Apple joins exclusive value club

Apple's market capitalisation topped US$500 billion Wednesday, climbing to a mountain peak where few companies have ventured - and none have stayed for long.

Apple Inc was already the world's most valuable company. The gap between it and No 2 Exxon Mobil Corp 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 capitalisation was near US$506 billion at Wednesday's market close. Shares rose US$7.03, or 1.3 per cent to US$542.44.

On Tuesday, the Cupertino, California, company sent out invites to reporters for an event in San Francisco next Wednesday, apparently to reveal its next iPad model. The launch of the new model was expected around this time, a year after the launch of the iPad 2.

Apple is in rare company. It is the sixth US corporation to reach the US$500-billion milestone, and the only one to be worth that much at current prices.

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

Apple's arch-nemesis Microsoft Corp was worth just more than US$500 billion briefly at the end of 1999, and again in early 2000. It even shot up above US$600 billion for one day. The company is now worth US$267 billion.

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

China's largest oil company, PetroChina, was briefly worth US$1 trillion after it listed on the Shanghai stock exchange in 2007, but only based on its price on that exchange. Its shares also trade in Hong Kong and on the New York Stock Exchange. Based on trading there, its market capitalisation has never reached US$500 billion.

Exxon's ascent to the US$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 capitalisation, 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 Inc 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 per cent from a year ago, to US$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 US$592 per share, or eight per cent higher than Wednesday's level. That implies a market capitalisation of US$552 billion.

The company now sits on US$97.6 billion of cash.

- AP