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
