Is Apple Now Poised To Become The Largest U.S. Public Company?
The maker of the iPad, iPhone and iPod could soon become the country’s most valuable public company.
One day after Apple reported a blowout quarter, one tech journalist is suggesting it’s just a matter of time before the Cupertino company topples Big Oil to become the largest public company in the United States.
Right now the top spot is owned by Exxon, which is worth about $330 billion. Apple is worth about $290 million and has been climbing steadily, up 64 per cent over the past 12 months — and about 188 percent since the first generation iPhone went on sale in June, 2007. (Wall Street is selling on yesterday’s news, driving down Apple’s stock a bit today, but the overall trend is up — way up.)
Guardian tech editor Charles Arthur makes a sound case that Apple could pass Exxon, in an article published hours before Apple reported Q4 earnings of $20 billion.
Momentum is on Apple’s side. Even though oil companies will remain huge for a long, long time, Exxon is in a business with diminishing returns. Throw in a little “you ain’t seen nothing yet” magic dust — imminent Verizon iPhones, for one — and this is a game nobody could really blame you for playing in a Silicon Valley parlor.
“Though at the end of last week, the gulf in valuations seemed large — Exxon’s $331bn, against Apple’s $274bn — the gap has been closing for more than a year,” Arthur writes. “Even if [last night's] results are not enough to propel Apple to the top spot, many on Wall Street think it is just a matter of time. Its profits will get another boost in January when Apple will begin selling iPhones through the largest network, Verizon, as well as AT&T, its partner since 2007.”
Of course there is big, and then there is Big. Apple passed Microsoft as the largest tech company by market cap five months ago, but in the last reporting period still lagged the Redmond Giant a tad on revenues. Compared to Exxon, Apple’s revenues are a drop in the oil drum — $20 billion in the most recent quarter to Exxon’s $92 billion.
There may have been little more benefit than bragging rights when Apple passed Microsoft to become second overall in market cap. But taking the top spot has real rewards — and risks.
Shareholders may have a better case to insist that Apple return at least some of its $50 billion cash mountain in the form of a dividend, something CEO Steve Jobs is still resisting, especially as the prospect of a rising stock price seems more difficult to sustain value.
On the other hand, fund managers would have to buy up Apple shares to rebalance their portfolios — which would likely giving a further boost to Apple shares, at least in the short term.
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Wednesday, October 20, 2010
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