Apple may soon pass Exxon to become the most valuable U.S. company

Mac Daily News ^ | Thursday, July 29, 2010 - 08:18 PM EDT

[Swordmaker]

"Better watch your back Exxon Mobil," Paul R. La Monica reports for CNNMoney. "No, I'm not talking about tough competition for the oil giant from rivals like Chevron, Royal Dutch Shell and ConocoPhilips."

"Exxon Mobil, which is currently the most valuable company in the U.S. with a market capitalization of $286 billion, has to listen for the footsteps of Apple," La Monica reports. "Of course, Apple doesn't compete with Exxon Mobil -- although given time I'm sure that someone will find a way to create an app that turns your iPhone into an oil rig."

"But Apple now is the second most valuable company in the land. It has passed Microsoft and Wal-Mart this year and now trails Exxon Mobil's market value by only about $50 billion," La Monica reports. "That may sound like a whopping gap but it really isn't -- especially given how well Apple has done compared to Exxon Mobil lately.

Consider this: At the start of the year, Apple's market value was nearly $125 billion lower than Exxon Mobil's."

"Apple shares currently trade at about $260. Many analysts think that a price of $300, a 15% jump from here, is reasonable given that Apple's got strong sales and earnings momentum on its side," La Monica reports. "If that happened, all it would take is for Exxon Mobil's stock to fall about 5% from current levels for Apple to leap ahead of it in market value."

La Monica reports, "That also seems like a rational proposition since it's tough to imagine oil prices heading substantially higher in the near future as the economic recovery appears to be stalling."

Full article here.

[catfish1957]

In these hard times, it will just take one more economic blip to cut Apple valuation in half (Cisco comes to mind) Versus ExxonMobil which is one of the strongest defensive plays of all. When it boils down to buying gasoline to get to work versus buying that new generation IPOD, you know which will win.

[zeugma]

In these hard times, it will just take one more economic blip to cut Apple valuation in half

Under normal circumstances, one might well think so, especially given the history of tech stocks in general over the past decade or so, but we're right smack in the middle of the Obama Recession/Depression, and Apple is turning in both record sales and profits quarter after quarter. Also, unlike many of the tech stocks that have crashed and burned in fairly recent memory, Apple sells physical product, and folks seem to want to buy them, even though they aren't the cheapest thing on the market.

[Atlas Sneezed]

That’s about $1000 per person in this nation.

[Mind-numbed Robot]

But Tandy was making electronics long before they got into the computer business, through their Radio Shack subsidiary.

You are correct if you consider 15 years a long time. They bought Radio Shack in 1963, when it was a small almost bankrupt company building parts for ham and marine radios. (The name is from what the sailors called the place that housed the ships radio equipment, the radio shack.) They decided to devote time and money to it in 1975 and introduced the first Radio Shack computer, the TRS-80 in 1977. It was about that time that Tandy phased out of the leather business and into electronics and Radio Shack full time.

However, in parallel with that, they were building and selling the Tandy 1000 series which had a number of innovations in graphics and voice production as well as installing DOS in ROM for a much faster startup. Tandy made computers until 1993. Radio Shack now sells other brands and has no brand of its own.

[kevkrom]

Market share does not justify this valuation

Market share is only part of the puzzle. Margin matters, too, and that's where Apple really shines.

Microsoft and hardware vendors such as Dell/HP/etc., may comprise a much large market share, but they operate on a much lower margin as well.

[antiRepublicrat]

I used to be able to find the components in a Radio Shack to build pretty much anything I wanted. Now that’s gone and Radio Shack carries nothing I can’t get from anywhere else. Sad.

[aMorePerfectUnion]

I really like my Apple products, but I suspect the current valuation being greater than other companies is a function of the phase of the stock market and economy. Apple is making money and others, far less.

That will change.

[conservatism_IS_compassion]

All true. I speak not a single word against Apple. I merely suggest that fossil fuels may have more lasting value than consumer electronics, which can fall before any new discovery.

They used to say, several decades ago, that it was a dull week when nobody announced something which was going to make the transistor obsolete. Somebody may yet do it, in a light or even a quantum technology.

But even so, Apple is a systems design house, much more so than a hardware manufacturer. Their business is figuring out what the customer wants, but doesn't know himself what that is. Just like you, when you shop for a Christmas present for an adult who has as much or more money than you do.

You walk into an Apple store, and the displays communicate, "You didn't think you wanted a tablet computer - but check this out!"

Which is why Steve Jobs is so adamant about secrecy in development - a gift is supposed to be a surprise.

IOW, when the Next Big Thing comes along, Apple will be more likely to be leading the charge than they are to be trampled in the stampede led by others.

IMHO. Your mileage may vary.

[LexBaird]

Speaking of which... it's been three months:

Apple releases iTunes 9.1.1 for Mac and Windows April 28, 2010 3:56:29 PM PDT · 34 of 50
LexBaird to dennisw
Okay, just for fun, APPL is $261.60 today. Let’s check things in 3 months.

$257.85 as of July 30. Down a bit, but I hope you didn't short AAPL too much, Dennis.

[dennisw]

http://www.freerepublic.com/focus/f-chat/2502023/posts?page=34#34

With proper leverage you could have made millions and before the 0-taxes kick in. Pity.

[dennisw]

All true. I speak not a single word against Apple. I merely suggest that fossil fuels may have more lasting value than consumer electronics, which can fall before any new discovery.

Extracting minerals from the ground is thought of as being primitive, down the economic scale along with agriculture. Wheat, oil, pork bellies, natural gas. Those are all commodities and thought of as common. Easily brought to market compared to advanced electronics

But we are seeing the comodification of electronics. iPads will have tons of better completion that will swamp them as long as there is money to be made. At the same time your traditional "lowly commodities" will become exotic and much sought after as their supply dries up.

Wheat futures more valuable than iPads and laptops? It all depends on supply and demand

[Swordmaker]

With proper leverage you could have made millions and before the 0-taxes kick in. Pity.

Lloyd Blankfein and me developed a special CDO that we filled with Apple debt, warrants and other Jobsian junks. GS is also extending me a 20 million dollar line of credit to short the shiite out of it. So, the answer is yes, I am shorting Apple and putting my money where my mouth is—dennisw, on April 28, 2010.

So, how's that CDO doing three months in? How many millions did YOU and Llyod make in pre Obama tax dollars?

By the way, Dennis, how did you fill up that CDO with "Apple debt" when Apple has none???? I can also find no references to Apple ever issuing any stock warrants into the market. There are some restricted purchase stock options, given to key employees or board members, but those are not tradable. With $40 Billion in cash on hand, Apple has no need to borrow, issue bonds, or sell speculative stock purchase warrants. So where did you find the debt, warrants, and "other Jobsian junk" you claim is in your putative CDO???

Sounds like a load of fraudulent securities to me. If you are really invested in this CDO, did you really read the prospectus closely? I suggest you try and get your money back.

If you really developed this CDO, you might want to consider turning yourself in to the SEC... they might be merciful and NOT throw away the key to your cell... or they might offer you a job in the Obama administration.

[dennisw]

Bottom line is shorted Apple and made a few million doing it

[Cboldt]

-- many people don't realize "iPod" is actually a brand name and not a synonym for "MP3 player" --

I call 'em what they are, "ear-pods."

[Swordmaker]

Bottom line is shorted Apple and made a few million doing it

I don't believe you. You better explain where those non-existent "Apple debt," "warrants," and " other Jobsian junk" you claim was in your CDO you put together to "short the shiite out of" came from. I cal bullish!t on your claim, dennisw.

[dennisw]

Hey just because I made $50 million on that trade doesn’t mean I’m going to blow my money on overpriced Apple junk. I’m still a PC man all the way and Linux is OK too. In fact the latest Linux beats the Apple GUI as far as looks. I was shocked how boxy clunky and primitive your OS looks in comparison to Linux these days. It’s like the Congo versus Tokyo Japan

Just saw the “Girl with the Dragon Tattoo” You might like it because Mac Books are heavily featured and she requests 20 thousand Swedish Krona to buy one

[Hoplite]

Do you seriously not see how stupid you’re making yourself look?

[dennisw]

Hey dopey! Shouldn’t you be busy out there working for the Muslim imperialists of the Balkans, and out subverting the Serbs.

[newfreep]

BINGO!

I love tweeking liberals who just worship Apple by telling them of the 25-30% net profit margin for making toys vs. the “evil” oil companies who produce a vital product for our economy & standard of living makes a measly 6-8% net profit.

[Hoplite]

I’ll take that as a “No”.