Slashdot Mirror
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."
...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.
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.
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.
what is the future of a civilisation whose most capitalised stock is gadget manufacturer?
They're not a gadget manufacturer (though they are also that). They are mostly an entertainment company. Just like the good old days of RCA, when they ran broadcasts, and sold televisions too ... to make sure that people could get their broadcasts.
It's not at all surprising that a company that makes money delivering entertainment, services, and other IP-ish stuff (iTunes, the App Store, etc) is huge. Because the US has a huge hunger for that sort of stuff. And that stuff is hugely more marked up than are distilled oil products, for which the profits are very slim.
Don't disappoint your bird dog. Go to the range.
Cash flow isn't the same as profit. And it is somewhat tempered by the comparison that MS has twice the number of employees as Apple. Bear in mind Apple counts their employees slightly differently than MS. Apple has lots of part-time retail employees while MS has far fewer. Apple uses the equivalent employee hours where it counts 40 hours of a part timer as a full time employee. It is not completely 1:1 as full time employees normally receive benefits that part-time ones; however, this may be offset by other overhead in hiring and maintaining a part-time labor force.
Well, there's spam egg sausage and spam, that's not got much spam in it.
It's highly doubtful that Steve Jobs would be amenable to a buyout in any case, even if someone had cash. In any case, the Apple board will follow Steve's lead and any attempt at a hostile takeover would almost certainly fail or else destroy the value of Apple in the process. Like it or not Apple is Steve Jobs and he is Apple. Without Steve, Apple would be just another me-too tech company; long since acquired by the likes of HP, IBM or even Microsoft.
EPS is only relevant for a company with no foreseeable change in demand.
Every tech company has a high uphill to remain relevant. Apple's iPhone was/is pretty cool, the Motorola RAZR was pretty cool, the blackberry was cool, Windows XP was pretty cool, Windows 95 was cool... etc etc You can't just sit on what you have and make money. Your against the clock
An oil company similarly has limited oil supplies and must keep exploring, but those don't deplete nearly as fast as relevance depletes does for a tech company (also don't forget oil companies are becoming 'energy' companies as they move away from oil).
Apple's iPhone is already feeling... dated to me. Its weird but when I hold my wife's iPhone 4 it just feels old compared to my Atrix even though the iPhone does many key features better than the atrix and motoblur isn't exactly the spiffiest interface out there. Her home button issues don't help at all (randomly quits working). Eventually she'll get like me and say "well, I'm not buying another Apple product again" after she gets fed up with all its quirks and shortcomings like I did with my iPhone 3G.
Apple's market capital is driven by speculation, but its probably the wrong kind. Some people buy into apple because they think it has a future, others buy into it because it seems to be more resistant against market swings as a large-cap stock and because it's had a long-term growth trend. The rest are bots running an algorithm that will continually drive up the price of the stock until something triggers them to decide the stock is going to go down... Then those bots will drive down the price of the stock when they go bearish on it. It is likely Apple's price/share is too high given their long term viability, but you do have to give credit to the fact Apple has built their long-term income on their iTunes store which people will probably keep on using well beyond when they decide Apple's hardware just isn't the best item to buy with their money.
However, when someone major starts selling songs cheaper than apple while at the same time giving more money to the creators of the content being sold, then I would say apple is in trouble. At that point, creators may stop using apple as a distribution source