Step-by-step, our favorite Mac maker has been reborn in the 21st century. Out with Apple Computer, Inc. In with Apple, Inc. Apple now has the 5th largest market cap of publicly traded companies in the US—just behind Walmart.
Apple is flirting with another all time record high stock price. Macs, iPods, iPhones are huge hits. Sales and profits are at record levels. Does Apple deserve to be valued as much as Walmart or Microsoft?
Apple’s Stock In The Stratosphere
There’s an old saying. What goes up, must come down. So it has been with AAPL stock, which sold in the low $80s just a year ago, and is poised to top $200-billion in market value.
Besides Apple, who are the Top 5 in the US? Walmart, Berkshire Hathaway, Microsoft, and Exxon Mobil.
That’s high in the sky. Many considered Apple to be near death just a decade ago.
What’s behind the resurgence of sales, profits, and stock price? Does Apple truly deserve to have a market value higher than Intel, Dell, IBM, and other industry giants?
While the Mac struggled to gain market share for much of the early 21st century, Apple’s fortunes were enhanced by successful ventures into portable media players, online music sales, the iPhone and App Store.
The so-called halo effect produced by tens of millions of new iPod customers vaulted the Mac’s revenue and profits to record levels, doubled market share, and, importantly made Apple the dominant PC maker in the lucrative $1,000 and higher market segment.
Let’s compare Microsoft’s stock performance over the past five years with Apple’s performance (image from Wolfram Alpha and CNN Money). Microsoft is red. Apple is blue. Which stock would you prefer to own? This is a no brainer.
What’s not to like? Apple is sitting on more cash than Microsoft. The stock price is at record levels, and a hotly anticipated new product is ready to launch.
The iPad Cometh
Perhaps as a sign of the times, Business Insider published a ChangeWave Research survey of Amazon Kindle owners (the most popular e-reader). Without ever having seen or touched an Apple iPad, nearly one third of Kindle owners wished they had an iPad instead.
Even worse for Amazon and other e-reader wannabes, ChangeWave asked consumers which e-reader they would buy in the next 90 days. Only 28-percent said Kindle, but a whopping 40-percent said iPad. Similarly disturbing charts can be found on Silicon Valley Insider and Barron’s Tech Trader.
Is it any wonder why Apple’s stock is at record levels?
What’s interesting about comparing Apple to Walmart is the huge difference—Walmart is known for selling cheap goods from China.
Apple sells expensive goods from China (and Taiwan). Walmart has over 8,000 retails stores worldwide, and annual revenue of over $400-billion (vs. Apple at $50-billion and approximately 275 stores) yet net profits are similar.
Clearly, Apple remains a stock market darling. Is the company really worth as much as Walmart? If the iPad is a runaway success, will that vault Apple’s market cap beyond Microsoft? Such considerations would have seemed ridiculous a few short years ago, but today such levels are well within the realm of possibility, if not probability.
Could continued success make Apple America’s most valuable company? Is Apple ready to fall from the tree of success? Or, does the company’s fortunes grow and expand as the world’s economy begins to climb out of recession?
Here’s what I think: Apple’s iPad will be a big hit, and evolve into a successful ecosystem, ala the iPod and iPhone. That will propel revenue and profits to record levels. From that, the stock must follow.
Of course, whatever goes up must come down. How could Apple falter?
Share your concerns, consideration, and opinions about Apple’s fortunes and misfortunes in the Comments section.