Apple Largest Cap of all Time? Hardly, and Neither is IBM

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Apple Largest Cap of all Time? Hardly, and Neither is IBM

On Monday, Apple Inc.(NASDAQ:AAPL) market value surpass the record set by Microsoft Corporation (NASDAQ:MSFT). Up to now, Apple Inc.(NASDAQ:AAPL)’s shares have gained 64 percent, prizing it with market capitalization of $623.5 billion, which is more that the Microsoft Corporation (NASDAQ:MSFT)’s 1999 value of $620.8 billion at time of technology boom. However if the 1999 peak figures are adjusted for inflation, Microsoft Corporation (NASDAQ:MSFT)  retains the title of history’s most valuable company. Microsoft was worth about $850 billion after adujsting for inflation. Apple would need to rise approximately 35% to beat this record.

An initial report by Ryan Chittum Columbia Journalism Review notes , after taking in inflation, it would be International Business Machines Corp. (NYSE:IBM) listed as the historic winner, with a 1967 value of $1.3 trillion. Apple’s $661 billion market share does not account for inflation.  With inflation in account, IBM remains the historic winner with a 1967 value of $1.3 trillion. This has been noted all over the internet, but it’s false.

The author notes that he made a mistake stating:

CORRECTION: Let me rap myself on the knuckles here for the above update, which was flat incorrect. As commenter JD points out, IBM’s 1967 market cap was not $1.3 trillion in real dollars, it was $192.3 billion. The NYT’s data was already adjusted for inflation.

This is the New York times chart which he refers to:



Apple overtook the oil giant, Exxon Mobil Corporation (NYSE:XOM), to capture the top spot by market capitalization last year, but after yesterday’s trading it has now displaced Microsoft from holding the title of biggest company ever, in terms of market value. This month the iPhone makers shares have gained 9 percent as the investors wait eagerly for the latest version of the iPhone, the device that revolutionized the mobile industry. It’s common for smartphone maker’s shares to gain in the run-up to major product launches.

“A key question for the launch will be Apple’s expected rollout schedule,” the analyst wrote on Monday. “Apple’s intention is to continue to ramp offerings as quickly as possible, but the company’s ability to do so remains a key near-term question.”

What’s impressive, is that the iconic achievement comes despite facing the death of its co-founder and creative genius Steve Jobs in October, and also after posting less than expected quarterly sales and profit gains. The company’s new milestone is also special, as it has been achieved without introducing a major new product line since the iPad, announced in early 2010.

Now every eye will be on Apple, as to how it will continue to post such impressive growth. It will be a big challenge to attract customers with expected future products, including an iPhone with a bigger screen and a smaller iPad. The iPhone company also plans to revolutionize the television business with a device that can carry live television. Almost similar challenges were faced by once-dominant companies like Microsoft, General Motors Company (NYSE:GM), and International Business Machines Corp. (NYSE:IBM) etc.

“It is one of those iconic companies,” says Richard Sylla, professor of financial history at New York University’s Stern School of Business. “When I think about these companies, their products were used by all kinds of people and their leaders were considered geniuses.”

There are other companies whose shares hit new heights in 2012, like Wal-Mart Stores (NYSE:WMT), whose shares were at all time high last month; International Business Machines Corp. (NYSE:IBM) hit record highs in April above $200.

This might seem like a moot point, but its important. An imaginary company worth $100 billion in 1900 would far surpase Apple, so would a company worth $850 billion in today’s value. Inflation is an important factor for any investor. The media likes to get excited over records, and perhaps this is the reason they overlooked inflation numbers, as Ryan Chittum points out in his article.

Furthermore, According to the experts, the title of the most valued company changes with time, as new companies will come with new and improved products and will surpass the current company’s, the cycle will go on and on. “Capitalism is creative destruction, and as we speak, someone probably is plotting a product that will steal Apple’s thunder,” says NYU’s Mr. Sylla. “Apple will sell a lot of products, but I suspect that their reign as the most valuable company in the world won’t last for more than another few years.” He added: “These products can be imitated and they will be imitated.”


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