Lots of viewers question why we, in the media, seem so obsessed with Apple Computer. Partly, I suppose, it’s because so many of us use Apple products and like them. Partly it’s because the story of Apple, and of its founder Steve Jobs, has been one of the great business stories of all time. And partly it’s because the stock is one of the most widely held in America, owned by individuals and institutions alike, including hundreds of mutual funds in which you may be a shareholder.
But lately the reason to report on Apple has been the stunning drop in the value of its stock.
You know the numbers: from $705 in September to a little over $400 today. That roughly $300 drop translates rather neatly into a decline in market value of roughly $300 billion dollars.
Think about it. In six months, Apple, the number two company in market capitalization after Exxon Mobil, has lost in value the equivalent of Microsoft ($270 billion), Google ($269 billion) or Wal-Mart ($259 billion), the three next-most-valuable companies in the world. That is stunning to me. It’s not the first time, of course, that a company has lost a lot of value. Just ask the CEOs and employees of dozens of dotcom companies who saw their fortunes vanish in 2000 and 2001. Or ask the shareholders of General Electric. It was once the world’s most valuable company. But its stock was cut in half, or worse, and has been in the doldrums for years.
The history of one-time MVCs (most valuable companies) is that, once they tumble, they rarely regain the throne. Exxon Mobil has, but it’s the exception. Microsoft, once worth nearly a half-trillion, hasn’t come close to that value or the top-spot in years. Same for GE.
Whether Apple can ascend to the mountaintop again is an open question. That’s not to say it can’t be a good stock, and maybe even a very rewarding one year after year. It’s got a single-digit price-earnings ratio, a lovely dividend and a fortress balance sheet with tons of cash. But here’s one vote that says energy trumps gadgetry. Apple had its moment. Exxon will be the market-value king for a good while now.