Apple Passes Exxon to Become Most Valuable Company
(Corrects percentage gain for Apple in second paragraph.)
Apple Inc. (AAPL), a company that was on the brink of bankruptcy before Chief Executive Officer Steve Jobs returned as chief executive officer in 1997, passed Exxon Mobil Corp. (XOM) to become the most valuable business in the world.
The stock rose as much as 4.7 percent to $369.89 at 2 p.m. New York time on the Nasdaq Stock Market. The shares have climbed more than 13 percent this year, fueled by sales of the iPad and iPhone, and a burgeoning business in China. Exxon, the largest energy company, fell on the New York Stock Exchange.
Apple’s ascension caps a 14-year transformation from a personal-computer also-ran into a seller of everything from smartphones to digital music. Apple has already eclipsed Microsoft Corp. (MSFT),International Business Machines Corp. (IBM) and Intel Corp. (INTC), whose dominance of the technology industry in the 1990s helped nudge Apple to the fringes of the PC market.
“The Apple of today is different from the Apple of even a few years ago,” Shaw Wu, an analyst at Stern Agee & Leach, said in an interview. “People who buy Apple tend to buy big and get your friends and family to do it as well. There’s nothing else like that.”
Apple may as much as double computer sales over the next few years, while the iPhone business may triple, Wu said. If successful, Apple’s new iCloud music and information-storage service may help the company add millions of new users.
Jobs, who co-founded Apple at the age of 21, was ousted by the board in 1985. When he returned to the company 12 years later, it had run up $1.86 billion in losses over two years. Apple was 90 days away from bankruptcy, Jobs would later say.
Passing Exxon
He engineered the company’s comeback by honing Apple’s industrial design, tightly integrating software with hardware, and pushing into new markets, such as phones, music and tablets.
The stock price gives Cupertino, California-based Apple a market capitalization of about $340 billion, topping the $338 billion value of Irving, Texas-based Exxon. Apple’s shares are up from an adjusted $5.48 on Sept. 16, 1997, the day Jobs returned to the company.
The iPhone, introduced in 2007, has become Apple’s best- selling product and turned the company into the world’s biggest smartphone maker. After winning customers away from Research In Motion Ltd. (RIMM) and Nokia Oyj, Apple is now sparring with Google Inc. for leadership in the market for mobile-phone software.
Apple’s profit more than doubled last quarter to $7.31 billion on revenue of $28.6 billion. The company had record sales of iPhones and iPads -- products that didn’t exist five years ago and now account for about two-thirds of sales. Apple has accumulated $76.2 billion in cash and other holdings.
iPhones, Oil
IPhone sales rose to 20.3 million units last quarter, buoyed by overseas demand, particularly in China, Apple said.
The company stoked recent growth with a new version of its Mac computer operating system called OS X Lion, along with updated computers. Its new iCloud service, meanwhile, will let users store, synchronize and access files from different Apple devices.
Exxon has tumbled since trading in July at more than $85 a share, as oil futures in New Yorkhave dropped. Crude fell as low as $75.71 a barrel today, the lowest price since Sept. 29 on an intraday basis. Exxon last year bought XTO Energy Inc. to tap natural-gas shale deposits in North America and is seeking to buy more gas reserves, even as futures remain about $4 per million British thermal units.
“Two things that I would definitely say have hurt Exxon are lower oil prices and its increasing reliance on natural gas,” said Philip Weiss, an analyst at Argus Research in New York who has a “buy” rating on the company and whose family owns some Exxon shares.
Source - [ bloomberg.com ]
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