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Financial Fruit: Apple Becomes First Trillion-Dollar Company

August 02, 2018 - 12:36 pm
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CUPERTINO, Calif. (WCBS 880/AP) — Apple has become the world's first publicly traded company to be valued at $1 trillion.

The milestone marks the triumph of stylish technology that has redefined what we expect from our gadgets ever since two mavericks named Steve started the company 42 years ago.

The peak reached Thursday seemed unimaginable in 1997 when Apple teetered on the edge of bankruptcy, with its stock trading for less than $1.

To survive, Apple brought back its once-exiled co-founder, Steve Jobs, as interim CEO and turned to its archrival Microsoft for a $150 million cash infusion to help pay its bills.

Jobs eventually introduced popular products such as the iPod and iPhone that subsequently drove Apple's rise. The stock has been surging this week as anticipation mounts for the next generation of iPhone, expected to be released in September.

Apple shares rose 2.7 percent to an all-time high of $207.39 at the close of the trading day Thursday. They're up 22 percent so far this year.

Jobs' vision, showmanship and sense of style propelled Apple's comeback. But it might not have happened if he hadn't evolved into a more mature leader after his exit from the company in 1985. His ignominious departure came after losing a power struggle with John Sculley, a former Pepsico executive who he recruited to become Apple's CEO in 1983 — seven years after he and his geeky friend Steve Wozniak teamed up to start the company with the administrative help of Ronald Wayne.

Jobs remained mercurial when he returned to Apple, but he had also become more thoughtful and adept at spotting talent that would help him create a revolutionary innovation factory. One of his biggest coups came in 1998 when he lured a soft-spoken Southerner, Tim Cook, away from Compaq Computer at a time when Apple's survival remained in doubt.

Cook's hiring may have been one of the best things Jobs did for Apple. In addition, that is, to shepherding a decade-long succession of iconic products that transformed Apple from a technological boutique to a cultural phenomenon and moneymaking machine.

Bloomberg technology reporter Mark Gurman told WCBS 880’s Steve Scott and Tanya Hansen it was the iPhone that brought Apple to this point.

“The iPhone for sure,” he said. “The iPhone is what’s taken Apple from just a, you know, $100 (billion) to $200 billion cap company on the heels of the Mac and the iPod to being a trillion-dollar company.”

Gurman said five years ago, he would not have expected Apple to hit $1 trillion.

“You know, ask me five years ago, and it would be a shock. People five years ago were saying, ‘Is there any way that Tim Cook could fill the shoes of Steve Jobs?’ So yes, it would have been surprising then,” he said. “But over the last couple years or so, it seemed clear that iPhone momentum – even though unit sales are growing at a very slow pace, about 1 percent year over year – the services and the iPhone becoming a hub for new accessories – it became clear that it was going to be Apple, and it wasn’t going to be a photo finish either.”

Christoforous said experts believe Apple stock will keep going up.

“They said the stock rises based on strong fundamentals. iPhones are still alive and well. Their services business is growing. It’s not based on the extreme wild stock valuations that we saw when we had the dot-com tech bubble,” she said. “And so some are now having a price target on Apple of between $230 and $250 a share.”

She said other tech companies are likely to join Apple at $1 trillion valuation, including Amazon, Google, and Microsoft.

“Each of the companies you just mentioned now have market caps of over $800 billion, so it’s really just a matter of time,” Christoforous said. “But if you look at the theme throughout all these companies, they’re the tech companies. They’re the most valuable publicly traded companies in the world.”

(© 2018 WCBS 880. The Associated Press contributed to this report.)