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Apple's market value hits $623.5 billion

Apple's surging share price makes it nominally the most valuable company of all time, surpassing rival tech firm Microsoft's $616.3-billion valuation in the late 1990s.

August 21, 2012|By Andrea Chang and Salvador Rodriguez, Los Angeles Times
  • The Apple store in New York.
The Apple store in New York. (Don Emmert/AFP/Getty Images )

Check off another milestone for Apple Inc. — it's now the most valuable company of all time.

The technology behemoth achieved that distinction with the latest jump in its seemingly irrepressible stock price. Apple shares have been on a steady uptick for years, and investors now value the company at $623.5 billion.

That surpassed the previous high of $616.3 billion, not adjusted for inflation, notched by rival Microsoft Corp. at the end of the late-1990s dot-com boom.

To put that in perspective, Apple is now worth 17 times as much as Ford Motor Co., seven times as much as McDonald's Corp. and three times as much as Warren Buffett's Berkshire Hathaway Inc. Among tech companies, it's six times as valuable as Amazon.com Inc. and 13 times as valuable as Facebook Inc.

It's a remarkable feat, even for a company accustomed to superlatives. Apple grew rapidly after launching from a Silicon Valley garage in 1976. But it stumbled badly in the 1990s after forcing out a young Steve Jobs several years earlier.

"It's the pinnacle of the American dream," said Peter Misek, managing director at Jefferies & Co. "You start a company from scratch, it nearly goes to zero, and then it comes back and becomes the world's most valuable company."

Just a decade ago, Apple was nowhere near where it is today — both in consumers' minds and on Wall Street. The 2007 introduction of the iPhone, coupled with the launch of the iPad tablet a few years later, changed Apple's fortunes by turning tech gadgets into must-have items for legions of rabid fans around the world.

"It's quite amazing," said Shaw Wu, a tech analyst at Sterne Agee. "At the end of the day, this is the best mega-cap growth story out there by far."

Despite its bright prospects, however, the bulk of the gains in Apple's stock price has come in the last four years. Shares traded in the $20s in 2004, reached $85.35 at the end of 2008 and closed Monday at $665.15.

The fervor for Apple shares has some analysts worried, given the boom-and-bust cycles that have struck even the mightiest tech companies. Microsoft, which closed Monday at $30.74, has traded around that level for much of the last decade, never coming close to its all-time peak of about $60 in late December 1999.

To give Apple something to shoot for, Microsoft still holds the world's most-valuable-company title when adjusted for inflation. And Wall Street already is percolating with talk of Apple's next landmark: becoming the first $1-trillion company, which some analysts say is a year or two away.

But any sort of unexpected stumble could cause a sell-off of Apple.

"Right now, I'm keeping my sell rating, and I think investors should take the profit in advance of the iPhone 5 release," said Longdley Zephirin of Zephirin Group Inc.

Apple's stock has been on a swift upswing since rumors began in the spring that the company was working on the big iPhone upgrade. Since mid-May, shares have jumped more than 25%.

Although Apple hasn't officially announced the so-called iPhone 5, excitement has been building for the revamped device that is said to feature a larger screen, high-speed 4G LTE connectivity, a better camera, faster processors and a smaller dock connector. An unveiling of the phone is widely rumored to be Sept. 12, with products to begin hitting store shelves by the end of September.

Wall Street has also been buzzing with speculation that Apple will introduce a smaller, 7.85-inch iPad to compete with rival tablets such as Amazon's Kindle Fire. And there's a rumor that Apple will also introduce an iTV television set, although most analysts say a TV announcement won't happen until late this year or next year.

"We think Apple has one more trick up its sleeve, at least, and it's going to change the living room," Misek said of the iTV.

The company's stock rally over the last few days has been a nice rebound for Apple, which saw shares tumble last month after releasing a disappointing third-quarter earnings report — a rare miss for a company known for reporting blowout numbers.

One problem last quarter: Many consumers appeared to be waiting for the next upgrade of the popular smartphone, and that caused sales to drag. Apple officials acknowledged during last month's earnings call that sales of the current iteration of iPhone had been hampered by speculation over new products in the pipeline.

With substantial growth opportunities in many international regions, new potential product categories and a fiercely loyal customer base, Apple shows no signs of a slowdown, analysts said. Many have raised their target price for Apple shares, and Wu is among those who say the Cupertino, Calif., firm could become the world's first $1-trillion company.

"It could get there," he said. "To support a trillion-dollar valuation, we're talking about a company that could be making $80-, $90 billion in net income annually, and it's possible in a couple of years."

andrea.chang@latimes.com

salvador.rodriguez@latimes.com

Times staff writer Walter Hamilton contributed to this report.

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