Apple Marches Ahead
Rekha is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Health concerns made Steve Jobs resign abruptly as the CEO of Apple (NASDAQ: AAPL) on August 24, 2011. People were concerned about the growth of the company, they thought that without Job’s fearless and visionary leadership the growth of the company would slow down. But the speculations proved wrong and Apple’s stock continued to soar. In fact Apple’s stock has risen to 76 percent since Tim Cook succeeded Jobs.
Apple's shares recently hit a new high, valuing the company around $623 billion, surpassing the records set by Microsoft Corp. (NASDAQ: MSFT) in 1999. Microsoft with the launch of Windows 8 is expecting to be back in the race. The impending launch of the iPhone 5 and the smaller cheaper iPad seems to be the reason behind Apple’s stock hitting a new high after a four-month dip. The company makes more than half its sale from the iPhone. Reports of disappointing earnings also did not discourage the investors, expectations rested on the new iPhone, which is expected to be launched next month.
Apple’s rivals Google Inc. (NASDAQ: GOOG) and Amazon are about to start the sale of cheaper seven-inch tablets. Apple is thus all set to launch larger versions of iPad by September along with smaller iPad in view of guarding its market shares. To satisfy their customers Apple has to bring in something new in answer to it rivals. At the same time analysts believe that Apple may face problems in the dearth of the availability of components for production of both iPhone and iPad thus delaying the launch.
Where does the company stand?
Apple Inc. one of the most valuable companies since the end of the last year, is now worth 53 percent more than Exxon Mobil Corp, which now stands at No. 2, making Apple the biggest company in the terms of market value. On Monday Apple’s share closed at $665.15. The introduction of new products and its market shares may take Apple to boundless growth. Apple’s stock has room to grow, the analysts predicted. Yet the company is not expensive when compared to its earnings. Investors thus do not believe that the company can grow its sales much from what it is now. Apple should come out with a new product which could appease the customers; at present the only thing new are the higher prices. Checked prices will surely make Apple’s product more appealing.
So is Apple there to stay at the top? Well, at present it seems so. Apple is way ahead in the race. Other companies are growing strongly but the rate of growth does not seem so rapid. The market value of Exxon Mobile, which ranks second to Apple, is 35% less than Apple’s. Google is also growing rapidly, but is barely one-third of Apple’s value and is in no position to remove Apple from its present position. As of now things seems to be good for the company, with no threat at a close proximity. But the market tends to be unpredictable. Back in 1999 Apple was a mole in an ant hill with its shares valuing less than mere one percent that of giant Microsoft. None would have believed it could ever defeat Microsoft. The new giant, Apple, may one day be caught unaware and history may repeat.
But till then Apple is the biggest company. Companies like Exxon Mobil, AT&T, IBM, Microsoft etc, are no doubt big companies that can put Apple’s position at stake. If Apple keeps growing at the present rate it becomes difficult for the so called giants to get ahead in the race to the top. Apple's victory over Samsung has taken the company to new heights. Apple had claimed that Google Android was actually a copy of it's iOS. The victory now results in removal and change of certain features which will be of great inconveniance to the customers. Here again Apple takes a lead, people will be more inclined towards the original. Moreover Apple's stategic use of money and careful selection of new technologies is another reason behind their success. By the time the other companies catch up with Apple, it is ready to release it's new innovation. Investors and customers are sure to gain in any investments made with Apple.
rekhamarwah has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.