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Apple now twice as large as the world’s second biggest company

Luke Johnson

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Apple’s unrivalled growth has hit new levels, with the iPhone maker now more than twice as large as the world’s second biggest company, Exxon Mobil.

With September’s iPhone 6 release having prompted record-breaking iPhone sales towards the end of 2014, Apple’s share prices have jumped to stratospheric new heights in recent weeks.

When paired with the recent slump in oil prices, the Cupertino-based company has further extended its valuation gap over Exxon.

At the close of play yesterday, February 23, Apple’s shares were up 2.7 per cent to $133, taking the company’s market cap to a staggering $765 billion (£496bn).

At the same time, Exxon Mobil’s shares dropped 1 per cent to $89.01, shrinking the company’s market cap to a meagre $374 billion (£243bn).

According to the Wall Street Journal, it has been 30 years since the world’s largest publically listed company was valued as more than twice as much as its closest competitor.

Back in the early ‘80s, IBM extended its valuation gap over Exxon by a massive 140 per cent.

Related: iPhone 6S release date

Despite Apple’s share prices having already risen 21.7 per cent this year alone, the company’s big new product is still yet to hit retailers.

The Apple Watch is set to go on sale with prices starting at a premium $349.

With many predicted the Apple Watch will help turn smartwatches into a mainstream proposition, the company’s share price could yet rise further.

Prem Desai

February 25, 2015, 7:21 am

Slightly misleading headline - Apple is the most "valuable" company, not the biggest.

"Biggest" implies size. In terms of size (employees, assets, etc) it is absolutely minuscule compared to the giants.

Just being pedantic. Ultimately, the news that Apple is so cash rich does not change!

Jmac

February 25, 2015, 9:21 am

Prem, if we're going to be pedantic, Apple's market capitalisation (the $765bn quoted in the article) doesn't directly mean Apple is cash rich. Market cap is simply current share price multiplied by number of shares in issue. It's a measure of "what the market thinks the company is worth", though it is clearly much more complex than a simple summation of assets and liabilities (hence crazy valuations for tech companies whose assets consist of three geeks in a garage full of cobbled together servers and which have never turned a dime of profit...). Obviously when new shares are issued, that results in an increase in the cash balance of the company, but an increase in share price doesn't have the same effect (unless new shares are issued), and companies usually need to deploy capital to generate income, so cash raised on new share issuance will usually be quickly spent.

Of course Apple IS enormously cash rich - something on the order of $100bn of cash on books IIRC. They could distribute some of this back to shareholders in the form of dividends (which generally results in a diminution of market cap as the share price drops to reflect the reduction in asset base) or concentrate ownership of existing shareholders by a share buyback programme (which also generally results in market cap - through a reduction in number of shares in issue, rather than price per share - falling as the asset base is reduced), though interestingly (to me anyway - I'm a tax lawyer so YMMV!) large reserves of cash are "trapped" in Apple's non-US subsidiaries because bringing the cash back to the parent company would trigger a big US tax liability. Apple (and many other US headquartered multinationals) are constantly lobbying government for a repatriation tax holiday to allow them to bring cash home at a reduced tax cost.

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