Monday, August 20, 2012

Apple becomes the most valuable company of all time


My first post on the subject of Apple vs. Microsoft was in October '08, when I predicted that AAPL would surpass MSFT in market cap within a few years (AAPL was trading around 100 then). Well, they did that in mid-2010, and now they have achieved yet another milestone: Apple's market cap ($621 billion as of this writing) now exceeds Microsoft's all-time high, which at the time (late 1999) was the highest market cap ever achieved. Apple is now the most valuable company of all time. This has got to be the greatest David vs. Goliath corporate story of all time. The chart tells it all.

I have made numerous posts on Apple over the years, always of the bullish variety. I remain bullish on AAPL, but have cut the size of my position for reasons of prudence and diversification. Obviously, AAPL can't continue to post such outsized gains forever. But I don't see why it can't continue to grow, especially since Apple's share of the PC market is still relatively small. Morever, although Apple has a very healthy share of the global smartphone market, smartphones still represent only a relatively small share of the global mobile phone market. There is lots of room to grow, and Apple still has the best products in its class and can still claim the mantle of world's most innovative company. New products are in the pipeline and it will be very exciting to see whether and how Apple can revolutionize TV as we know it.

I'm looking forward to upgrading to an iPhone 5 next month, and will be receiving a new MacBook Pro with Retina Display later this week.

9 comments:

Dr William J McKibbin said...

Apple is truly a great firm -- part of the genius at Apple was to oursource their manufacturing overseas -- the results have been incredibile, while not a single Apple mobile device is manufactured here in the USA -- every manufacturer in the US should follow Apple's example.

Tiho said...

Apple is a great company and I use their products for just about everything I do in work / life. Having said that, the price of Apple shares are in an investor euphoria and a massive bubble that will end in tears. The crash will be spectacular.

Rob said...

Not allowing for inflation, Scott ! Thought you would have known that. $600+ bn back in 1999 was worth a LOT more than $600+ bn now.

Rob said...
This comment has been removed by the author.
Rob said...

PS - You never answered my question of how much you invested in Apple shares and when ? What sort of multiple did you get? x50, x100 ? Come on Scott, we're all curious. Did you turn $10,000 into $1m or $100,000 into $10m or $1m into $100m ??!

Rob said...

btw, further to my previous criticism here of the iPhone, i sold mine and paid less than one-sixth of the price for a Samsung Galaxy Y. Sure, it's not as slick but its battery life is better and it does the job (eg better integration with gmail and google calendar), also pretty similar range of most popular apps. I still enjoy my ipad but i think Apple is vulnerable on the smartphone front.

William said...

Scott -

It is extremely thoughtful of you to mention that you have trimmed your position in Apple.

I believe there typically is a correction after Apple announces results partly because they provide very conservative estimates for the next quarter and full year - thus disappointing the analysts who have made higher projections. So it was wise to trim before the results were announced.

Today, Samsung announced a $4 Billion investment in their chip plant in Austin, TX so they can make logic chips for the iPhone and iPad. Apparently they have a very lucrative multiyear contract with Apple. Yet, Apple and Samsung are in huge patent law suits on four continents. Speak of a love-hate relationship.

Rob said...

Microsoft's valuation in 1999 would be about $850bn today, adjusting for inflation.

Rob said...

Apparently IBM's market cap of c. $165bn in the 1960s is equivalent to $1.5trn today !!