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After blowing past $500B market cap, Apple seen headed for $1 trillion

post #1 of 55
Thread Starter 
After surpassing Microsoft's record and becoming the most valuable company ever on Monday, Apple has passed a "key sentiment barrier" on its way to a $1 trillion market valuation, one analyst believes.

Brian White with Topeka Capital Markets said in a note to investors on Tuesday that previous companies with market capitalization above $500 billion were already dominant in their markets. Apple, however, has a relatively small share of many markets where it competes, giving the company potential for even more growth.

"For example, Microsoft, held over 90% market share for PC operating systems at the peak cap, while Intel had over 80% of the PC processor market and Cisco had over 70% share in the networking market," White wrote. "On the other hand, IDC estimates Apple held just 4.7% of the PC market in (the first quarter of 2012) and 64.4% share in the mobile phone market in (the second quarter)."

Back in June, White dismissed a belief held by some on Wall Street that the $500 billion market cap would be a price barrier to further upside at Apple. Some investors theorized that the $500 billion market cap threshold was a "barrier" for stocks.

At the time, he analyzed five U.S.-based companies that at one time enjoyed market capitalizations of about $500 billion or more: Cisco Systems, Exxon-Mobile, General Electric, Intel and Microsoft. However, among that list, White found "little similarities with Apple."

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In addition to what he called "monopoly-like market positions," the five previous $500-billion companies also had rich price-to-earnings ratios of over 60 times when they crossed the half-trillion-dollar threshold. In contrast, Apple is currently trading at just 10.7 times Topeka's calendar year 2013 earnings-per-share estimate.

White believes Apple's march to a trillion-dollar market cap will continue with anticipated product launches coming later this year, including a next-generation iPhone and a so-called "iPad mini." The analyst also believes Apple is planning to release a television set at some point in the future, and will also begin selling the iPhone through China Mobile, the largest mobile carrier in the world.

"We believe Apple is on a path to generate the highest annual net income of any publicly traded company ever by at least (calendar year 2013)," he wrote. Topeka Capital Markets has reiterated its 12-month price target of $1,111.00 for AAPL stock.
post #2 of 55

Of course if Apple fails to meet these wild analyst expectations, the doomsdayers will cluck that it's the beginning of the end for Apple. 

post #3 of 55
Quote:
Originally Posted by markbyrn View Post

Of course if Apple fails to meet these wild analyst expectations, the doomsdayers will cluck that it's the beginning of the end for Apple. 

The Apple haters will say reaching a trillion is a sign of weakness and that it proves Apple is a failure.
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Been using Apple since Apple ][ - Long on AAPL so biased
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post #4 of 55

I don't think Apple has 64.4% of the mobile phone market anywhere.   Even if you just look at smartphones in the US.  Is think that a typo 

 

Of total mobile phones (feature + smartphones), Apple has ~ 5%.  Of total global smartphone only sales, the estimates I see is Apple currently having a ~ 20%.   Smartphones I believe only account for ~20% of the total global phone market  

 

AI:  please confirm this number and what region and category it covers.  It is germane to the story  

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post #5 of 55

Agreed, not market share, perhaps profit share

post #6 of 55
Wrong. Corrected for inflation MS was worth a lot more..
post #7 of 55
Quote:
Originally Posted by Lerxt View Post

Wrong. Corrected for inflation MS was worth a lot more..

... it doesn't really matter, it's just a fun factoid. Being worth twice as much as MS is also just a fun factoid as is having far better products. When they get to a trillion I'm sure a trillion will be worth less than it is today. No problems. It's all just fun for us here on AI, that's why Apple do everything, just to entertain us here, didn't you know? /smile
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
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Been using Apple since Apple ][ - Long on AAPL so biased
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post #8 of 55

Yes, Microsoft was worth a lot more but I read that corrected for inflation Microsoft was in the low $800 billion range. I can't find where I saw it right now.

 

So, Apple has a ways to go, but should easily move past the all time high set by Microsoft.

post #9 of 55
Quote:
Originally Posted by digitalclips View Post

... it doesn't really matter, it's just a fun factoid. Being worth twice as much as MS is also just a fun factoid as is having far better products. It's all just fun for us here on AI, that's why Apple do everything, just to entertain us here, didn't you know? /smile

 

Well said! And it WILL be entertaining too when they become the all time largest, by market cap, of all time, adjusted for inflation.

 

LOL on the Apple does everything just to entertain us here! Too funny!

post #10 of 55
Quote:
Originally Posted by Lerxt View Post

Wrong. Corrected for inflation MS was worth a lot more..

I think you mean "adjusted for inflation".... There is no law that says this has to be done or that it is inaccurate without factoring in inflation. Why don't we adjust Microsofts 1999 share price to match Apple's current P/E ratio and then adjust for inflation. That seems reasonable and would still show that Apple is much bigger now.
post #11 of 55
Originally Posted by markbyrn View Post
Of course if Apple fails to meet these wild analyst expectations…

 

To be fair, they've been saying "trillion" for a decent while now. I'm actually quite impressed with their restraint in this regard, as usually they would say, "Apple is slated to reach $1 trillion market cap by the end of next quarter."


Originally Posted by Lerxt View Post
Wrong. Corrected for inflation MS was worth a lot more..
 

Is that past money worth more now than then? Or maybe it will have always been worth that much? So Microsoft wasn't ever actually worth $600 billion at the time, it was worth an ever-growing, $infinity-1 at any given time because of inflation? Does that mean they can buy a company now with a $200 billion market cap and pay them with the money they simultaneously had and didn't have back then that they wouldn't have had back then but did have back then now? Or should they wait for that money to reach $300 billion extra?

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #12 of 55
Quote:
Originally Posted by Red Oak View Post

I don't think Apple has 64.4% of the mobile phone market anywhere.   Even if you just look at smartphones in the US.  Is think that a typo 

 

Of total mobile phones (feature + smartphones), Apple has ~ 5%.  Of total global smartphone only sales, the estimates I see is Apple currently having a ~ 20%.   Smartphones I believe only account for ~20% of the total global phone market  

 

AI:  please confirm this number and what region and category it covers.  It is germane to the story  

The Washington Post has the IDC second quarter as

            Android  104.8 million units, 68.1 percent share

            iOS            26.0 million units, 16.9 percent share.

 

I would assume that "share" means revenue.

 

http://www.washingtonpost.com/business/technology/worldwide-market-share-for-smartphones-a-market-dominated-by-apple-and-android/2012/08/20/dc1bb65e-eb10-11e1-866f-60a00f604425_story.html

post #13 of 55
Quote:
Originally Posted by Lochias View Post

The Washington Post has the IDC second quarter as
            Android  104.8 million units, 68.1 percent share

            iOS            26.0 million units, 16.9 percent share.


I would assume that "share" means revenue.


http://www.washingtonpost.com/business/technology/worldwide-market-share-for-smartphones-a-market-dominated-by-apple-and-android/2012/08/20/dc1bb65e-eb10-11e1-866f-60a00f604425_story.html

Share could mean either 'revenue' or 'units'. In the mobile phone market, it usually means 'units' unless they specifically mention 'revenue share' or 'profit share'.

eta:
Given the numbers above, they definitely mean 'units'. Both the number of units and the percent share have the same ratio-4.03:1. Unless the average selling price is identical, that indicates that the share numbers are based on units.
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post #14 of 55
Quote:
Originally Posted by GregInPrague View Post

I think you mean "adjusted for inflation".... There is no law that says this has to be done or that it is inaccurate without factoring in inflation. Why don't we adjust Microsofts 1999 share price to match Apple's current P/E ratio and then adjust for inflation. That seems reasonable and would still show that Apple is much bigger now.

+++QFT

And if we factor in the internet bubble we see that Apple's real valuation is much, much higher than MS ever was.

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #15 of 55
Originally Posted by BoxMacCary View Post
Unfortunately, it will never happen ....
If Steve were here, OK -- but he isn't, so no.

 

Maybe you should bet me a trillion dollars that it won't.


You're certain of yourself, right?

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #16 of 55
Quote:
Originally Posted by Red Oak View Post

I don't think Apple has 64.4% of the mobile phone market anywhere.   Even if you just look at smartphones in the US.  Is think that a typo 

Of total mobile phones (feature + smartphones), Apple has ~ 5%.  Of total global smartphone only sales, the estimates I see is Apple currently having a ~ 20%.   Smartphones I believe only account for ~20% of the total global phone market  

AI:  please confirm this number and what region and category it covers.  It is germane to the story  
it's a typo. Should be 6.4%
post #17 of 55
Quote:
Originally Posted by BoxMacCary View Post

A trillion smackers ?!?
Whoa ....
That's a lotta simoleans.
Unfortunately, it will never happen ....
If Steve were here, OK -- but he isn't, so no.

What is the reasoning behind that? It's gone up tremendously since Steve has been gone so what rationale or proof do you have that Apple will now start failing?

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

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post #18 of 55
Quote:
Originally Posted by Lerxt View Post

Wrong. Corrected for inflation MS was worth a lot more..

Sour grapes from an iHater. Move along please.
post #19 of 55
Keep in mind that America loves a winner, until they actually win. Then it's tear down and destroy time. The new American culture is that any winner must have won by deceit, theft, oppression, greed, or criminal actions. The winner "didn't build that" after all. I'm glass- half-empty on this one. The long knives are being sharpened.
post #20 of 55
Quote:
Originally Posted by Lerxt View Post

Wrong. Corrected for inflation MS was worth a lot more..

So adjusted for inflation, Microsoft's $258B current market cap is actually closer to $200B compared to it's peak cap?

post #21 of 55
Quote:
Originally Posted by djmikeo View Post

So adjusted for inflation, Microsoft's $258B current market cap is actually closer to $200B compared to it's peak cap?

Funny, and on point. People are making a big deal out of this Microsoft adjusted for inflation thing ("big" adjusted for the relative non-importance of this story), however, I don't see anyone adjusting Microsoft's old cap DOWN due to the fact it was riding an irrational bubble. If Apple rode a wave, not of their own doing, to a $2000 stock price, then there might be some room to argue about a comparison. 

 

As it is, I have a new iPad, Macbook Air, and Mini this year between work and home, and I'm loving it. Even our psycho IT lead has been revealed as a closet Mac user despite his pushing Dells in the workplace. For investors, this sort of stuff matters, records are just something to tweet about....

post #22 of 55
Quote:
Originally Posted by markbyrn View Post

Of course if Apple fails to meet these wild analyst expectations, the doomsdayers will cluck that it's the beginning of the end for Apple. 

Apple is doomed!!

 

/s

 

 


Tim Cook using Galaxy Tabs as frisbees

 

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Tim Cook using Galaxy Tabs as frisbees

 

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post #23 of 55
Quote:
Originally Posted by wvmb99 View Post
Even our psycho IT lead has been revealed as a closet Mac user despite his pushing Dells in the workplace. For investors, this sort of stuff matters, records are just something to tweet about....

"a closet Mac user"

 

WTF?!

 

 


Tim Cook using Galaxy Tabs as frisbees

 

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Tim Cook using Galaxy Tabs as frisbees

 

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post #24 of 55

"...64.4% share in the mobile phone market in (the second quarter)…" 

 

64.4%? That can't be right, can it?

 

People saying that MSFT peaked at a price "adjusted for inflation" that is higher than Apple now… well, but… there's no meaningful reason to make that adjustment when valuing market cap. It's an interesting exercise, but to say Apple has another $200 billion to go to pass MSFT is a bit disingenuous.

 

By the reverse measure, you could also say MSFT has fallen MUCH further than the market indicates… the current $257bn cap they enjoy today is REALLY ONLY worth about $100bn in peak dollars… so they haven't lost a little over half their value… they've lost almost 85% of their value! Panic Room!!!!

 

 


Apple is today, in real dollar terms, the highest valued company by market cap in history (excluding the controversial and brief trillion dollar measure given that Chinese company).
post #25 of 55
Quote:
Originally Posted by logandigges View Post

"a closet Mac user"

 

WTF?!


He uses his Mac in a closet. What's wrong with that? I'm a closet closet Mac user. I don't announce in public that I use it in a closet.

post #26 of 55
Originally Posted by Harbinger View Post
He uses his Mac in a closet. What's wrong with that? I'm a closet closet Mac user. I don't announce in public that I use it in a closet.

 

What about the people that keep their Macs in a closet as an iTunes server? 

 

This is turning into a real tweedle beetle battle.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #27 of 55
Quote:
Originally Posted by logandigges View Post

"a closet Mac user"

 

WTF?!

Some people still think it's 1998.  

post #28 of 55
Quote:
Originally Posted by tribalogical View Post

People saying that MSFT peaked at a price "adjusted for inflation" that is higher than Apple now… well, but… there's no meaningful reason to make that adjustment when valuing market cap. It's an interesting exercise, but to say Apple has another $200 billion to go to pass MSFT is a bit disingenuous.

It's not at all disingenuous. There is a time value to money - you can't compare money at any one time with money at a different time unless inflation has been zero over that time frame. The only legitimate comparison of past, present, and future events considers time value of money.

It's like all those reports about top selling movies. They always use 'current dollars' which makes recent films look better than they really are. If you adjust for inflation (that is, you consider the NUMBER of tickets sold rather than the dollars received), I believe Gone with the Wind is still #1.

Now, one can argue that the internet bubble distorted things, so it would be reasonable to consider Microsoft's share of the total combined global market cap at that time vs Apple's share of total combined global market cap today, but that doesn't change the fact that you need to consider inflation.
Quote:
Originally Posted by tribalogical View Post

By the reverse measure, you could also say MSFT has fallen MUCH further than the market indicates… the current $257bn cap they enjoy today is REALLY ONLY worth about $100bn in peak dollars… so they haven't lost a little over half their value… they've lost almost 85% of their value! Panic Room!!!!

Sure. You could use that logic - and if you're a smart investor, you would.
Quote:
Originally Posted by tribalogical View Post

Apple is today, in real dollar terms, the highest valued company by market cap in history (excluding the controversial and brief trillion dollar measure given that Chinese company).

No, it's not. You said 'in real dollar terms' which means after adjustment for inflation.

If you had said "in CURRENT dollar terms", you would have been correct. But it's not very meaningful.

Let's say that we hit a hyperinflation phase and the dollar declines in value by 99.9%. Pick a company with $1 B market cap today. Now, after the dollar declines by 99.9%, the market cap would be $1 trillion (if nothing else changes). By your argument, that company is worth more than AAPL. Obviously, that's nonsense.
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post #29 of 55
Quote:
Originally Posted by Turley Muller 
it's a typo. Should be 6.4%

Yeah it should be 6.4%:

http://www.idc.com/getdoc.jsp?containerId=prUS23624612

They are saying it's good that they have so much profit with such a small share as it means lots of room for growth.

The 6.4% share is of all phones. This graph shows one set of figures of the shares in 2011:



http://thenextweb.com/mobile/2011/11/29/report-smartphones-account-for-just-27-of-all-mobile-phones-worldwide/

The orange block will expand out to the remaining 70%.
post #30 of 55
Quote:
Originally Posted by wvmb99 View Post

Funny, and on point. People are making a big deal out of this Microsoft adjusted for inflation thing ("big" adjusted for the relative non-importance of this story),

There are a lot of people who just can't accept the fact that Apple is succeeding so they are compelled to haul out the straw man "but" arguments. Either that or watch their brains explode.
post #31 of 55
Quote:
Originally Posted by lkrupp View Post


There are a lot of people who just can't accept the fact that Apple is succeeding so they are compelled to haul out the straw man "but" arguments. Either that or watch their brains explode.

That just about says it all.

post #32 of 55

A far cry  from the "beleagured apple" years of Scully and Amelio! We've come long way baby!

post #33 of 55
Quote:
Originally Posted by Marvin View Post

Quote:
Originally Posted by Turley Muller 
it's a typo. Should be 6.4%

Yeah it should be 6.4%:

http://www.idc.com/getdoc.jsp?containerId=prUS23624612

They are saying it's good that they have so much profit with such a small share as it means lots of room for growth.

The 6.4% share is of all phones. This graph shows one set of figures of the shares in 2011:



http://thenextweb.com/mobile/2011/11/29/report-smartphones-account-for-just-27-of-all-mobile-phones-worldwide/

The orange block will expand out to the remaining 70%.

 

Great graph, although this is still not a graph of "all phones". It is a graph of "feature and smartphones". Big difference, although the remaining non-feature, non-smartphone phones are diminishing in number compared to the overall number of phones, they are still a significant number especially in developing countries.

post #34 of 55
Quote:
Originally Posted by Lerxt View Post

Wrong. Corrected for inflation MS was worth a lot more..

I think they are now saying IBM is the most valuable - but - you can't just take a company pick it up and apply a formula to it to decide what it would be worth in todays $'s.  A lot of things went into creating that inflation (and IBM's price at the time)  that are ignored.  there are more people on the planet now - we sell to more countries than back then - we sell at higher volumes but at cheeper prices and there is much more competition and the NASDAQ has a VERY different make-up than it did back then. You are comparing apples (get it) and oranges.   But, wait,  we do know what inflation and every other market change did to IBM - we don't need to apply a formula - in 2012 IBM has a market cap of $228 billion.  That is what IBM is worth in 2012 $'s.    Just my humble opinion.  


Edited by i_bad_apple - 8/21/12 at 9:35am
post #35 of 55
Quote:
Originally Posted by Marvin View Post


Yeah it should be 6.4%:
http://www.idc.com/getdoc.jsp?containerId=prUS23624612
They are saying it's good that they have so much profit with such a small share as it means lots of room for growth.
The 6.4% share is of all phones. This graph shows one set of figures of the shares in 2011:

http://thenextweb.com/mobile/2011/11/29/report-smartphones-account-for-just-27-of-all-mobile-phones-worldwide/
The orange block will expand out to the remaining 70%.

 

How come Apple's 5% is smaller than the Nokia 5%? Notice also that several of the 1% slices are of a different size on the graph. Does this indicate that the numbers on the graphic are rounded and the graph actually indicates the real value or that we are just seeing an example of somebody putting together a crappy (read sloppy) graph?

 

Just curious.

post #36 of 55
post #37 of 55
Quote:
Originally Posted by Lerxt View Post

Wrong. Corrected for inflation MS was worth a lot more..

 

However at the time Microsoft's P/E was sitting at 75 while Apple's is currently only at 15... that's an enormous difference.

 

People thought Microsoft was going to grow forever and the stock was priced accordingly (as was every other dot com company)... then the bubble burst and those who invested at the time lost their asses. Apple's P/E is set around an "established" range, not that of a company that continues to grow at the pace it does. Apple currently develops five platforms: OS X, iOS, WebKit, iTunes, and iCloud, all of which work together seamlessly to unable them to create well designed, elegant products. It's a no-brainer that they will continue to leverage these platforms when they enter new markets and as such they should be able to continue their unprecedented growth.

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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post #38 of 55

Apple is set to lose the Samsung case. That's what it looks like. 

post #39 of 55
Originally Posted by AdonisSMU View Post
Apple is set to lose the Samsung case. That's what it looks like. 

 

Uh… huh… 

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #40 of 55
Quote:
Originally Posted by i_bad_apple View Post

I think they are now saying IBM is the most valuable - but - you can't just take a company pick it up and apply a formula to it to decide what it would be worth in todays $'s.  A lot of things went into creating that inflation (and IBM's price at the time)  that are ignored.  there are more people on the planet now - we sell to more countries than back then - we sell at higher volumes but at cheeper prices and there is much more competition and the NASDAQ has a VERY different make-up than it did back then. You are comparing apples (get it) and oranges.   But, wait,  we do know what inflation and every other market change did to IBM - we don't need to apply a formula - in 2012 IBM has a market cap of $228 billion.  That is what IBM is worth in 2012 $'s.    Just my humble opinion.  

That's undoubtedly true. If one only wants to know what publicly traded company is more valuable today, that's clearly Apple.

However, there ARE reasons why you'd want to compare a company to past companies to get some assessment of their impact on the global economy or their ability to influence the markets. In that case, it is necessary to adjust for time value of money in some way. Doing an inflation adjustment is certainly the easiest, but may not be the most accurate.

If I had to choose, I'd add up the entire global combined market capitalization at any given point in time and look at the percentage. That is, if Apple is worth $650 B today and the global market cap for all public companies combined is $650 T, then Apple is worth 0.10% of the total. Now, if Microsoft was worth $600 B a decade ago and the entire market was worth $500 T, then Microsoft was worth 0.12% of the total - or a larger percentage than Apple. Similarly, if the entire market was worth $1,200 T and MS as worth $600 B, then MS was worth 0.05%.

This calculation takes into account a large number of variables such as:
- Time value of money (inflation)
- Market bubbles (unless they're restricted to only a single stock or segment)

If I had to guess, I wouldn't be surprised if Standard Oil of a century or so ago had the greatest percentage of the market of any publicly traded company.


Now, there are other methods one might use. For example, one might divide the company's market cap by the total global GDP at that point in time and analyze it as above.
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