Finally, Apple Inc. (Nasdaq: AAPL, stock) is now officially the world’s most valuable company after the iPhone maker surpassed Exxon Mobil Corp. (NYSE: XOM, stock) early in the trading Wednesday, 10 Aug 2011, till the closing bell. Apple’s market capitalization is a whopping US$ 337.17 billion compared to Exxon Mobil’s US$ 330.77 billion. Indeed it was an amazing achievement, when about a decade ago during the 2000-2001 recession, Apple was in financial trouble with several quarter of losses so much so that Apple was once trading at about $7 bucks a share.
Now, Apple is about $363 a share – that’s 5,085% appreciation within a span of 10 years. Within the same period of 10-year, Exxon Mobil’s stock price appreciate from a low of about $30 bucks to yesterday’s closing of $68 a share – a mere 126% appreciation. Of course with the volatility of crude oil, Exxon Mobil could overtake Apple once again but for now, it’s celebration for the iEverything. Apple’s fabulous revenue and profits were basically driven by iPod, App Store, iOS, and of course iPhone and iPad.
Apple’s revenue, net profit and EPS (earnings per share) actually more than double since the first quarter of 2010, about one and half year ago. Apple grew its quarterly revenue from $13.49 billion in first quarter of 2010 to $28.57 billion in the second quarter of 2011 – a 111% growth within 18 months. Its quarterly net profit growth – $3.1 billion to $7.3 billion (135% growth) while the EPS appreciated from $3.39 a share to $7.89 a share (132% growth); within the same period. If Warren Buffett were to regret for not investing in technology stocks, this could be the only stock Warren would have missed dearly.
Apple CEO Steve Jobs, who co-founded the company at the age of 21, was ousted by the board in 1985. When he returned 12 years later, Apple had run up $1.86 billion in losses over two years. In fact the company was 90 days away from bankruptcy. Jobs re-engineered the company’s journey to glory by revamping its industrial design, integrating software with hardware seamlessly and marketing the beautiful gadgets such as iPod, iPhone, and iPad into the music, phones and tablets market segments.
Exxon Mobil had held the top spot as the most valuable company since 2005 and hit the record as the company which registered the highest quarterly earnings in 2008. Going by industry, Exxon Mobil’s organic growth is limited because of its dependency on new oil discovery and oil prices. On the other hand, Apple’s growth is limited only by innovation, a field it already specializes. As long as Apple keeps making products or gadgets that people want to own, its organic growth is limitless.
With the latest FOMC’s decision to leave the interest rate at historical low of nearly 0% till mid-2013, you don’t have to be a rocket scientist to predict how the oil price would perform. So perhaps the earliest Exxon Mobil can reclaim its top spot would be mid-2013; but considering Apple would generally introduce a new product every 3 years, 2013 being the next target, Exxon Mobil may not be able to do so after all. Meanwhile, there’s another trophy for Apple to grab – the world’s largest technology company by revenue, currently held by Hewlett Packard.
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August 11th, 2011 by financetwitter
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