The news was splashed all over the media this week that Apple has become the biggest, most valuable company “of all time“. Really? I do wish those reporters would analyse their own statements a little.
First of all, Petrochina was worth more – over $1 trillion – briefly in 2007.
Secondly, Apple’s current valuation at around $665 billion is based on 2012 US dollars. Microsoft’s market capitalisation in 1999 dollars peaked at around $620 billion. According to Forbes magazine, that equals roughly $850 billion when adjusted for inflation. Still worth more. Now, depending on the method used for calculating inflation (these sources often use just a fiscal calculation, rather than a percentage share of US or global GDP), that may be worth much more in today’s dollars. IBM, in the 60s, was also worth well over $1 trillion on the share market, in today’s dollars.
Thirdly, if one examines the companies of yesteryear, one sees a fascinating history emerge. Take, for example, the British East India company. Amongst other things, It had a sizeable standing army and navy. Its annual sales in 1801 alone would be worth over 450 billion pounds today (USD$710 billion dollars), using estimated retail price index at around 2% per annum (which is conservative). By using estimates of inflation as measured by increase in average earnings, this would equal well over 7 trillion pounds in today’s wealth – in just one year of sales.
Lastly, if one takes into account power and influence, Apple’s influence is not as substantial as some of the behemoths of even the early 20th Century. US Steel is one such example. The steel company was literally building modern America and its power was enormous.
Unfortunately, hyperbole is rife within all kinds of industries, including the financial. It is well to take a lot of the claims with a shaker full of salt and realise it’s another round of propaganda.
On the other hand, most people would probably be quite happy that their company had Apple’s problem of being hyped as the most valuable of all time. I’m sure Apple shareholders and fanboys are just as happy.