Apple on cusp of $2 trillion milestone, defying pandemic
WASHINGTON, Aug 12: Apple is on the verge of becoming the first $2 trillion American company following a gravity-defying surge that has highlighted the value of its iPhone ecosystem during the global pandemic.
Shares in Apple have roughly doubled from March lows, an astonishing performance which has lifted chief executive Tim Cook's net worth to $1 billion for the first time, according to a Bloomberg Billionaires Index calculation.
A dip in Apple shares left its market value at around $1.87 trillion Tuesday, ahead of Big Tech peers Amazon and Microsoft (both at $1.54 trillion) and Google parent Alphabet ($1.0 trillion).
If it reaches $2 trillion, Apple would be the only company other than Saudi Aramco to hit the milestone.
Even as other large tech firms have shot higher on robust demand during lockdowns, Apple has outpaced its rivals by delivering strong sales of gadgetry including wearables and tablets, along with new apps and services which have gained ground during the global health crisis.
"Apple has been wildly successful in building out its platforms, mitigating the fact that iPhone sales had peaked, by building products that surround it and services that enhance it," said Avi Greengart, analyst with the consultancy Techsponential.
"It all feeds back into the cycle for Apple."
In the past quarter ending in June, Apple reported profits rose eight per cent to $11.2 billion and revenues jumped 11 per cent to $59.7 billion.
The quarter showed a modest rise in smartphone revenue, buoyed by the new entry-level iPhone SE, and robust increases in sales of iPads and Mac computers, in demand for remote education and work-from-home buyers.
Services made up more than one-fifth of Apple revenue as it expanded its offerings in music, digital payments, streaming television and boosted income from its App Store. Apple has also extended its lead in the smartwatch market amid growing interest in health and fitness applications.
"Apple entered the pandemic strong and the company's products are an even more foundational part our lives today as we work, live, and play from home," said Gene Munster of Loup Ventures in a research note.
Goldman Sachs analyst Rod Hall said markets appeared surprised by Apple's strong results and noted that "consumers and institutions are clearly spending even more than we had anticipated to support both work from home and study from home."
A major factor in Apple's success has been leadership from Cook, who took over just ahead of the death of Steve Jobs in 2011.
Cook was not one of Apple's founders and his salary, by Silicon Valley standards, was a relatively modest $3 million in 2019, along with a bonus of $7.6 million. But the value of his stock grants has pushed him into the club of billionaires for the first time, according to Bloomberg.
Cook "deserves a tremendous amount of credit because Steve Jobs was a hard act to follow," Greengart said. -AFP