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Apple becomes sixth U.S. company ever to be worth $500 billion

Tim Cook, Apple CEO, said the company’s board is thinking seriously about ways to use its $97.6 billion pile of cash.

Associated Press (2011)

Tim Cook, Apple CEO, said the company’s board is thinking seriously about ways to use its $97.6 billion pile of cash.

Construction of the interstate highway system

One of the more ambitious public works projects ever done in the United States was the construction of the Interstate Highway System. Between 1956 and 1991, some 47,000 miles of highway were built with the program at an estimated cost of $477 billion (estimates adjusted for inflation). With a market cap of $506 billion, Apple is worth more than the construction of the highways across America.

Entire National Football League times 10

The annual NFL football franchise valuations list has just been released by Forbes (full list here). This year - for the first time ever - the average franchise in the league is worth over a billion dollars. 15 of the NFL's 33 franchises are worth over a billion apiece. The most valuable team is the Dallas Cowboys, valued at $1.85 billion. If you added up all the value of every team in the NFL, you'd come up with some $33 billion as your total. With Apple's current market cap of roughly $380 billion, it is worth more than ten times that!

Every home in Tampa and Detroit combined

Apple is worth more than all the homes in Detroit ($153.1 billion) and Tampa ($146.3 billion) combined.

Source: World Property Channel

NEW YORK — Apple's market capitalization topped $500 billion Wednesday, climbing to a place where few companies have ventured — and none has stayed for long.

Apple was already the world's most valuable company. The gap between it and No. 2 Exxon Mobil has widened rapidly in the past month, as investors have digested Apple's report of blow-out holiday season sales of iPhones and iPads. And, more recently, Apple has raised investors' hopes that it might institute a dividend.

The company's market capitalization ended the day at about $506 billion as shares rose $7.03, or 1.3 percent, to close at $542.44.

Apple is in rare company. It is the sixth U.S. corporation to reach the $500 billion milestone, and the only one to be worth that much at current prices. Exxon Mobil, Microsoft, Cisco Systems, Intel and General Electric are the only other U.S. companies to eclipse a market cap of $500 billion, but none could maintain that lofty level.

Exxon's ascent to the $500 billion level was propelled by record oil prices. Cisco, Intel, Microsoft and GE were boosted by the general stock mania of 1999 and 2000, and the hunger for technology stocks in particular.

Apple's rise, by contrast, is powered by its mammoth sales and profits, which are growing at rates unheard of for a company its size. And despite its sky-high market capitalization, Apple's shares aren't expensive compared to its earnings. It's worth 15 times its earnings for the last year. That compares to 21 times earnings for Google and 14 times for the S&P 500 overall. Yet few companies in the index grow their earnings as fast as Apple does: In its latest quarter, its earnings rose 118 percent from a year ago, to $13.06 billion.

Analysts expect the Apple rally to have some legs. The 35 analysts who have reported to FactSet since Apple's latest earnings report have set an average price target of $592 per share, or 8 percent higher than Wednesday's level. That implies a market capitalization of $552 billion.

Apple's stock accounts for 3.8 percent of the value of the S&P 500, according to Standard & Poor's, and it made up 6 percent of the operating income of the 500 companies in the fourth quarter.

Apple has been signaling that a dividend is under consideration, and several analysts now consider it a given that one will be announced this year. Last week, CEO Tim Cook told shareholders at the annual meeting that the company has more money than it needs, and the board and management are thinking "very deeply" about ways to use the cash.

Former CEO Steve Jobs, apparently haunted by the company's lean years in the '90s, had a policy of accumulating cash. The company now sits on $97.6 billion.

Rivals' rise and fall

Other U.S. companies that have reached the $500 billion valuation mark and what has happened to them since:

• Exxon Mobil was worth just over $500 billion for two short stretches at the end of 2007, but is now worth $411 billion.

• Microsoft, now valued at $267 billion, was worth just over $500 billion briefly at the end of 1999, and again in early 2000. It even shot up above $600 billion for one day.

• Cisco Systems., Intel and General Electric peaked just above $500 billion in early 2000. Cisco and Intel are now worth a bit more than $100 billion each, while GE is worth $200 billion.

Apple becomes sixth U.S. company ever to be worth $500 billion 02/29/12 [Last modified: Wednesday, February 29, 2012 10:54pm]
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