Apple's day in the sun as most valuable Silicon Valley company

Stephen Withers
Friday, 15 August 2008 08:21

Opinion and Analysis

If you had bought Apple shares back in the mid 80s you'd be looking at something like 5000 percent appreciation. Trouble is, much of the growth has happened in the last few years, reflecting the largely notebook-led resurgence in Mac sales plus the success of the iPod.

In some ways, it's encouraging to see that a Western company that's still largely dependent on designing and selling 'stuff' - even though the manufacturing has been outsourced to businesses in low-wage economies - can still be seen as a success.

Apple's published accounts don't allow much insight into where sales are coming from, but in the second calendar quarter of 2008, Macs and iPods represented almost $US5.3 billion of sales that totalled almost $US7.5 billion.

We can't see the iTunes Store sales, for example, because the company lumps them in with iPod services and accessories. In any case, Apple consistently claims that it doesn't make much profit from the iTunes Store.

Anyway, Apple's revenue was $US7.46 billion with net profit of $1.07 billion. For the corresponding period, Google reported $US5.37 billion revenue and net profit of $US1.25 billion.

With those numbers, investors have clearly found something to make them more optimistic about Apple's future than Google's. Maybe they envision even more diversification by Apple, with the same degree of success that it had with iPods.