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Apple's market value tops $200 billion as stock soars

March 9, 2010 |  4:15 pm

Apple Inc. shares continued their run to new highs Tuesday, lifting the stock market value of the company past $200 billion for the first time.

That gives Apple a seat in a very exclusive club: Only four other U.S. companies -- Exxon Mobil, Microsoft, Wal-Mart Stores and Berkshire Hathaway -- have market values exceeding $200 billion.

Apple stock rallied $3.94, or 1.8%, to close at a record $223.02, amid ongoing excitement about the company’s upcoming debut of its iPad tablet device. Apple on Friday said it would launch the iPad in the U.S. on April 3. The firm’s plans to quickly ramp up sales in foreign markets also helped allay concerns about possible manufacturing delays.

At $223.02 each, the company’s 906.8 million shares outstanding are worth a total of $202.2 billion.

Ipad Apple’s success now is the stuff of Silicon Valley legend, of course. As Tim Cook, the company’s chief operating officer, noted at a Goldman Sachs tech conference last month, Apple has made the transition from a desktop-computer firm to a leader in mobile devices, including the iPhone, iPod and, next (it hopes), the iPad.

The company's sales now are running at an annual rate of more than $50 billion. Apple earned earned $3.4 billion, or $3.67 a share, on sales of $15.7 billion last quarter. Just four years ago annual sales totaled $14 billion.

But does the Apple franchise really deserve to be valued at more than $200 billion? At its current market value the company is neck-and-neck with Warren Buffett’s Berkshire Hathaway, at almost $204 billion, and Wal-Mart, at $206 billion. For the moment, Apple has a long climb to surpass Microsoft ($252 billion) and the most valuable U.S. company of all, Exxon Mobil ($315 billion).

The price-to-earnings ratio of Apple’s stock isn't shocking by tech-stock standards -- about 19 based on analysts’ median earnings estimate of $11.67 a share for this year. The average U.S. blue-chip stock’s P/E is about 15 based on expected earnings of the Standard & Poor’s 500 index companies this year. . . .

Not surprisingly, Wall Street analysts still love Apple. Of 44 analysts who cover the company 40 rate it a “buy,” according to Bloomberg News data. With a 168% gain over the last year Apple stock has humbled any analyst who doubted its potential.

On Tuesday, TheStreet.com’s Scott Moritz dared to take the contrarian side. “Sell before the fall,” he wrote, arguing, among other things, that the “iPhone is getting stale” and that Apple’s Mac computers will look even more overpriced compared with what Moritz describes as “not so bad anymore” PCs.

On the “buy” side, money manager Bob Turner of Turner Investments on Tuesday gave Fortune.com’s Scott Copeland five reasons why Apple shares should continue to plow ahead.

Turner thinks Apple’s earnings can rise 25% a year over the next five years. Apple’s great allure, Turner said, is that it doesn’t simply meet consumer demand -- “it creates a need with products that everyone wants.”

-- Tom Petruno

Photo: Apple CEO Steve Jobs with the iPad. Credit: Ryan Anson / AFP / Getty Images

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