APPLE'S market capitalization topped US$500 billion in opening trading yesterday, reaching a peak where few companies have ventured and none has stayed long.
Apple was already the world's most valuable company. The gap between it and No. 2 Exxon Mobil Corp has widened rapidly in the past month, as investors have digested Apple's report of strong holiday-season sales of iPhones and iPads, and raised their hopes that the company might institute a dividend.
On Tuesday, the Cupertino, California, company sent out invites to reporters for an event in San Francisco next Wednesday, apparently to reveal its next iPad model. The launch was expected around this time, a year after the launch of the iPad 2.
Exxon, now worth US$411 billion, was worth just over US$500 billion for two short stretches at the end of 2007.
Apple's arch-nemesis Microsoft Corp was worth just more than US$500 billion briefly at the end of 1999, then again in early 2000. It even shot up above US$600 billion for one day. The company is now worth US$267 billion.
Cisco Systems Inc, Intel Corp and General Electric Co also peaked just above US$500 billion in early 2000. Cisco and Intel are now worth a bit more than US$100 billion each, while GE is worth US$200 billion.
Despite its sky-high market capitalization, Apple's valuation isn't high compared to its earnings. It's worth 15 times its earnings for the last year. That compares to 21 times earnings for Google and 14 times for the S&P 500 overall.
Yet few companies in the index grow their earnings as fast as Apple does. In its latest quarter, its earnings rose 118 percent from a year ago, to US$13.06 billion.
Apple's stock accounts for 3.8 percent of the value of the S&P 500 index, according to Standard & Poor's, and it accounted for 6 percent of the operating income of the 500 companies in the fourth quarter.
Analysts say Apple's sheer size works against its stock price. Apple stock already makes up a large share of the holdings of technology and growth-focused funds, and they have little appetite for more.
Meanwhile, value-focused funds are often prevented from buying shares because the company doesn't pay a dividend.
However, Apple has been signaling that a dividend is under consideration, and several analysts think one will be announced this year.
In the first few minutes of trading yesterday, Apple's market capitalization climbed near US$508 billion as shares rose 1.7 percent, to US$544.39.