San Francisco/New York: Apple Inc. surpassed $700 (Dh2,571) in late trading on Monday after announcing record first-day orders for the latest iPhone, fuelling optimism that the company will keep generating the revenue growth that transformed it from a niche computer manufacturer into the world’s most valuable business.
Shares climbed as high as $701.79 after reaching a record $699.78 at the close in New York. The stock has advanced 73 per cent this year.
Apple surpassed Exxon Mobil Corp. to become the biggest company in the world by market capitalisation last year after overtaking Microsoft Corp. as the most valuable technology provider in 2010. Before his death in October, co-founder Steve Jobs mastered a strategy of pushing Apple beyond its core business of selling computers into new markets, including digital music and mobile phones. Each new family of products helped the company boost revenue while inducing investors to snap up more shares.
Revenue increased to $35 billion in the June quarter from $1.73 billion in the last quarter before Jobs returned to Apple in 1997. Apple’s shares crossed the $600 threshold in July, after passing $500 in February and $400 last year.
IPhone sales last quarter alone reached $16.2 billion, 33 per cent higher than Google Inc.’s total and almost as much as Microsoft Corp.’s $18.1 billion in revenue.
Sales estimates
As many as 58 million units of the iPhone 5 may sell by the end of the year, according the average estimate of analysts surveyed by Bloomberg. That could generate as much as $36.2 billion in sales for Apple.
Apple has grown adept at keeping existing customers and drawing new ones through incremental improvements to the hardware and software of its products while also cultivating a developer community that cranks out thousands of applications for use on the company’s phones and computers, Dan Morris, chief investment officer at Morris Capital Advisors, whose largest holding is Apple, said.
The company’s shares are also getting a boost from a legal victory in August, when a jury said Samsung copied the iPhone. The outcome of the California trial may result in a ban on certain Samsung phones in the US, and it ratchets up pressure on Apple competitors to make their products less like the iPhone and iPad.
Gains in coming months will hinge on the success of future products, such as a smaller version of the iPad tablet, which according to people with knowledge of the matter will be released in October. Apple is also trying to make headway with products that let users view TV shows and movies on Apple devices. Yet the company has struggled to come to terms with communication providers over how products will be crafted, and media companies have been reluctant to cede control over content and customer relationships.
“That may be a tough market for them,” Morris said.
For now, the share rally is poised to continue, according to analysts who, on average, are predicting that Apple will rise to about $773 in the coming 12 months, data compiled by Bloomberg show.