AAPL Target Price: $450 Per Share

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    Posted: 26 September 2010 03:21 AM #16

    Great discussion.

    The question of “should Apple be worth more than Exxon on a market cap basis?” will be coming when AAPL gets to around $340 (assuming XOM doesn’t move much in either direction).

    I was wondering if there were some readily available historical “highest market cap” company data, so we can arm ourselves with knowledge and perspective as that debate heats up.  Luckily, Wikipedia has just such a resource: http://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalization 

    Some highlights:

    Highest market cap company in Q2 2009:  Petrochina, $366.7B
    -Q2 2008:  ExxonMobil, $465.7B
    -Q4 2007:  Petrochina, $724B << $724 billion?!
    -Q4 2006:  ExxonMobil, $446.9B

    Going back in time a little…
    -End of calendar Q1 2001 (end of dot-bomb era):  General Electric, $477.4B
    -End of calendar Q1 2000:  Microsoft, $586.2B

    Other interesting tidbits: 
    -In FY2001, GE had about $13.8B in earnings (after insubstantial accounting change), on $126.4 in revs.
    -In FY 2007, PetroChina apparently had $114B in revs (up 29%) and $19.9B in net income (up 9.3%).
    -In FY2008, ExxonMobil had $459.6B in revs and $45.2B in net income. (+17% YOY revs, +11% YOY earnings).  Yup, in 2008 you could buy ExxonMobil, in theory, for the low low price of a single year’s revenues, more or less raspberry.

    Given the company, I think Apple could wear the mantle of “world’s most valuable company by market cap” quite comfortably, with quite a bit of room to grow from Exxon Mobil’s current $314B in market cap.

    [ Edited: 26 September 2010 03:59 AM by Mav ]

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 26 September 2010 04:21 AM #17

    Apple may surpass XOM in market cap by the end of December quarter or as late as the 1st calendar quarter of 2011. There’s no denying Apple’s revenue and earning growth trajectory for FY 2011 and as revenue and earning scale so will the share price. What’s interesting about Apple’s current valuation is that it remains at a deep discount to current rates of growth.

    As I mentioned in today’s blog post, Apple will have grown revenue four fold by the end of FY 2011 in four fiscal years.

         
  • Posted: 26 September 2010 04:22 AM #18

    Apple has a good chance to scale $400 plus as it continues to innovate and execute.  That is Apple corporate DNA, and it has no peer.  Although I don’t see Apple growing complacent, I do see competitive forces that are making Apple the focus of their collective response.  Intellectual property is not well protected by patent law, so a lot can happen in a year.  And projecting YOY growth is easier than quantifying the response of some big players in the space within which Apple dominates.  It may be Apple’s lead to lose, but don’t count out HP’s WebOS nor Chrome on HTC-led hardware.

    It will be interesting to watch and rewarding for Apple shareholders if current trends continue.  But Apple has painted itself a very big target.

    [ Edited: 26 September 2010 04:26 AM by ByeTMO ]      
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    Posted: 26 September 2010 04:35 AM #19

    It has for years.  Apple failing to execute on a high enough level isn’t as much of a concern for me.  Holding the iPhone 4 says so much about Apple’s innovation and integration lead, as well as how well Apple understands innovation and integration.  More intense competition will only spur Apple onto greater things.

    It’s tough when you’re up against a megabillion customer-responsive company that acts like a startup and spends its virtually unlimited cash with laser focus.  What do Samsung, HTC, Motorola do?  Why are their products’ fit and finish behind Apple’s?  There’s no real secret, Apple just plays the game far better than anyone else.

    [ Edited: 26 September 2010 04:39 AM by Mav ]

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 26 September 2010 04:46 AM #20

    Mercel - 26 September 2010 07:22 AM

    Apple has a good chance to scale $400 plus as it continues to innovate and execute.  That is Apple corporate DNA, and it has no peer.  Although I don’t see Apple growing complacent, I do see competitive forces that are making Apple the focus of their collective response.  Intellectual property is not well protected by patent law, so a lot can happen in a year.  And projecting YOY growth is easier than quantifying the response of some big players in the space within which Apple dominates.  It may be Apple’s lead to lose, but don’t count out HP’s WebOS nor Chrome on HTC-led hardware.

    It will be interesting to watch and rewarding for Apple shareholders if current trends continue.  But Apple has painted itself a very big target.

    A few points:

    You’re right. In addition to Apple, shareholders shouldn’t become complacent.

    HP has a lot of work to do in reintroducing the WebOS and building a customer base in the enterprise and consumer markets. Google’s now in a bind. Android was not intended for tablet products and its scalability is in question. Chrome has been under development to compete with Windows in the netbook market. Competing with Apple in the tablet market is a whole different ball game. It’s not to say Apple’s lead is insurmountable. But there’s enough room for growth to support multiple players in the market while maintaining current rates of revenue and earnings growth for AAPL in FY 2011.

    There isn’t a competitor currently in the market that draws revenue and earnings from handset sales, retail margin and the sales of apps and advertising.

         
  • Posted: 26 September 2010 08:41 AM #21

    Since the iPod, the tech,entertainment, and communications industries have been trying to fashion a response to the outside the box innovation that is Apple. It’s not that these companies lack the creative talents, it’s simply that the individual companies and industry segments do not have the tools at their disposal that Apple has assembled. Apple has gone about these industries and asked “Why not?”  and proceeded to assemble the tools necessary to “Make it so.” It is a costly dynamic they launched a few years ago and the risks are paying off. The technical leap required to surpass Apple at this point would require resources, time and talent that just might not exist.

         
  • Posted: 26 September 2010 10:50 AM #22

    Asymco covers this topic with a slam dunk.

    http://www.asymco.com/2010/09/26/apples-growth-vs-top-10-largest-market-caps/

         
  • Posted: 26 September 2010 12:25 PM #23

    danthemason - 26 September 2010 11:41 AM

    The technical leap required to surpass Apple at this point would require resources, time and talent that just might not exist.

    HP had the talent and resources at one point to put up a fight on the iPad front when Jon Rubenstein came over from Palm.  Since then, an exodus of talent that helped create the Palm Pre and WebOS has left HP.  Hurd gutted the R&D bench and HP’s Board isn’t winning any awards for decisiveness.  Can HP reverse course and resuscitate its talent pool and leadership to execute a comeback?  It’s not obvious to me they can.  And the more time passes, Apple’s advantages may prove insurmountable on its way to $400.

         
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    Posted: 26 September 2010 01:08 PM #24

    By the time most corporations have matured, most of the department heads have already marked-their-territory within the company and are waiting for retirement to start. They have become comfortable, too comfortable. New ideas have trouble emerging within the company because of the fear of rocking the boat for someone. Apple was suffering from this in the 1990s until Steve Jobs returned and started rocking the boat. He has received a great deal of criticism for his methods, but the results speak for themselves. Jobs has a passion and vision for this company that is hard to match. Having a passion and vision are not just luxuries but a necessity if a company is going to grow as Apple has grown. Until someone comes along and starts rocking the boat at Apples competitors, those companies will continue to become more irrelevant to the market place.

    :apple:

         
  • Posted: 26 September 2010 02:22 PM #25

    Mercel - 26 September 2010 03:25 PM
    danthemason - 26 September 2010 11:41 AM

    The technical leap required to surpass Apple at this point would require resources, time and talent that just might not exist.

    HP had the talent and resources at one point to put up a fight on the iPad front when Jon Rubenstein came over from Palm.  Since then, an exodus of talent that helped create the Palm Pre and WebOS has left HP.  Hurd gutted the R&D bench and HP’s Board isn’t winning any awards for decisiveness.  Can HP reverse course and resuscitate its talent pool and leadership to execute a comeback?  It’s not obvious to me they can.  And the more time passes, Apple’s advantages may prove insurmountable on its way to $400.

    I’m not looking to HP for breakthrough consumer products at the moment. Reintroducing the WebOS as a competitive force in the marketplace will take time even if the company commits to that path. I have questions about the scalability of the Android OS and Google has already committed to Chrome.

    The market has changed dramatically following the release of the Apple iPad. Netbooks no longer represent the opportunity they once did and how is Google going to integrate its operating systems for multi-product solutions?

    This is not to say competitive factors don’t exist. They do. But considering the importance of the holiday quarter to device sales, Apple has a distinct advantage moving into the final calendar quarter of the year to extend its market leadership to the point it will take competitors more than a year to adequately position their products.

    The value of content and content availability can not be overstated. Developers are key to success and app stores can not be developed or deployed overnight.

         
  • Posted: 26 September 2010 02:23 PM #26

    DawnTreader - 26 September 2010 12:20 AM

    AAPL Target Price: $450 Per Share

    My latest missive at Eventide.

    Snippet: In evaluating and forecasting Apple one must look beyond the individual product lines and look at the performance of the company as a whole. In fiscal year 2011 Apple may have a second consecutive year of 50% revenue growth and 60%+ growth in earnings per share.

    The numbers support it. I won’t deny it. We’ll see how quickly the pros revise their projections for AAPL to match the revenue, earnings and share price appreciation potential the active members of the AFB discuss everyday.

    The original topic post back for page 2.

         
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    Posted: 26 September 2010 03:41 PM #27

    MacCube - 26 September 2010 04:08 PM

    By the time most corporations have matured, most of the department heads have already marked-their-territory within the company and are waiting for retirement to start. They have become comfortable, too comfortable. New ideas have trouble emerging within the company because of the fear of rocking the boat for someone. Apple was suffering from this in the 1990s until Steve Jobs returned and started rocking the boat. He has received a great deal of criticism for his methods, but the results speak for themselves. Jobs has a passion and vision for this company that is hard to match. Having a passion and vision are not just luxuries but a necessity if a company is going to grow as Apple has grown. Until someone comes along and starts rocking the boat at Apples competitors, those companies will continue to become more irrelevant to the market place.
    :apple:

    Beautifully said!

    We may forget, but HP (which has come up in this thread and others) was once the most innovative company, the creme-de-la-creme of technical leadership, and the yardstick against which others were measured. Today they’re surviving and managing their maturity stage adequately, but I doubt they’ll get back a fraction of their former reputation.

    In his Stanford 2005 commencement speech (which I keep referencing often) Steve said of his ousting from Apple: “I felt that I had let the previous generation of entrepreneurs down—that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me: I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.”

    Packard and Noyce are gone. Bill Gates (though I don’t think his vision was as strong) retired. Brin and Page (for reasons unbeknownst to me) seem to have relinquished much of their visionary responsibility to Eric Schmidt.

    Steve has now taken the mantle and is leading the most innovative (and now the most valuable) technology company in the world to further his vision. This position is his to lose.
    :apple:

         
  • Posted: 26 September 2010 04:04 PM #28

    Roman - 26 September 2010 06:41 PM

    Steve has now taken the mantle and is leading the most innovative (and now the most valuable) technology company in the world to further his vision. This position is his to lose.
    :apple:

    This ties into my statement in the blog post: In evaluating and forecasting Apple one must look beyond the individual product lines and look at the performance of the company as a whole. In fiscal year 2011 Apple may have a second consecutive year of 50% revenue growth and 60%+ growth in earnings per share.

    To truly glimpse Apple’s potential one must look beyond the performance of any particular product line and look to the motivations of the geniuses that guide the company.

         
  • Posted: 26 September 2010 06:57 PM #29

    DawnTreader - 26 September 2010 05:18 AM
    BillH - 26 September 2010 03:18 AM

    I know this was addressed to DT but thought I’d post something I sent to my nephew in July of 2009.  This was an amplification of a discussion that started in 2007 re: my all in strategy and Apple.  I continue to believe it’s essence.

    There was a discussion in one of the bulletin boards that I frequent a couple of years ago about the likelihood of AAPL being the first trillion dollar company.  The consensus seemed to be that it was a real possibility.  That was before the meltdown of course and who knows whether stocks will ever get the kind of multiple that they once did.

    I continue to believe that the way to think about Apple is to do this:

    Microsoft + Sony + Nokia + Blockbuster + Dell + Tower Records = Apple

    Bill:

    You and I have been exchanging posts about Apple’s thematic approach to product markets for as long as I can remember. Looking at the company as a whole will always yield a better understanding of the company’s potential than looking at the individual product segments as if they existed apart from the whole.

    It has been awhile hasn’t it?  Still it seems like no more than a couple of years and to mangle Jerry Garcia’s quote…,what a strange but entertaining trip it’s been.  I’m in total agreement that Apple is best viewed as a gestalt rather than componentry.  My comment about how to think about Apples future by combining the aforementioned companies was really about market cap and not individual product branches.  I’m enjoying the commentary above re: Steve as the spiritual successor to Hewlett and others.  My tendency is more to think of him as a Jack Welch given his ability to attract and motivate managerial talent.  Senior people that don’t fit aren’t around long,  (Papermaster and Fadell come to mind), but those that do, bring stability and results. 
    I’ve tried to imagine where the storms on the horizon may develop but that is an even more difficult task than forecasting Apples product pipeline.  Microsoft still doesn’t seem committed to starting from scratch in an effort to resolve their security issues and build an OS with the proven scalability of an OSX.  Googles android doesn’t seem to scale hence chrome.  It’s also a product that seems more complex to the user without a support infrastructure like the Apple stores.  Can HP turn itself into a software company?  Not judging from my experience with their AIO drivers. 
    Their was a story a couple of weeks ago that I really should have posted.  It was a story about Detroit’s ongoing woes and that they had lost the focus of the young. No longer on the automobile, their objects of desire were now tech gadgets.  To us the automobile was the essence of freedom and the ‘vehicle’ for discovering and interacting with the world.  For our children it’s the computer…,and the phone…,and soon the iPad.  It’s hard to get ones head around the villager in China now having the same access to the world as the kid from Grosse Pointe and what that may imply.  I’m also talking to more and more people who are nearing retirement and awareness that they’ll be losing their IT support.  To a man (and worman) they recognize the need to shift to “AMac”.  wink  At least it always sounds like one word.

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  • Posted: 26 September 2010 08:09 PM #30

    BillH - 26 September 2010 09:57 PM

    I’m also talking to more and more people who are nearing retirement and awareness that they’ll be losing their IT support.  To a man (and worman) they recognize the need to shift to “AMac”.  wink  At least it always sounds like one word.

    Last year I was the conference planner for my regional professional organization (higher education institutional research, assessment and planning - mostly institutional research).

    Our keynote speaker was a retired practitioner from a major research university in Virginia.  As I helped him get his MacBook Pro connected to the projector for his keynote address, I ribbed him a bit as Windows has owned and still owns my profession.  He said:

    “When I was at Tech and had their IT and IT security infrastructure, I could use anything.  Now that I am retired and a consultant, I need something that works well without all that support, so I went Mac.”

    I use Windows at work.  My wife is a graphic artist, and I wrote my dissertation on our Mac IIvx (WordPerfect 3.5) a couple of decades ago, nothing but Mac at home since I retired my 386SX white box DOS computer a long, long time ago.