Apple expected to earn the highest profits by any public company

The idea that Apple could go on to become the first trillion-dollar company seems closer than ever, with market analysts predicting that the Cupertino based tech giant might earn record profits this year, the highest ever by any publicly traded company in history.

In a note to investors on Monday, Brain White of Topeka Capital Markets said that he has heard analysts and market pundits over the last several weeks discuss the point of $500 billion market cap as a barrier to further price upside at companies in the past. Some of the analysts and pundits believe that companies that exceed $500 billion in market capitalization have trouble growing much beyond that $500 billion mark and fear that a similar scenario could prevent Apple from going much further past the $500 billion mark. As of Monday morning, Apple was positioned at the $545 billion mark. White believes that Apple’s market cap has potential to touch a trillion dollars and he firmly believes that Apple could be well on its way of achieving the trillion-dollar mark soon. This is what he wrote:

We went back and analysed five U.S-based companies that at one time enjoyed market capitalisation of (about) $500 billion or more, but found little similarities with Apple

The five companies that were analysed were Cisco Systems, Exxon-Mobile, General Electric, Intel and Microsoft. Except for Exxon each of these companies had rich price-to-earning ratios when they crossed the threshold $500 billion mark, and according to White each of these tech companies had a monopoly-like market share position. Apple completely differs from these companies in this case as it doesn’t have a stranglehold on All markets where it competes, in fact there is plenty of room for growth for Apple in the booming smart phone market.

White further went on to add that:

Microsoft held over 90% market share for PC operating systems at the peak cap, while Cisco had over 70% share in the networking market and Intel had over 80% of the PC processor market. By comparison, IDC estimates that Apple held just 4.7% of the PC market in (the first quarter of 2012) and 8.8% share in the mobile phone market.

Apple’s iPad does indeed dominate the tablet market, with an estimated 68 percent share in the first quarter of 2012, but this fact was ruled out by White noting that it’s a market category that Apple itself invented. White expects that this year Apple is all set to generate highest profits of any publicly traded company ever. According to him compared to the Big Three tech companies that exceeded the $500 billion market cap Apple’s income will be over six times higher on individual basis to when those companies were at their respective peaks.

In addition to its relatively low market share, Apple stock is currently trading at just 8.4 times White’s estimates for calendar year 2013 earnings per share, excluding cash. In comparison, the three technology companies that have crossed the $500 billion threshold — Microsoft, Intel and Cisco — had price-to-earnings ratios of over 80 times signalling a more stable situation for Apple and making Apple a likely candidate to touch a trillion dollar market share.

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