Why Alphabet Inc. is more valuable than Apple

“Apple Inc. brought in more revenue in the final three months of 2015 than Alphabet Inc. did the entire year,” Jeremy C. Owens writes for MarketWatch. “Ditto on profit, with Apple reporting net income of $18.4 billion in the fourth quarter while Google’s parent company had earnings of $16.4 billion for the entire year.”

So why has Alphabet overtaken Apple as the world’s most valuable company?

“While Apple has posted phenomenal profit and revenue thanks to the iPhone, the company now seems to be transitioning from a high-growth tech stock to a value stock,” Owens writes. “Alphabet, meanwhile, is still growing at a fast rate.”

“Alphabet’s ‘Other Bets,’ broken out in Monday’s earnings report for the first time, are another big reason for investor optimism,” Owens writes. “The potential for future big businesses is also another strike against Apple. Beyond the iPhone, Apple’s iPad and Mac sales are shrinking, and while Apple refuses to specifically disclose sales of its new smartwatch, the first new consumer product category released under Cook doesn’t appear to be moving the needle. Apple executives instead focused on the potential for services delivered through their mobile devices in their earnings call last week, a specialty of Google.”

“Investors will trust Page and Co. to make these big bets because they have paid off in the past, most notably in the form of YouTube, which Google acquired a decade ago for less than $2 billion,” Owens writes. ” Apple doesn’t operate in the same manner… Even Apple’s one high-profile acquisition under Cook, Beats Electronics, was not a bet on future technology but rather a complement to Apple’s current offerings.”

Read more in the full article here.

MacDailyNews Take: Again, the market craves GROWTH (for Apple, iPhone unit sales growth, in particular). Until Apple can realistically promise, or, better yet, actually show growth, all bets are off.

SEE ALSO:
Alphabet Inc. surpasses Apple, now the world’s most valuable company – February 1, 2016

25 Comments

  1. From the AP: “Top News – Headlines: Today

    By: MICHAEL LIEDTKE

    SAN FRANCISCO (AP) – Alphabet now comes before Apple atop the list of the world’s most valuable companies.
    The shift occurred in Monday’s extended trading after Alphabet, Google’s new parent company, released a fourth-quarter earnings report that highlighted the robust growth of the digital ad market. Apple Inc.’s iPhone, meanwhile, is suffering its first downturn since it debuted eight years ago.
    Alphabet Inc. earned $4.9 billion on revenue of $21.3 billion in the fourth quarter. If not for employee stock expenses and certain other items, Alphabet said it would have earned $8.67 per share. That figure easily topped the average estimate of $8.10 per share among analysts surveyed by FactSet.
    The report provided the most detailed breakdown yet on the profits pouring in from Google’s dominant search engine and ad network. (Google reorganized itself under Alphabet last October.) Investors pushed up Alphabet stock $35.73, or 4.6 percent, to $806.50 in extended trading.
    Based on that after-hours bump, Alphabet’s market value stood at $555 billion while Apple’s was at $533 billion, based on the most recent regulatory filings showing the company’s outstanding shares. The rankings could quickly change again in regular trading Tuesday.”

  2. What future google/alphabet buisness is exciting the market so much?
    They just monitized the hell out of youtube recently, Almost no content without advertizing now.. Thats great for them…But whete is the next exciting growth prospect coming from for alphabet?
    Anything tangable ? Or is it all PR vapor.

    On the other hand Apple is the most profitable comp in the world…. And when currancy headwinds are accounted for they had good yoy growth .. Specially if last years 1st two quarter’s unusual spike (due to pentup demand for the larger iphons )is taken into consideration.
    Normalized for those.. Apple would have shown a 15%ish growth overall.
    Apples services 18 billion and growing at 26%
    Billion super loyal iOS users..
    Apple has as many new frontieres that they are exploring as google does as well…… But apples PR migh as well be considered in a COMA recently .
    Steves charisma is not there.. That was automatic PR and insperation. That has to be madeup for through other avenues of PR.

    But to be frank, Outside of numbers, 2015 was a bit worrisome for investors.
    So many bogus decisions , so many half baked or unbaked implementations… Disarray galore.
    Definitly not confidance inspiring. Hence PE of 10..
    Repair the confidance factor and give apple its usual and fair pe of 15 to 18….and most investors would be happy .

    Where Apple is screwing up is in the department of PPR, as in public Perception Relations .. ..
    And rock solid implementation of beautifully synargized fantastic products. Not fragmented dissaray of things. (Ahhh.. Those inconsitancies in software, ui, etc… Shameful TVOS after so many years of massive hype…. Sigh)…….exciting PR… Cool advertizing, exciting and orderly product launches.

    I , for now, attribute all those negatives to growing pains… But that is it.. 2016 things better shape up or I start woring about Tim and the managements wisdom, guts, vision and capability.

    Apple wakeup and bring on the excitement ….

  3. I just changed my default search in Safari on my iPhone to something other than Google. If another billion iOS users did the same, Google would notice.

    So would Wall Street.

    1. Growth is great but not everything.. Consistency in generating profit is also a very important metric.

      Just imagine apple adding 18billion to their pile of cash every quarter. In a few years its cash is going to be more than the its cap value ! …… Is growth the only important thing?
      Apple has both great growth potential and is massive recurring cash generating machine.
      Both of these should allow apple a much better pe.

      But the problem for apple is one of perception (see my post above)
      Market believes Microsofts revenue is more reliable than Apples….hence the higher PE.

      Apple has to do some major PR and Narrative polishing work..(and avoid some of the 2015’s embaressing disarrays and bogus decision )
      Repair the confidence issue and we will all be happy .
      Imho

    2. Actual investors are betting on Microsoft and betting against Apple. What more can be said? They believe Microsoft is a better investment and truth be said, it is. An investor can make far better gains with Microsoft than they can with Apple. The big investors believe in Microsoft and have absolutely no confidence in Apple and that has to be really sending a message to Apple. Apple shareholders are nothing but a big joke on all of Wall Street. All those profits and all that cash and Apple shareholders see almost nothing from it.

      It’s no wonder Apple stock continues to lose value. Shareholders are trying to escape their misery by dumping their Apple stock and going to other tech companies for share gains. Microsoft’s P/E is going to quadruple Apple’s and there’s not a damn thing Tim Cook can do about it. Apple has been handcuffed.

  4. Welcome to Bizzaro World, where 3 times value in real product sales is trumped by temporary advertising revenues by a competitor.

    If only Apple bent over for the 3 letter acronym intelligence agencies and turned over all privacy info like MS and Alpha do then they would be making buck on Wall Street too.

    Now if Apple were held privately and was not being held hostage by Wall Streeters they would be considered the most valuable company on the planet.

    They need to pay off their outstanding debt load and be done with it instead of playing games designed to keep Business Majors happy.

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