After releasing its second quarter results, with quarterly turnover up 17%, Apple, as expected, is now America’s first trillion-dollar company: a million millions. The company’s shares rose 2.9% to end the day at $207.39, giving it a market capitalization of $1.002 billion. On Thursday, the stock market valuation of Apple passed $1.006 billion.
Regardless of what its critics may say, Apple’s stratospheric valuation highlights the role the company set up by Steve Jobs and Steve Wozniak has played in transforming the world as we know it, from its origins in 1976 in a California garage to the brink of bankruptcy 21 years ago, and then, thanks to a reboot it has since revolutionized technology and consumer electronics with a series of hugely popular products that have radically reinvented consumer electronics. Trying to understand our relationship with technology would be impossible today without analyzing, among others, products such as the Macintosh or the iPhone, which gave rise to game changers such as personal computers, smartphones and apps.
What has driven Apple’s meteoric growth? Despite the growing role of business services, the main product is still the iPhone, which contributed $5.060 million to the $7.860 million the company reported in 2Q 2018. China also played a big role: it now provides a fifth of sales and is a fundamental element in its cost structure, to the point that it is forcing Google to rethink its position and re-enter the country with a search engine that obeys Beijing’s demands.
By now, we know that Apple can pretty much play by its own rules: it has so much cash that it can start buying the company back from its shareholders. Last April, it announced plans for the repurchase of one hundred billion shares: in the second quarter of this year alone it has returned $25 billion dollars to its shareholders, including $20 billion in the repurchase of shares.
Buying back so many shares allows it to keep the share price high, which obviously keeps the shareholders happy and makes it possible for the company to manage its quotation as it wishes. Obviously, this is not an infallible formula: the company could now be vulnerable to the trade war Donald Trump seems to want to wage with China, suffering an increase in the price of its products that could cut its profits. At the same time, it’s playing a different game: coming third after Huawei in smartphone sales is no biggie, because the fight is not just about the number of units sold but the profit margin on them. In addition, next September the company will surely introduce new iPhone models and renew other product lines that will immediately translate into a rebound in sales figures as has happened with monotonous regularity in recent years.
Apple is not the only technology company to breach the trillion dollar threshold: Amazon, Alphabet and Microsoft will soon do the same, revealing again the important role technology plays in today’s world. But it is the first to reach that mythical figure and has earned its place in the history books, redefining tastes thanks to a powerful combination of innovation and strategy. Haters gonna hate, but Apple is a winner, a million millions times over!
(En español, aquí)