple is still having a growth spurt. In fact, if Apple’s watches, phones, laptops and other gadgets and services keep generating favorable publicity — and if its quarterly earnings report on Monday is as strong as the market expects it to be — there’s a reasonable chance that Apple’s value will keep swelling. Not far down the road, it might even reach the $1 trillion level that some hedge funds predict.”
“But even if Apple still has some room to run, there are some early warning signs,” Sommer reports. “After all, the company has already crossed a significant threshold. In February, it grew to twice the size of the next biggest company in the S.&P. 500, a rare feat of financial dominance, and one that hasn’t happened since Ronald Reagan was president.”
“Now it’s Apple’s world. Apple is the most widely held stock in American mutual fund portfolios. IBM, the former undisputed heavyweight champion, isn’t even in the running anymore,” Sommer reports. “It ranks 62nd, according to a Morningstar analysis performed at my request. IBM is still an important company, but it is struggling. Investors judge it to be worth less than one-quarter of Apple’s market value today. What happened to IBM — how it became this small, in comparison with Apple — is worth remembering… Rapid growth, after all, isn’t a sure thing, especially when you’re already the biggest company in the world. IBM has proved that. Sooner or later, Apple investors will have to take that lesson to heart.”
Read more in the full article here.
MacDailyNews Take: Nothing lasts forever, but Apple certainly isn’t IBM. What happened to IBM was allowed to happen by myopic, unfocused management. We simply do not see that with Apple currently. If anything, Apple is slamming the pedal to the metal. Jeff and the rest of the haters/doubters: You haven’t seen anything, yet!
All that has to happen for Apple to go down is to put business school graduates in charge. Someday, hopefully in a more distant future than a nearer one, that will probably happen.
Tim has an MBA from Duke.
It’s not business acumen that kills companies, it’s loss of focus on its customers and its products.
Fair point. But can you imagine Tim Cook running Apple without having worked under and been influenced by Steve Jobs?
I can too–it looks like Microsoft.
EXACTLY Bubbles. Sad, but consistently proven to be true.
A: “So kiddo! I see you have an MBA!”
B: “Yes sir! I am highly qualified!”
A: “You’re highly UNDER-qualified to run an actual business with a typical US MBA. You might even be dangerous. I’m sorry to have to disagree with you. What ELSE do you know?”
What happened to IBM… Happened long after billionaire billy boy fleeced big blue.
It was around 1996, about the time Louis Gerstner handed over the reigns to his protégé Sam palmissano – who quickly claimed a paradigm shift was underway at IBM. It was no longer cool to make stuff anymore, you know – like business machines and other physical objects. No, the future was Service! Like hotels and restaurants… There would now be Computing.
So, as if there was a fire sale going on- IBM backed out of the physical world of tech, to concentrate on stuff like clouds and on-demand computing. Heck, they even helped a small city in Norway, so that everyone got to work without traffic during their commute.
They unloaded the printing division, PC division; hard drive division: quit Bluetooth; FireWire; and fscked up the PowerPC roadmap! I dusted off my bondi blue iBook last weekend & damn! that thing was fast!
So now they have a bulk of employees maybe in India and China and their fancy sales execs travel world wide selling virtual solutions, which is nice for the Asian economy – but they gambled on that paradigm and got a 5th place to show, I guess. They’re no longer innovating or fun.
In fairness, I think the current CEO of IBM has realized this, and that’s why she has so aggressively partnered with Apple to build software products that they can actually sell.
Ironic coming from the New York Times. Maybe they could do some research and find out if time will last forever.
This is so TARD:
Apple can’t grow like this forever. No company can/
Oh really.
What happened to IBM — how it became this small, in comparison with Apple — is worth remembering…
…Because FUD sells.
Shut up and grow up NYT.
“Print is dead!” … Dr. Egon Spengler
Was the data correct? The article cites IBM’s stock in 85 is worth $200B in today’s dollars.
Looking at 1985, IBM was around $35, ranging from a low of $30 to a high of $39, with share splits. Today, it’s $170 a share and worth $167B. So, that would mean it was worth only $30B to $40B in 1985.
Using an average inflation rate of 2.5%, I get an adjusted market cap of about $80B, not the $200B they have listed. I know inflation was higher in the Carter era, but was it so much higher from 85?
NYT sounds like the person who gets on the mic at a wedding and says, you know, these two won’t always be married, they could get divorced or one could die first.
WTF would NYT need to throw cold water on AAPL earnings when GOOGL went up on an earnings miss only days ago. Should we reward a miss and punish success and how does this make sense to the average person.