Feb 23

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Is Apple the Most Valuable Company on Earth? Maybe Not!

It has been three weeks since Apple (NASDAQ: AAPL) announced its financial results for its fiscal 2011 quarter ended December 25, 2010. Apple announced it had record breaking revenues of $26.74 billion and net quarterly profits of $6 billion, or 6.43 per diluted share.  As summary of the prior release and some additional comments are at this earlier post

Since that time, five firms raised their 12-month forecast for the stock to an average of $467 a share. This is approximately a 32% increase from its February 8, 2011 share price of $355.20. At a $467 share price, Apple’s market value would be $433.7 billion, surpassing Exxon Mobil’s current market value of $423.2 billion. The following are the five firms 12-month forecast for Apple:

  • Needham – $450
  • Canaccord Genuity’s – $460
  • RBC – $425
  • Caris & Co. – $450
  • Ticonderoga Securities – $550

According to Bespoke Investment Group, after underestimating iPhone and iPad sales for the last year, analysts as a group have ratcheted their numbers up for Apple this year more than any other technology company. One of the driving factors for this bullishness is the launch of the iPhone on the Verizon network.

Despite its recent success, Apple does have some problems.  Its CEO Steve Jobs is currently on an indefinite medical leave of absence.  Also, Apple faces a coming threat of tablets powered by Google’s Android platform.  Jobs is the visionary at the company.  Jobs is known to make all final decisions on every single product.  If Jobs is not around, who will make these decisions?  When Jobs was fired from Apple in the 90’s by the Board of Directors, the company went into financial ruin and was close to shutting down.  In 2008, the stock lost half its value when rumors began circulating that Jobs pancreatic cancer had returned.  This drop was magnified by the banking crisis that affected the global markets, hitting a low of $82.58 in November of 2008.  Investors did not rally behind the company until Jobs retuned in June of 2009.  Apple’s current upswing could be attributed to the recent rally in the equity markets.  Job’s indefinite medical leave may not be fully incorporated in the Apple’s stock price.

About the author

Anand Khemlani

I am a founding member of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA), Accredited in Business Valuation (ABV), a Certified Fraud Examiner (CFE) and am a licensed Real Estate Broker. I regularly serve as an expert witness involving results of my forensic accounting assignments and damage analyses. My resume is available on Fulcrum's website

Permanent link to this article: http://betweenthenumbers.net/2011/02/is-apple-the-most-valuable-company-on-earth-may-be-not/


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