Google Passes Apple as World's Most Valuable Tech Company (in One Measure)

Discussion in 'Android News' started by dgstorm, Jun 27, 2013.

  1. dgstorm
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    dgstorm Editor in Chief Staff Member Premium Member

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    Some financial analysts at the Wall Street Journal have used a unique, yet quite logical method to determine that Google has actually already passed Apple as the world's most valuable technology company. Currently, Apple sits a total market capitalization of $378 billion , while Google sits at a total market cap of $286 billion. Obviously, when taken at face value, Apple is more valuable than Google; however, keep in mind that these figures reflect the included total cash reserves of the two companies. Apple is sitting on $145 billion in cash, and Google is sitting on $45 billion in cash.

    The analysts make the valid analogy that if you were to buy a hose for $378,000 dollars but found $145,000 in cash it the attic, then that house really only cost you $233,000 dollars. Conversely, a house that cost $286,000 with an attic full of $45,000 dollars is actually worth $241,000. Thus if you strip out the cash reserves when determining the value of these two companies, based upon their stock valuation, then Google's "enterprise value" is a little bit ahead of Apple.

    Of course, this admittedly does seem like a bit of mathematical wrangling. Also, if you were buying a house with these characteristics, who wouldn't choose the first option? Still, the chart above does show the volatility of Apple's stock, while Google's has steadily grown. Do you think this disparity will balance over time, or will Google continue to outpace Apple and eventually surpass them in all financial measures?

    Source: WSJ
  2. johnomaz
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    johnomaz Well-Known Member

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    Frankly, Apple's stock was artificially inflated. I have no doubt that all the people that loved to plug apple that have influence in the stock market were paid well under the table by Apple and many people made lots of money in the process. Google provides many services and products and have maintained a high trading price for quite some time now.
  3. gadgetrants
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    gadgetrants Well-Known Member

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    Man, that's one expensive hose. :icon_eek: (Sorry, couldn't help myself!)

    -Matt
  4. jntdroid
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    jntdroid DF Super Moderator Premium Member

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    I'm sorry, but that is the most ridiculous logic I've ever heard... lol. We're talking about knowns, not unknowns. You can't just strip the cash balances out as if they don't matter and then use that assumption to turnaround and build an analogy that fits the point you're trying to get across (I'm looking at you WSJ!). I do think it's a valid point to take into consideration just the enterprise value, or the value of their operations as the author puts it. But if you're going to do that, you have to factor in the power of having a lot of cash - it is a huge enabler, especially for tech companies that can dip their fingers into new areas.

    @John you also bring up a good point that tends to be overlooked... while search is their number one money-maker, Google clearly provides a lot more than that, and they can do so for cheap/free because their search business is so huge. Apple has, pretty much, the exact opposite business model. I read something somewhere recently that I thought summed them both up pretty well... I don't remember the exact verbiage, but the gist of it was this: Google has always provided the most functional and useful services, Apple has provided the highest quality and most refined products. Right now, it would seem, Google is streamlining and refining at a faster pace than Apple is able to provide/produce more useful services. Though, one could argue that Apple isn't necessarily trying to do that, at least that's what they're trying to put out there.
  5. mountainbikermark
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    mountainbikermark DF Super Moderator Staff Member Premium Member

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    If Apple decides to get back into innovation and other things that make long term investors happy they'll flatten back out on an upward curve. With their mediocre changes, lack of foresight, sales numbers coming in well below projections, court battles (that they initiated) coming back to haunt them and a general apathetic attitude otherwise it's no wonder the investors are nervous and looking elsewhere. With Google being so spread out in their portfolio they can absorb changes in market share.
    Google is acting more like Samsung and Philip Morris by divesting into many avenues. Apple is acting more like Sears and HTC by their actions of plugging a sinking ship with a piece of bubble gum

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  6. jntdroid
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    jntdroid DF Super Moderator Premium Member

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    Someone recently said Google could be the GE of the digital/internet age... in some ways, I don't think that's out of the realm of possibility.
  7. mountainbikermark
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    mountainbikermark DF Super Moderator Staff Member Premium Member

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    Motorola of yesteryear comes to mind also. Ironic/cool that they're part of the past and future. If what I read is true that they're going to start making their handsets back on U.S.soil I will probably buy Moto as my next phone.

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  8. jspradling7
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    jspradling7 Active Member

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    Cash does matter. If both companies invested that cash what would their values be then? Also, a company able to sit that much cash is a much more stable investment to many investors as they are better prepared for a storm or to jump at an acquisition opportunity.

    On the other hand, if "I" had a million bucks that I needed to invest with one of those two it would go to Google in a heartbeat. I'll back the horse that seems to be in tune with where the markets are going not the horse that seems to be trying to figure out where to go.
  9. kodiak799
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    kodiak799 Well-Known Member

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    That's partially true in so far as removing any sort of debt overhang, but it completely ignores valuation and growth expectations. True for debt, much less true with regard to equity.
  10. kodiak799
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    kodiak799 Well-Known Member

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    Also, there's a huge herd mentality in investing. Apple soared to bubble levels, and it's now been deflated to much more realistic valuations. In fact, investors are probably now more negative than justifiable.
  11. mountainbikermark
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    mountainbikermark DF Super Moderator Staff Member Premium Member

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    I saw an ad for Apple earlier today on tv that the theme was "this is who we are" kinda going all nostalgic. To me it screamed desperation to go to that. To try to counter Samsung "the next big thing is here" with that type of marketing, to me at least, shows they're after the baby boomers and have given up on trying to win anyone under 55 years of age .

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