The Apple Inc. logo is seen in the lobby of New York City's flagship Apple store in this January 18, 2011 file photo. Apple Inc is expected to report another dazzling quarter on July 19, 2011, propelled by strong demand for its perennial bestseller iPhone and the new, thinner iPad 2 tablets.MIKE SEGAR/Reuters
Apple Inc.'s blowout quarterly earnings this week handed bloggers all sorts of material for hypothetical observations. Like, when is Apple going to become the most valuable company in the world? And, where would the Dow Jones industrial average be now if the keepers of the index had added Apple instead of Cisco Systems Inc. in 2009?
Barry Ritholtz at The Big Picture pointed out that Apple is currently 13 per cent behind Exxon Mobil Corp. in terms of its market capitalization. However, given the growth of Apple's earnings and the gains in the stock price (it hit a record high on Wednesday), it would likely close the gap in just 12 months.
"That assumes analysts' share-price estimates are on target; so far, they have been too low in terms of earnings and revenue forecasts," he said.
Meanwhile, Bespoke Investment Group pointed out that the Dow added Cisco in 2009, after kicking out General Motors. Since then, Cisco shares have done nothing, while Apple has blossomed. If the Dow had added Apple instead, the index would be 10 per cent higher than it is today, and just 2 per cent away from a record high.
"While Cisco was one of the largest companies in the country at the time and certainly was a viable candidate for inclusion in the index, the case for Apple was just as - if not even more - compelling," Bespoke said on its blog. "After all, just as there used to be a General Motors car in nearly every driveway, there is now an Apple product in practically every American household."
David Berman