Five years ago, Apple was a successful company with the iPod and its Mac line of computers. But it had not yet launched the iPhone. It had not yet launched the iPad. Back then, Apple’s yearly profit was $2.4 billion. In 2010 that number had risen to $16.6 billion. And in the first quarter of 2011, Apple has already made a $6 billion profit, well on its way to eclipsing previous years. It’s become a cash machine.
Apple is riding a wave of continuous success, and the stock market simply loves it. The value of the company has skyrocketed.
That’s the part we will take a closer look at in this article. How well has Apple done compared with other big tech companies in the last five years, i.e. 2011 compared to 2006, the year before Apple launched the iPhone?
Comparing Apple with other tech companies
To give you an idea of how much the value of Apple has increased in the last five years, we’re going to look at its market capitalization (“market cap”) and compare it with how some other big tech companies like Google and Microsoft have fared in the same time period.
(Market cap is a measure of a publicly traded company’s size and worth. It’s the number of shares times the share price, i.e. how much it would cost to buy all shares in the company. In this article, when we talk about what a company is “worth,” we mean market cap.)
The companies are sorted by their current market cap, biggest at the top.
As you can see in the above chart, none of the other companies we included even come close to the increase in market cap that Apple has seen over the past five years. This even though we included companies from all the different kinds of markets where Apple competes.
A few interesting observations:
- Apple is now worth 5.3x more than in 2006.
- Google is now worth 1.4x more than in 2006.
- Oracle is now worth 2.3x more than in 2006
- Microsoft is worth 8% less than it was in 2006.
- The biggest loser of this bunch? Nokia, which is now worth just 32% of what it was worth five years ago.
Apple’s rise compared with Google and Microsoft
When examining how the market cap has changed for these companies in the last five years, a couple of very interesting things stand out that give us a nice perspective on how fast Apple has grown compared to its competitors.
- In 2006, Google was worth twice as much as Apple. In 2011, they have traded places, with Apple now worth nearly twice as much as Google (1.9x to be exact).
- Another sign of how times have changed: In 2006, Microsoft was worth 4x as much as Apple. Now, Apple is worth 1.6x as much as Microsoft.
That’s a pretty impressive track record. In just five years, the positions have completely changed.
Conclusion
Apple’s revenue keeps growing, its profits keep growing, and it’s selling its products to an ever-growing user base. The incredible success of Apple’s iOS devices has helped pull the entire company up another notch (iOS devices now make up 65% of sales). So the company is definitely not running on fumes.
It of course remains to be seen if Apple can keep this up, but for now, things are looking good.
Now, if we had only bought a big lump of Apple shares back in the day… Sigh.
A disclaimer: We here at Pingdom are techies, not financial analysts. If you make investments based on this article and end up losing money, don’t blame us.
Data source: Market cap numbers from Wolfram Alpha.
