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Which Company Is the Largest?
Fudge Factor 3000 writes "Apple and Exxon are fighting it out to be the company with the largest market cap. Tuesday, Apple pulled ahead. It is hard to believe a tech company can beat out an oil giant, but is the market cap really the measure of the size/influence of a company? It is certainly the simplest metric to consider. Ars is running an excellent article on how to measure the size of a company. They discuss different metrics such as cash balance, revenue, number of employees, etc."
by outsourcing all your labor to the 3rd world, and not having to pay people a living wage in a western country.
Very unusual article. They did not mention the most important metric of all. Profit.
"There is no flag large enough to cover the shame of killing innocent people."--Howard Zinn
Would Steve Jobs be considered a genius if he was an oil company CEO?
How you measure the 'size' of a company depends on WHY you want to measure its size (environmental impact? political clout? market influence? raw spending power?). If it's just to put it in a league table then you might as well use anything that comes to mind - market cap, turnover, hash total of all employee shoe sizes... whatever.
(In terms of measuring success particularly to shareholders, Apple's GROWTH in market cap over a relatively short period of time is extremely impressive but that's another matter)
They are making too much money we need to have congress investigate where all these profits are going and what tax loopholes they are using to get these profits.
Just wanted to beat the libs to it.
People gotta live outside the west too.
Congrats! You have beaten The Libs, and have won the Douchebag of the Day award!
Does it really matter? Honestly, who gives a shit what company is the biggest?
I only care about the products/services they produce.
and distribute the proceeds to shareholders.
That'd be a lot of proceeds! BTW Dell now sells smartphones and tablets, too.
what is the future of a civilisation whose most capitalised stock is gadget manufacturer?
...Apple was dying...
I've heard that for the last 20 years from dozens of tech magazines and from numerous Slashdotters...
Do not look into laser with remaining eye.
And those $1 shares go up to $100 tomorrow, MY (company's) capital from sale of stock is STILL $1000. Those who OWN the shares are those who reap the gains. Now, if I go into my MSFT-like back office and print out 1000 MORE shares and sell them, now I am rolling in the dough.
Always look at shares outstanding before and after. See who has what, and when. Then, Go roll another one, just liiike ... theee other one.
Of course it isn't. If it were, then the gyrations of the DJIA would mean that the total size of the representative corporations in the stock market have grown and shrunk across a 10% margin over the past couple of weeks. Those companies, and by extension the rest of publicly traded corps, and indeed business in general, have clearly not been growing and shrinking that much in any size except solely their market cap. The market cap is undeniably a contrived measure that is primarily an artifact of nothing but finance. Which in the past generation has become almost completely independent of underlying business, and even independent of any underlying reality except preferential treatment by the powerful.
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make install -not war
This company makes Apple, Google, MS et al look silly.
Market cap is a completely nonsensical way of saying "what's the largest company". Market cap is simply whatever irrational price the market has placed upon a company, and has zilch to do with its actual value as a cash generating engine.
For that, one has to look at book value or intrinsic value, as defined by Graham, Dodd, Buffett and others in the value investing fold. Book value (or carrying value) is simply assets minus liabilities minus intangibles (e.g. goodwill, the paid in capital during acquisition of other companies in excess of their book value). Intrinsic value, more or less, includes the net present value of discounted cash flows looking probably five or six quarters forward (any more than that is pure speculation as companies tend not to forecast out more than a year or two from the known inputs into their business).
A third way of looking at it is net working capital plus net operating cash flows... paring it down to inventories on the balance sheet side (working capital) and cash flows related directly to the sale of their goods/services, and not via financing activities, acquisition, etc. This is a really strong measure of how powerful a business is. By almost all of these measures, Apple is pretty strong, but their market capitalization seems to have them overvalued several times relative to what their future cash generating ability truly is.... which is why you won't see any offers for acquisition any time soon, not that Apple would entertain any of them anyway.
Although Apple is on top at the moment, they have a very volatile stock. This tend to discourage long-term investments generally accounts for less than 15% of a well balanced portfolio. Microsoft and also Exxon on the other hand have a stable stock price and they both tend to play it generally safe. It might not please stock holders who were looking to make money quickly but perhaps is how a company can achieve more maturity.
So yeah, they are big now but they might be tiny in a few months.
Views expressed do not necessarily reflect those of the author.
(oblig)
Is that SJ and Tillerson duking it out, mano a mano?
Are they launching missiles at each other's corporate HQs?
No, I didn't think so. They're just minding their businesses and the stock market is setting a price on their shares. Hardly what I'd call battling it out. Strange metaphor.
Here is another way to think about it.
What if the company disappeared over night? How "important" are these companies?
If Apple disappeared, people wouldn't have their toys and music anymore and people who actually get work done with Apple products (like designers or movie editors) would have to migrate to other platforms like Linux or Windows.
If Exxon disappeared, the world would have a temporarily huge reduction in the available oil until competitors could pick up the slack which could take a long time in which case the whole world will fall apart (only slightly exaggerating).
So I say that Exxon is way more important than Apple.
By that metric, Microsoft, IBM, and Oracle are also way more important than Apple.
With the recent spurt in the stock price, Microsoft's market capitalization has reached nearly $600 billion, putting it back in first place ahead of General Electric's $475 billion market cap.
Tech stocks are a bit more volatile than that of oil companies. Back then, Microsoft looked even better than Apple does today, virtually unstoppable.
With guaranteed yearly revenues from over 300,000,000 paying customers and gracious lubricatory contributions from thousands of companies... Apple's and Exxon's customers and lubes don't stand a chance against that!
C'mon, this is a repackaged duplication. http://apple.slashdot.org/story/11/08/10/1928206/Wall-Street-Software-More-Valuable-Than-Oil
And THAT one was really not adding much to this. http://slashdot.org/index2.pl?fhfilter=apple+exxon Slashdot, make another pot of coffee.
Gently reply
This sentence from the last page sums it up nicely:
Most pundits would say that Exxon is the larger company by far in every comparison that matters, particularly when you're thinking about who does or does not drive the American economy.
I would go a step further and say that fossil fuel extraction is the most important sector of the economy, at least from the perspective of what makes industrial civilization possible and allows human beings to number over 7 billion. After all, the last few centuries of technological progress and human biomass growth can largely be attributed to how we've creatively employed the vast armies of energy slaves liberated by the combustion of fossil fuels to do things like power generators, run combines and tractors, and make plastics and fertilizers. And human biomass proliferated in the 20th century largely due to our ability to convert stocks of low entropy stored solar energy into edible calories and fertilizers. The energy sector (which is dominated by fossil fuels) subsidizes other service and production sectors and makes our highly complex society possible (1).
So Apple or some bank may be largest or "most important" based on some metric employing fiat currency (that's being inflated away by the Federal Reserve) or the Wall Street casino's latest valuation based on pixie dust, but energy (or more precisely, exergy) is what really matters for civilization; everything else is just playing with your food.
(1) Joseph Tainter, "Complexity, Problem Solving, and Complex Societies."
http://www.oilcrash.com/articles/complex.htm
See also:
Ayres and Warr, "Accounting for Growth: The Role of Physical Work."
http://www.fraw.org.uk/files/economics/ayres_2005.pdf
Jobs is a marketing genius. Who else could take a $50 product and get $500 for it? Now, you may say that his products are great (I don't agree but that's me) but they still aren't worth nearly the price he's getting for them.
For computers and for a share of stock. When Steve finally moves on (one way or the other), the company will go the same route it did the last time he left. He's an example of a driven visionary that jumps right through all the middle management to directly manipulate products, services and the marketing messages. How often does your CEO drop into your product meetings to tell you how to make it work or what not to do?
Oh yeah, and stress causes cancer.
In other news I completely frustrated several of my Apple buying friends by taking a 4 year old 17" laptop and spending 2 hours hackintoshing it. Its as good or better than the $2000-3000 apple laptops they've bought recently. When they said "Well, but thats not the same" I challenged them to tell me what was deficient about it or what the extra money bought them. They couldnt come up with a thing. In fact, my laptop runs faster in benchmarks than similar apple laptops, because it has a faster disk drive and ram than Apple put in them. It also runs cooler because the fan runs more than the fan does in the macbook.
The message here is that when you have a huge cost/profit built into a product that appear to be based entirely on perception, when the chief influencer of that perception goes away...so does the profit.
Unless of course you can find another really smart, really driven leader willing to kill himself stomping around Apple trying to out-do what Steve Jobs did. Good luck with that.
So yah a tech company making shiny things for the masses will be on top till the masses revolt.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
Okay then, which one pays/evades/avoids the most corporate taxes?
Visa/Mastercard > Exxon >= {Oracle|IBM|HP} > Microsoft > Apple.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
The important thing is the profits, not how 'big' they are. If you doubt it, imagine if the country of Congo were a company. Clearly Congo would be bigger than any company in the world (what company has land holdings the size of Congo?), but they would be making $11 billion a year (GDP). Not really good.
The fundamental reason for a stock having a particular price is the profit (or, future profit.....no one wants to hold stock in a company that makes less each year).
There is no doubt that Exxon is bigger, look at its revenue! (370billion vs 65 billion for Apple). But it doesn't matter which is bigger, it matters which will be making more profit. Their current profit is a lot closer, with 30 billion for Exxon and 14 billion for Apple, and on current trend, Apple will close that distance within three years.
"First they came for the slanderers and i said nothing."
It's the largest entity run by corporations.
I would rather own a firm that has a net worth of $10 billion and zero profit than a firm with a net worth of $0 and, say, fifty million in annual profit.
From the perspective of the owner, the firm's profit is not the only thing that matters. It is one metric among many--albeit it an important one.
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
First of all, would it have killed them to update their fucking metrics? Hello? Does anybody in journalism do anything other than repeat old articles anymore? This is ridiculous.
Second of all, this:
is bullshit. The banks have all the money because they designed our financial system that way! They are important on paper because they are the ones writing the papers. But is what they do really that complicated? or difficult? or important? That's a different question entirely. Our society is run by mindless penny-penching bureaucrats, but they're not the ones doing the work, keeping the lights on, and inventing new things. And after looking at all the shenanigans they've pulled over the last decade, it's hard for me to believe that we'd really all be worse off if they all went out of business tomorrow.
I'm not surprised - Steve Jobs has the personality of Charlie Manson.
Largest, in terms of average belt size.
Have gnu, will travel.
"Market cap" of bid shares is bogus. What happens after the first 10% (or 1% or less) of shares get sold? The price goes down. This is especially true for volatile, speculative, or foward-looking stocks where there are comparatively few buyers who are willing to bid a high price, as opposed to a company like Exxon that has reserves in the ground and the price is more readily and more universally agreed upon and the bids have "depth" that strongly support a price not much less than the highest bid price, which is the only thing that gets reported on Yahoo! Finance and even the vast majority of brokerage accounts.
This distinction between reporting highest bid only and the full depth of bids (e.g. NASDAQ Level II Quotes) is ignored by the mass media (e.g. in stories such as this one) and is one of the ways that Wall Street and also the Plunge Protection Team can manipulate markets -- naked shorts are another and can be used in conjunction.
A truer market cap calculation would take into account the dynamic price and would use the full depth of bids as an indicator and input into a model.
Which CEO thinks he has the biggest dick? It's about as relevant.
Hypothetically, what if it was GM? And what would change if GM was just a holding company and Chevrolet, Buick and Cadillac were listed separately?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I don't think there is an overriding means of detecting book cooking in the short term. Auditors can be - and prominently have been - compromised. Accountants can pretty much manipulate the results any way they want. That may be what accountants are for. In the longer term - say, a decade or more - if a company reports year after year that they had vast profits and cash flows and don't still have the cash but didn't pay it out as dividends and stock buybacks it might be appropriate to ask "where did it go?" Apple appears to be pretty square on this measure, but at least one major tech company makes me curious on this metric.
Help stamp out iliturcy.
When a company has a huge holding of treasury stock it can use that as power in the market to pay for mergers in stock at approximately the current market value. The bigger the market cap, the less the dilution and the bigger the entity that can be acquired. So yes, size does matter. This is how AOL "acquired" Time-Warner, becoming the minnow that swallowed the whale.
Help stamp out iliturcy.
Corporate taxes are just a way for the government to hide taxes from the people who actually pay them. Any funds you raise by taxing corporations will actually come out of the pockets of the individual, either by raising the costs of goods they purchase, or by lowering the wages they earn, or by reducing the amount of money they earn on investments (and the associated fallout from that). People who advocate corporate taxes, and know this fact, typically are advocating them as a way to tax the wealthy by proxy. But the reality is that the government has little say in who will end up actually paying for government services, because that is ultimately driven my market forces.
Hipsters are willing to give up gas money for an ipod.
Profits are the money left from revenues after expenses are paid. Those expenses include taxes. Corporations own vast assets that deliver ample benefits to corporate executives and their associates, paid out of profits. When taxes rise, the corporation can choose to cut dividends to pay them. If it chooses to raise prices, that increased income would pay more taxes, so raising prices is the last way a reasonable corporation would try to make a tax neutral in effect. And raising prices means its competitors which lower profits instead have an advantage. You should also learn about price elasticity, since those competitors with lower prices will sell more units, and make a larger total profit than the high-priced one refusing to give up its high profit margins.
The market forces corporations to lower prices closer to the cost of production. That is what you free marketeers are always saying about the market finding efficiency. But when the same economics means taxing corporations, suddenly the market is powerless. Or sometimes it's the government, that all-powerful enemy of all business and all consumers, that is suddenly powerless, when it suits the cause of corporate tax evasion.
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make install -not war
Clearly Congress needs to immediately convene an investigative panel, comprising of pretentious, self-aggrandizing fluffs who must drag Apple's executives out to DC and grill them on exactly why they are so profitable, why they don't pay enough taxes and why they are charging so much for their product.
Oh wait, right, that'll never happen...
How many people they fuck over per year?
That might liven up the morning biz reports....
Try to live 6 months without your Macbook, smartphone, or iPod. Now try the same without petroleum based products. 'nuf said.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
'Market Cap' is a crock of shit and a red herring. Remember pre - 'crash and burn' Enron. I believe it had an astronomical Market Cap at it's peak of popularity, right before it got obliterated off the planet. It is an almost meaningless set of figures, or perception of value.
It's not the size, it's how you sue it.
sounds wonderful. ask all the marine life in the gulf.
The surprising thing is how little Apple actually does. Apple is really a design and marketing firm and a reseller/retailer. They don't make much hardware. (From the annual report: "Substantially all of the Companyâ(TM)s Macs, iPhones, iPads, iPods, logic boards and other assembled products are manufactured by outsourcing partners, primarily in various parts of Asia. A significant concentration of this outsourced manufacturing is currently performed by only a few outsourcing partners of the Company, including Hon Hai Precision Industry Co. Ltd. and Quanta Computer, Inc."). They resell music owned by others. They're not a wireless carrier.
Serco, the biggest company (religious cult?) you never heard of
What would your money buy if it could never buy fossil fuels? Nothing.
There is no value other than raw material equivalent, money itself has no value. These type of comparisons are just to keep you believing money in itself is something to covet.
For example, if Exxon was the biggest oil company and sells all its oil over many years and saves the income. At the end of the run, it would have trillions of dollars, but there would be no oil. What would those trillions buy? Ask a Norwegean..
The solution is roboeconomics. http://www.sunreign.com/info/Roboeconomics
Microsoft and IBM are probably too important to fail. But anything Oracle is selling can easily be replaced by, well, IBM, Microsoft, and some second-tier generic Unix vendor (including Redhat perhaps). Oracle's crown jewel, Java, is already opensource, so there's almost zero harm to Oracle just going under.
I think AAPL is building a bubble. Well, they might not be doing it, but the stock market is. There'll be a notable drop when Jobs is gone, and from there, if he's built enough of a culture, they'll do well on the business end for a while. Apple is more of a fashion company than say, MSFT, and can't leverage entrenched industry standard fundamental products like MSFT has. You never know though. HP lost a bunch of its engineering culture when Bill and Dave were gone, but they've been making bank on Canon laser printer engines for over a quarter century since. I do think there'll be a "pop" at some point.
Apple depends on Exxon a lot more than Exxon depends Apple.
I think market cap is an important metric of a company from an investor's perspective, but has only indirect relevance to the size of the company.
Basically, the largest company by market cap (roughly) is the one expected to make the highest total discounted future profits, not the "largest" which would more obviously be defined by total sales, total employees, total capital (cash, land, buildings, equipment). Exxon represents a bigger slice of the US economy, even if its profits are lower than Apples. The difference is Exxon spends more money paying employees (and indirectly income tax) and other things that don't directly improve value from an investor's perspective.
Obviously investors want to own a company that is going to net them strong profits in the future. Therefore a massive company (tens of billions in sales, hundreds of thousands of employees) is not particularly valuable if its cost of good sold and marketing expenses leave it with a profit of 0.00001% of revenue. In fact, this sort of company is high risk because a very small increase in costs could quickly send the company bankrupt. Similarly, a company that has massive revenues but averages a loss on each sale is often near worthless to an investor. It may have valuable assets that can be salvaged, but that may require a write off of a portion of its debts which will usually wipe out the existing investors.
Similarly, a company like Microsoft who has high revenue, negligible expenses and a cash mountain is an excellent proposition from an investor's perspect (unless its sales are expected to decline, but even then its got some intrinsic value simply from the pile of cash it could pay out if it decided to wind up.)
Market cap is therefore roughly a function of the investor's average expected future profits. This can swing wildly day to day as new information acquired by investors can lead to reaction (and over-reaction) based on a change in perceived future profitability (plus human nature).
The other thing to remember about market cap on any given day is it does not reflect investors in the company as a whole, but instead reflects those who decided to buy or sell shares on a given day. This is in turn influenced by the price and the information available on any given day. The classic example of this is Petrochina which briefly became the world's largest company by market cap at close of trade one day because some idiot (or maybe just some hacker doing it for the lulz) drastically overpaid for the last couple of shares bought that day.
Here is another way to think about it.
What if the company disappeared over night? How "important" are these companies?
If Apple disappeared, people wouldn't have their toys and music anymore and people who actually get work done with Apple products (like designers or movie editors) would have to migrate to other platforms like Linux or Windows.
If Exxon disappeared, the world would have a temporarily huge reduction in the available oil until competitors could pick up the slack which could take a long time in which case the whole world will fall apart (only slightly exaggerating).
So I say that Exxon is way more important than Apple.
By that metric, Microsoft, IBM, and Oracle are also way more important than Apple.
Define "disappeared." Are you saying that if Exxon Mobil "disappeared," the oil in the ground that it owns the rights to would "disappear" as well? That it's Esso/Exxon/Mobil retail outlets would become smoking craters on street corners around the world? That its employees would simultaneously be struck dead, leaving their grieving spouses and crying orphaned children?
Well, yeah, that would be pretty awful. But that's patently impossible.
Frankly, Apple (or Microsoft, or Oracle, or IBM) as an entity has contributed as much to human achievement as Exxon has ever since it was split off from Standard Oil.
Technology companies promote ideas that are beneficial.
In Apple's case it has, more than any other technology company, put esoteric technical concepts into the hands of regular people. From the first Apple II to the Mac and the iPhone, Apple has taken technologies that only an engineer could love and turned them into technologies that teenagers could love. (Slashdot, naturally, hates this "dumbing down" approach, but that's the way Slashdot geeks are.)
IBM, Oracle, (Sun) and Microsoft have made their own unique contributions (yes, really.)
Exxon pumps toxic goo out of the ground and sells it. A dozen other petroleum companies do exactly the same thing.
Is a 500k$ apartment in NY "larger" than a 1k$ old barn in Syberia?
Number of employees X how scary they are...
Fight. The biggest is the company that wins.
Sure McDonald's can field a pretty bit army, but they are all skinny teenagers, easily overwhelmed.
Apple, I've seen the folks that work at the iStore. They are not scary.
Exxon. While not all of them work on a oil rig or a refinery, I'm fairly certain they would wipe the floor with Apple.