On Thursday, Apple’s stock market value was higher than Microsoft and Google put together.
According to the US stock market data, Apple’s market capitalization was $ 459.82bn. Microsoft was $ 258.18bn and Google stood at $ 198.81bn.
Bill Gates, chairman of Microsoft said that Steve Jobs was an incredible person. “He did great work at Apple, particularly in the last 11 years and so it’s a huge loss,” he told NDTV in an interview at Davos in January 2012.
The stock market clearly believes in the Steve Jobs legacy and innovation at the company that has created products that captivate consumers around the world.
Here are reasons why Wall Street continues to back Apple:
• The stock market value today discounts the future. Clearly, investors see a strong growth in Apple. One year consensus price target of Wall Street analysts for Apple is 18 per cent higher than the current stock market price. For Google, it is 15.6 per cent up while for Microsoft, analysts see growth in the share price of only 3 per cent.
• Investors are buying what they are consuming. Riots in China over Apple 4S phones, long queues in US and Europe for new versions of Apple products are an indicator of the demand for Apple products. Although what happened in December 2011 quarter is already discounted by the market, basic numbers are staggering. During the quarter, Apple sold 37.04 million iPhones, representing 128 per cent unit growth over the year-ago period. It sold 15.43 million iPad units, more than double (111 per cent) of what it had sold a year earlier. Apple sold 5.2 million Macintosh computers, up 26 per cent from a year ago.
• The one year price target for Google suggests that investors continue to believe that Google will remain the search engine leader for some time. This means the company could continue to generate more revenue and profitability. For Microsoft, the low expectation suggests that the street is not convinced of the company’s ability to grow as fast. Competition from rivals like Google and Facebook has intensified.
• Investors are already hearing technology pundits talk about what Apple could do with the iPad 3, slated for March 2012 launch. The company’s products continue to capture consumers'imagination. In short, everyone is curious to know about the company’s next product. This yet again indicates a growing appetite for Apple products.
• Apple reported one of the most profitable quarters ever for any US company. Apple's net income more than doubled to $13.06 billion in the October-December 2011 quarter, boosted by strong sales of its bestsellers iPhone, iPad and Macintosh computers. The price target estimates suggest that investors continue to expect a strong growth in revenue and profitability.
• Apple generated $17.3 bn in cash in the December 2011 quarter. It has a cash pile of over $95bn now, a fifth of its current stock market value. Considering the cash it generates each quarter, the street perhaps expects a dividend either in cash or stock by the company.