February 12
Apple Hillol Sarkar
2015
hillol.sarkar@ago-inc.com
Computer
Apple: $710 Billion and Counting CEO Cook iPhone Maker’s Ability to Sell Pricey Products in China
DAISUKE WAKABAYASHI Updated Feb. 10, 2015 5:57 p.m. ET
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On the day Apple Inc. became the first U.S. Company to close with a market capitalization above $700 billion, Chief Executive Tim Cook credited its success to its ability to sell pricey products to Chinese consumers and ignore commonly accepted beliefs about big companies. Mr. Cook said Tuesday that Apple has grown rapidly in China by disregarding conventional wisdom that Chinese consumers were too price-sensitive for Apple’s high-end products
“It’s a bunch of bull. It’s not true,” he said at the Goldman Sachs Technology and Internet conference in San Francisco. In the fourth quarter of 2014, Apple, which resisted pressure to introduce a cheaper smartphone for the Chinese market, sold more smartphones in China than any other company, according to research firm Canalys. Mr. Cook said rapid economic growth in China and the rise of a large middle class there gave Apple a major opportunity. The company’s sales in greater China, which includes the mainland, Hong Kong and Taiwan, grew 70% in the three months ended Dec. 27. Mr. Cook said Apple’s annual sales in that market grew to $38 billion last year from $1 billion five years earlier. MORE ON APPLE • •
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Mr. Cook also said he didn’t believe in the “law of large numbers”—the idea that growth rates slow as companies get bigger. He rejected it as “dogma.” Apple’s shares rose 1.9% Tuesday to $122.02, giving it a stock-market value of $710.7 billion. The shares have risen 64% in the past year. Market value is calculated by multiplying a company’s shares outstanding by its stock price. Since Apple’s initial public offering in December 1980, the company’s market value has risen more than 50,600%. The company’s current value is nearly double each of the next three largest companies in the S&P 500 index. Exxon Mobil Corp. is second to Apple with a market cap of about $382 billion; Berkshire Hathaway Inc. is third at $370 billion; and Google Inc. is fourth at $363 billion, according to FactSet. Apple is riding high after a holiday quarter in which it sold a record number of iPhones and reported $18 billion in quarterly profit, also a record for a U.S. company. The surge in iPhone sales came after it introduced a pair of bigger-screen models in September, enticing customers to upgrade from existing iPhones or switch from rivals.
ENLARGE
The recent milestones are notable for Mr. Cook, the longtime lieutenant of Apple’s iconic former CEO Steve Jobs . When Mr. Cook took over as CEO in 2011, he was dogged by doubts about whether Apple could succeed without Mr. Jobs’s vision. Since then, Apple’s value has more than doubled. When told Tuesday at the conference about Apple’s record market value, Mr. Cook’s only response was a smile. The executive, who was answering questions from Goldman Sach Group Inc. President Gary Cohn , said Apple would update its share-repurchase and dividend plans in April. Apple has said it would return more than $130 billion to shareholders by the end of 2015, and it already has returned $103 billion in dividends and share buybacks under that plan. Mr. Cook said Apple also acquired 17 companies in 2014.
“By and large, my view is for cash that we don’t need, we want to give it back,” Mr. Cook said. “We are not hoarders.” Mr. Cook said Apple and First Solar Inc. plan to build a 2,900-acre solar farm in Monterey County, Calif., that will produce enough electricity to power all of Apple’s offices and stores in California, including its new headquarters under construction in Cupertino, Calif. —George Stahl contributed to this article. Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com Corrections & Amplifications Google ranks fourth among U.S. companies in market value, at $363 billion. An earlier version of this article reported incorrectly that Microsoft was No. 4.
http://www.wsj.com/articles/apple-the-700-billion-company-1423602877?mod=e2fb
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