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Monday, August 20, 2012, 12:55 pm
Apple tops Microsoft to become most valuable company ever
Apple's continued strong market performance has made it the most valuable stock by market capitalization ever, besting a record set by Microsoft in 1999.The company's market capitalization reached $621 billion in trading on Monday, besting the previous record held by rival Microsoft, as noted by the Associated Press. However, Apple's new achievement does not account for inflation. In today's dollars, Microsoft's 1999 record would have given it a market capitalization of $850 billion.
Last Friday, AAPL stock closed at a record price of $648, driven to new heights by rumors of a new iPhone, a smaller iPad, and an Apple television set.
Apple's tremendous success has helped to put it in a strong cash position which led the company to distribute its first dividend payment since the late 1990s to shareholder last week.
Apple's soaring market cap has made it worth more than 50 percent more than Exxon Mobil Corp, the second-largest company by market capitalization. Apple first passed Exon in August of 2011, with a then-value of $347 billion.
Earlier this year, Apple became worth more than Microsoft and Google combined when its market cap reached $456 billion. The iPhone maker saw its market capitalization pass Microsoft alone in May of 2010 when it reached $222 billion.
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Previous Comments View All
... Apple will be doomed(TM) all over again, so it's all cool.
Apple's new achievement does not account for inflation. In today's dollars, Microsoft's 1999 record would have given it a market capitalization of $850 billion.
That makes zero sense. Value is value. Inflation is in both the numerator (cash flows) and denominator (cost of capital) in all valuation.
Inflation sucks, but a notable paper milestone nonetheless!
Steve Ballmer is going to need more chairs to throw.
But... that one Chinese company...
Anyway, when it falls back to $580 after the fall keynote, Apple will be doomed(TM) all over again, so it's all cool.
YES! There was a Chinese company in 1998(?) that hit 1 trillion dollars in their market cap, they quickly dropped down to zero and went bankrupted.
That makes zero sense. Value is value. Inflation is in both the numerator (cash flows) and denominator (cost of capital) in all valuation.
Say what? Can you show me where "cash flows" and "cost of capital" factor into a market cap calculation? Funny. I thought it was "shares outstanding x price per share." Of course inflation makes a difference.
If we experienced 100% inflation next year (and let's assume for the sake of argument that the economy didn't completely collapse and it didn't affect corporate health) are you telling me that apple's market cap wouldn't just be twice as big since the value of a dollar is now halved?
I don't think AAPL is going south of $600 again for a long time, if ever... although the last "Adjustment" from $640 to $530 surprised me, I think it was a 'manipulated' fluke frankly... created by the "analysts" who made SO much of the "Big Miss" by the last quarterly report (never mind the repeat of record profits all over again)... This quick "Correction" past the mid $600's didn't surprise me at all, however...
$700 before Aug 31st...? VERY likely.
And after the announcements in September? If it goes like people think, and we get a new iPhone, iPad "mini" and apple-TV (followed soon after by new iMacs and a 13" retina MacBook Pro?), it'll punch to $750...
$1,000 after the holiday quarter ends... assuming the analysts don't drag it down too much by COMPLETELY overblowing the estimates.......
And if an Apple TV Monitor comes into the mix? I don't know what the ceiling will be...................
Inflation sucks, but a notable paper milestone nonetheless!
Steve Ballmer is going to need more chairs to throw.
Let's start a Chip-In to get him a lifetime membership at Herman Miller.
I think Apple's distinctive achievement is that they became the most valuable company by delivering the best, while Microsoft achieved theirs by catering to the lowest common denominator, and essentially trying to be all things to everyone.
That makes zero sense. Value is value. Inflation is in both the numerator (cash flows) and denominator (cost of capital) in all valuation.
That's ridiculous.
Value is what the market considers a company to be worth. If the value of the dollar drops (for example, with inflation), it takes more dollars to equal the worth of the company.
You are referring to ESTIMATES of valuation, but even there, you're wrong.
Let's look at the common proxies company value:
- Earnings per share. This is the dollars earned divided by the number of outstanding shares. Since the number of outstanding shares is independent of inflation, inflation increases only the numerator and therefore increases the estimated value
- Asset value. Asset value goes up with inflation.
- Net asset value (assets minus liabilities). Both figures go up with inflation, but if the inflation for both assets and liabilities is the same and if the company had a positive net worth to start, then the difference will also increase with inflation.
By almost any measure, an inflation adjustment is necessary to compare a present-day value to a historic value.
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But... that one Chinese company...
Anyway, when it falls back to $580 after the fall keynote, Apple will be doomed(TM) all over again, so it's all cool.