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Apple Tops $500 Bln. In Market Value

Apple Tops $500 Bln. In Market Value
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2/29/2012 2:15 PM ET

The world's most valuable company Apple Inc. (AAPL: Quote), reached another milestone on Wednesday when its stock market value topped the $500 billion mark.

Apple became only the sixth company ever to touch the half-trillion mark. Only Microsoft, Cisco, General Electric, Intel and Exxon Mobil have ever entered this exclusive club, but none of them were able to maintain the position for long. Apple also became the only company post-recession to top the $500 billion mark in market capitalization.

Microsoft, Cisco, General Electric and Intel reached the milestone in 1999 when the dot com boom was at its peak. Microsoft went past $600 billion in market cap for just one day. Microsoft, Apple's main rival, is now valued at $267 billion, while Cisco and General Electric sits at $108 billion and $201 billion, respectively.

Exxon Mobil, currently the second most valuable company in the world, was the recent entity to reach the $500 billion mark. The oil giant went past the mark in 2007, driven mostly by surging oil prices. Exxon is currently valued at $406 billion.

Apple stock has continued to climb steadily through the year, gaining a whopping 34 percent in 2012. After a stock split in 2005, Apple's stock price was $41.67 per share. Two weeks ago, seven years since then, the stock surpassed the giddy levels of $500 per share. The company's shares hit the $400 mark for the first time seven months ago, in about nine months from the $300 level.

This stunning evolution of Apple can be almost fully credited to its co-founder and former CEO Steve Jobs, who died in October 2011. Jobs became the backbone of Apple since he returned to the company some fifteen years ago. Apple was really non-existent at that time, but Jobs transformed it from an only-a-computer maker, to developing portable music players, multimedia phones, and pioneers in the tablet computers.

Steve Jobs, with his friend Steve Wozniak, released Apple I computer in 1976, with the formation of Apple Computer. However, a power struggle in 1985 led to Jobs being ousted from his own company. Nonetheless, financial losses, no major innovations, and three-year record-low stock price, made the company rethink. Subsequently, Apple brought back Jobs in 1996, through the acquisition of Jobs startup company NeXT.

Industry experts believe the mercurial rise of the stock value was primarily due to the stupendous earnings and revenue growth in the latest quarter, coupled with the possibility of dividend payment linked to the huge cash reserve available with the company. The anticipated release of iPad 3 next Wednesday may also have contributed to the jump in Apple share prices.

Even though, Apple's stock has risen sensationally in last few years, it has failed to keep up with its earnings growth. Apple's stock is trading at less than 13 times its expected earnings for 2012, while Nasdaq 100 trades at about 18 times the forecast earnings. This would mean Apple shares are much cheaper than other tech companies.

Apple's huge market cap has not impacted its growth performance. For the first quarter, Apple reported a profit that more than doubled, as revenues surged 73 percent on strong holiday sales of iPhones and iPads.

Apple on Tuesday issued invitations to the media for an event next Wednesday, March 7, although there were no indications as to what the event pertains to. It is widely speculated the launch event could be that of the third version iPad.

Apple is currently trading on the Nasdaq at $543.89, up $8.28 or 1.55%, on a volume of 23 million shares, above the three-month average volume of 14 million.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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