On January 3, local time in the United States, Apple's stock price rose to $182.88 during the session, which not only set a record high, but also made Apple the first company with a market value of $3 trillion. From $2 trillion to $3 trillion, Apple took just 16 months.
In 1995, Ford became the first U.S. company to have a market capitalization of $100 billion. Two years later, when Apple was on the verge of bankruptcy, Microsoft became the first U.S. company to have a market capitalization of $500 billion. As the iPhone grew in popularity, Apple began to outperform other public companies, becoming the first U.S. company to reach a market capitalization of $1 trillion in 2018. In 2020, despite the global economy being hit by the COVID-19 pandemic, tech companies benefited from the spread of telecommuting and online shopping, making Apple the first U.S. company to reach a market capitalization of $2 trillion. By comparison, Microsoft and Google parent company Alphabet reached a market capitalization of $2 trillion in June and November 2021, respectively.
There is no doubt that the product is the foundation of Apple's market capitalization. Since its inception, Apple has brought breakthrough products such as Mac, iPod, iPhone, iPad, Apple Watch, etc., and people's quality of life has reached a new height. Although none of them were pioneers in their class, they succeeded in creating new segments in the field of personal computing and becoming leaders in these areas. In addition to products, the rapid development of Apple's market value is also inseparable from its planning and execution in terms of market strategy, organizational structure, and capital operation.
The Chinese market
At the beginning of the birth of the iPhone, it landed in the Chinese market as an "informal channel". Some media reported that in 2008, a year after the release of the original iPhone, 800,000 to 1 million iPhones "disappeared" after legal purchases. It is said that 400,000 of these iPhones are "jailbroken" and run on China's indigenous networks. By October 2009, for the first time, Chinese citizens were able to legally buy iPhones operated by a local Chinese carrier (China Unicom). At this point, iPhone sales in China have not had a significant impact on Apple's performance until Apple reaches an agreement with China Mobile. Since then, the importance of the Chinese market in Apple's global business map has grown day by day, with the former accounting for an increasing share of the latter's performance. In the fourth quarter report of fiscal 2021 released last year, Apple's revenue in Greater China has exceeded $14.5 billion, an increase of more than 80% year-on-year.
According to the latest data from market research firm Counterpoint Research, during November 2021, Apple's share of the Chinese market was 23.6%, becoming the first sales volume in the Chinese mobile phone market for the second consecutive month, and the main driving force behind this is the hot sales of the iPhone 13 series. Counterpoint's research director, Tarun Pathak, said in a statement: "As Huawei's voice in the mobile phone market becomes smaller and smaller, the top spot in the Chinese mobile phone market has been changing hands, like OPPO in January 2021, then vivo in March, and then Apple in October." "If it weren't for the supply chain issue, the iPhone 13 would have sold better.
Today, Apple remains very keen to embrace the Chinese market and continues to work hard to design new products for Chinese users that match its characteristics. As last year, in anticipation of the upcoming Chinese New Year, Apple launched a special edition AirPod Pros with a "tiger" image.
Tim cook
While Tim Cook didn't launch groundbreaking innovations like Jobs did during his tenure as Apple's leader, he made three major contributions to jobs after his death in 2011.
The first contribution was that Cook brought stability to Apple long before Jobs died. Back in 2009, Jobs withdrew from the day-to-day management of the company, and Cook's takeover quelled Wall Street fears that Jobs would leave Apple. After Jobs's death, Cook's strong leadership became even more important. Under his leadership, Apple launched new products, including the Apple Watch.
The second contribution is that Cook has driven a change in Apple's management style over the past decade. During this time, Apple reorganized its team around project managers, whose job was to manage the project's entire lifecycle. As top managers, Cook and executive management provide these product managers with direction, funding, people, and tools to make projects successful. While these project managers do report to the executive supervisor, they have the autonomy needed to ensure the success of the project. Today, this management style has gained the attention of business schools and other corporate boards. In addition to decentralization, Cook and his management team are also very patient, and they will not launch a product that is not ready.
The third contribution is that under Cook's leadership, Apple began building its own silicon chips, a key step in its future development. Previously, Jobs had always wanted Apple to grasp the entire technology chain related to the product, but he could not achieve this vision on his own. Today, that burden falls on Cook, who has deep experience in supply chains. Since the advent of the M1 processor, the importance of Apple's independent production of silicon chips has become more and more obvious. The chip integrates CPU, GPU and other key technologies to allow Apple to control the fate of its products starting at a CPU/GPU level and beyond by providing a SoC. By the end of 2022, Apple may equip all of its major products with self-developed silicon chips.
Share repurchases
The continuous rise of Apple's stock price is a strong embodiment of the results of its capital operation. Apple has been the largest repurchaser of S&P 500 constituent stocks over the past few years. By buying back shares, companies can proactively reduce the supply of outstanding shares in the market as a way to push up their own stock prices and return funds to investors. In addition, this approach can increase earnings per share, which is an indicator that many value investors use to judge the investability of stocks.
Apple began paying quarterly dividends and buying back shares in March 2012. According to S&P Global Market Intelligence, Apple has spent more than $450 billion on stock buybacks since then and through the summer of 2021. In fiscal year 2021, which ended last September, Apple spent a total of $85.5 billion to buy back shares and paid $14.5 billion in dividends.
In fact, since Apple's market capitalization reached $1 trillion for the first time in August 2018, its stock price has risen by more than 250%, and its market value has only increased by about 200%, which is a direct result of its stock repurchase behavior. At present, the number of shares outstanding by Apple has been reduced from about 19.4 billion shares at the end of June 2018 to about 16.4 billion shares. In addition, because Apple has a huge cash flow and is willing to return this money to investors, investors are beginning to see their stock as a "safe asset", and cash flow is one of the reasons why investors believe that Apple can continue to invest a lot of money in stock buybacks, manpower, research and development and other fields.
