In November, Apple ‘s market capitalization exceeded $ 900 billion and is on its way to becoming the first US company to reach $1 trillion next year. Barron’s has had an in-depth analysis of the challenges and advantages of Apple’s $ trillion-dollar company, from equity values, profit margins, loyalty to customers.
Apple also has challenges that they must address if they want to achieve this. In 2011 saw the big upsurge at Apple in August, Steve Jobs announced he is treating pancreatic cancer and will yield to the CEO position for Tim Cook.
Two days before Apple announced the iPhone 4s that year, Steve Jobs died. After the sale, iPhone 4s made a huge hit in the market when in fiscal year 2012 they achieved 60% higher profits and stock prices rose more than 80%.
The iPhone 4s have been a success, but Apple has come under pressure with the next generation, particularly the iPhone 5 and iPhone 6 Plus. The iPhone 5 debuted a year later and saw profit drop in 2013 and the stock dropped 40% after launch. The incident continues with the next generation of iPhone 6 Plus launched in 2014, causing Apple shares plunged 25%.
That was one of Apple’s ups and downs at stock prices and now is a good time to revalue when Apple is near the milestone as the first company to reach a market cap.
$1 trillion market. No other company in the United States has ever achieved this milestone, since Rockefeller’s Standard Oil. “Other companies focus on sales or revenue, but over the past several quarters, Apple has accounted for 80% of the overall smartphone industry,” said David Rolfe, investment director at Wedgewood Partners.
This is a good example for David Rolfe: In the recent fiscal year, Apple earned $229.2 billion in revenue and profit of $48.4 billion, both with Microsoft and JPMorgan Chase plus. Remarkably, these are the second and third most profitable companies in the US.
In addition, the repurchase of shares also helped earnings per share (EPS) increase 11% to $9.21.
Apple is ice on the open road but they also have problems. IPhone sales are expected to fall next year , the stock market is in trouble or many major smartphone markets become saturated. In addition, Apple is also experiencing internal problems, such as software complaints that offend customers, make it more difficult for Apple to achieve this milestone, or simply longer.
Apple has completed a $5 billion base of missiles and may be a sign that they will have trouble in the future, from the same events of Woolworth, Chrysler or Sears in the past.
This magazine also said that Apple will be hard to become a company with a capitalization of $ 1 trillion in the near future. Apple does not seem to be pursuing superlative life-cycle strategies but moving toward sustainable growth over the years and it also indirectly affects the value of its stock.
Barron’s tracked share price from $76 per share until Apple debuted Plus machines from 2014, the stock’s value has risen to 147% since then.
“Apple does not just sell phones.” Says David Pearl of Epoch Investment Partners. “They sell you the easiest, best experience for mobile communications and computing, and revenue from services is growing faster than revenue from products.” Compared to 20 years ago, the times have changed a lot with the fortunes of Apple and Microsoft.
At the time, Microsoft was dominating Windows-based computers and Apple had to face bankruptcy, Steve Jobs was forced to leave with the company he co-founded. Jobs is back with promises of product innovation, but he and Apple need more cash than ever. Fortunately, under pressure from the antitrust laws, Bill Gates agreed to invest $150 million in Apple. At that time, Apple was valued at $1.7 billion, or about 1% of Microsoft’s value.
Then Apple went to the iMac, then the iPod later helped revitalize the music industry with iTunes, and the Apple Store and iTunes Store sold music and movies like never before.
Today, Apple has about 900 million customers, many of whom purchase services including music streaming, movie rentals, applications, cloud storage, warranty extensions and billing. With a 23% increase in the fiscal quarter, services accounted for 13% of Apple’s total sales, and about 20% of profits.
iPhone generates 60% of Apple’s revenue and about 800 million active machines, creating the infrastructure for Apple to sell the service. A recent UBS survey in five key markets showed the highest loyalty of iPhone users was 85%, compared to 71% for Samsung and 78% for Android.