Tuesday, February 2, 2016

Alphabet Jump Apple to become most valuable Company




Shares of Alphabet opened nearly 3 percent higher Tuesday, pushing the technology giant's market capitalization past Apple to become the world's most valuable public company.


Alphabet has a market cap of $547.1 billion, higher than Apple's $529.3 billion as of 9:45 a.m. ET.

The median share price forecast of 31 analysts who raised price targets after Alphabet reported strong results on Monday was $924, suggesting that the company formerly known as Google could be valued at $628 billion in the next 12 months.

Apple, tracked by 49 analysts, would be valued at $748.5 billion, at the current median price target of $135.

Apple's massive market cap is still trailed by Microsoft ($425.7 billion), Facebook ($326.2 billion) and Exxon Mobil ($310.1 billion) to round out the list of the world's five biggest companies.

Billionaire investor Carl Icahn, an Apple investor, said in May that the iPhone maker was "dramatically undervalued" and should trade at $240 per share. At that price, the company would be valued at about $1.30 trillion.

Alphabet easily beat Wall Street's forecasts, helped by strong mobile advertising sales.

Alphabet's shares rose as much as 4.4 percent to $804.50 on Tuesday, valuing the company at $546.50 billion, making it the world's most valuable company - for now.

Once allies, they fell out after Google launched its own Android mobile operating system in 2008.

Alphabet was already set to take the title Monday night, before sealing the deal Tuesday morning. At Monday's after-hours levels (which technically reflect an indication, but not the real-world value), Alphabet's market cap hit roughly $570 billion, eclipsing Apple's market cap of about $535 billion. Shares of Apple opened Tuesday down nearly 1 percent.

The last time Google was more valuable than Apple was in February 2010, when both companies were worth less than $200 billion. At the time, Apple had yet to release its first iPad, the newest iPhone on the market was the 3GS, and the Mac was the company's biggest product line, accounting for one-third of revenue. Steve Jobs was still at the helm.

Google was being guided by Eric Schmidt, who would hand control back to co-founder Larry Page the following year. The company was a little more than half its current size.

Apple and Google actually flip-flopped multiple times between 2008 and early 2010, before Apple went on a historic tear, jumping from $180 billion in value to over $650 billion in September 2012. At that point, the two companies were separated by over $400 billion. In 2011, Apple passed Exxon to become the world's most valuable company.

It's hard to believe that Google was the more valuable company from the time of its IPO in 2004 until April 2008. Then iPhone madness began.

Google's latest rise versus Apple began in July. From that point through the end of 2015, its shares soared 44 percent, while Apple's sank 16 percent.

Apple's main problem is its reliance on the iPhone, which now accounts for two-thirds of revenue. It's a massive business, but sales in the fiscal first quarter increased only 1 percent from a year earlier, while iPad and Mac revenue dropped. Investors are concerned that unless Apple changes course and decides to compete with lower cost Android manufacturers on price, the iPhone's best days are in the past.


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