Hail to the Market-Cap King (for Now)

Its market cap makes it more valuable than General Motors, Ford, General Electric (NYSE: GE  ) , and AT&T combined. It's a company "estimated to be worth as much as the entire country of Spain." Its staggering valuation, built on the kind of profit margins those pre-computing dinosaurs could only dream of, grows and grows with each passing month as the company's stock price goes parabolic, and its proponents trip over each other to offer ever more outlandish price targets.

No, it's not Apple (Nasdaq: AAPL  ) . The company I'm describing is -- or rather, was -- Microsoft (Nasdaq: MSFT  ) , back in the days of dot-com yore. Microsoft began 1998 worth just over $150 billion and ended the millennium with a bang, worth $600 billion. I thought about that historical comparison when Bloomberg's daily chart showed that Apple was about to become more valuable than every publicly traded company in Spain, Greece, and Portugal combined. It's an incredible comparison, and one that's at least fairer than many of the outlandish Apple-to-oranges matchups found on the "Things Apple Is Worth More Than" blog. For those of you interested in keeping score, here are a few other things Apple is worth more than at the moment:

  • The construction of the U.S. interstate highway system.
  • All U.S. retail electricity sales.
  • One year's worth of global lottery sales.
  • Two Apollo space programs.
  • The entire U.S. Navy carrier fleet.
  • The entire U.S. retail sector.

With a newly instituted dividend and near-unanimity in bullish sentiment, it seems likely that Apple's market capitalization will soon surpass other ridiculously expensive milestones. But how far can it go, and how long can it remain ahead of the pack? The New York Times took a look back at the market's past market-cap rulers after Apple surpassed Exxon Mobil (NYSE: XOM  ) last year. There weren't a whole lot of companies to get to the top of the mountain -- just 10, not counting Apple. Some ruled for decades, but in recent years the crown's changed hands rather frequently.

Microsoft and Cisco each had their turn at the height of the dot-com boom, only to relinquish the throne to ExxonMobil as oil costs skyrocketed and energy again became a dominant economic theme in the mid-aughts. There's also something to be said for bubbly valuations coming back to Earth.

Looking back further, GE was the last company with significant manufacturing operations atop the market, holding the "world's largest" moniker through the mid-'90s. Before that, Wal-Mart and Altria, the former Philip Morris tobacco-led conglomerate, each briefly ruled. The last company to hold the crown for any extended length of time was IBM (NYSE: IBM  ) , which lost its lead in the early '90s after a quarter-century at or near the top of the market-cap standings.

The companies that claimed the crown for any extended length of time did so behind fundamental transformations to modern life. AT&T and GM, two of the Times' earliest leaders, connected America in different but equally important ways, though GM wound up ahead for a longer period. Exxon (before the Mobil merger) rode the interstate highway system and the postwar economic boom to market-cap leadership before IBM started the long process of computerized automation that continues to change modern life with each passing year.

Once the '90s hit, the market seemed unable to decide which company was really driving the modern economy. Was it the big-box retailer, the energy-focused conglomerate, the operating-system monopolist, or the oil titan? For now, at least, the answer seems to be a mobile-device manufacturer, which is a rather radical shift. Retailing is all about efficiency, and oil is just a commodity. Apple's sales today have earned it its place in history, but the consumer-electronics industry has never suffered its kings to rule for long.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights.

The Motley Fool owns shares of Wal-Mart, Cisco Systems, Ford, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Ford, Wal-Mart, General Motors, ExxonMobil, Apple, and Microsoft, creating a diagonal call position in Wal-Mart, creating a synthetic long position in Ford, and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 14, 2012, at 5:19 PM, Apple4adam wrote:

    Associating Apple's fair name to Spain, Greece and Portugal seems tendentious and belies author's intent to subliminally scare the readers away from Apple. Sorry, but I can not help ignore that! I did not hear those comparisons with Exxon that is Saudi Arabia or Iran or Venezuela comined or something akin to that? Apple is a still an undervalued stock. It will continue to rise as long as they make high quality products that more and more people like to buy. There is no need to engage in obscurantism to mystify or undermine company's worth by fantastic comparisons.

  • Report this Comment On April 14, 2012, at 5:57 PM, bbrriilliiaanntt wrote:

    Apple might be considered more than just a 'mobile device manufacturer'...lol...what will allow apple to rule for at least a decade will be its ecosystem. No other company in history had anything close to it - and it doesn't have a boundary (e.g. Msft had 2 markets - windows os & Microsoft office - they had 90% share of both, they had to attack or develop new markets which wasn't who they were, barring Xbox.). Apple is about attacking and developing new markets, that's what they do. They will have the crown at least until 2025. Longer if they don't 'forget who they are'

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