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Apple: The first $1-trillion company?

Apple Inc. passed another financial milestone on Monday when its stock market value topped $300 billion for the first time -- at $302 billion, ranking second only to Exxon Mobil Corp.’s $377-billion capitalization.

Now, get ready to hear more predictions that Apple will be the first U.S. company to reach $1 trillion in market value.

Hedge fund manager James Altucher said exactly that in a post he wrote on Business Insider at the end of 2010. He gushed

Apple is the dream company we always wished for when we were children. The messiah of companies that we never thought would come to Earth in our lifetimes ....

Even back of the envelope using current growth of the iPad and the app store, we can easily make a rationale for a trillion dollar market cap. The fact that iPad sales, rather than cannibalizing the Mac, [have] actually increased Mac sales further increases the argument .... I have a 30 year relationship with Apple. I love it. I don’t think I have a real relationship with any other company on the planet. That’s why it’s going to be a trillion dollar market cap.

MarketWatch’s Cody Willard was about four months ahead of Altucher on the $1-trillion call. He predicted in September that Apple stock would reach $1,000 before 2015, which would get the company close to a $1-trillion market capitalization, assuming the outstanding share count continues to rise. Apple has about 917 million shares outstanding currently.

Applelogo The stock jumped $7.01, or 2.2%, to a record $329.57 on Monday, the first trading day of the new year, and edged higher Tuesday, to $330.94 by about 11:45 a.m. PST.

The shares now are priced at about 17 times analysts’ mean fiscal 2011 earnings estimate of $19.47 a share.  That’s more expensive than the average blue-chip stock, but it isn’t the kind of nosebleed-territory valuation that tech stocks got in their heyday of the late-1990s.

Still, it’s worth noting that the last company that was seriously considered a contender for a $1-trillion capitalization was another tech titan: computer networker Cisco Systems Inc.

In March 2000, as the tech mania was reaching its zenith, Cisco’s stock market value topped $450 billion, and $1 trillion seemed eminently doable.

As the San Jose Business Journal wrote on March 19, 2000:

One trillion dollars. That's how much at least one analyst believes Cisco Systems will be worth in a few years -- and you'd be hard pressed to find anyone to disagree.

That was one week after the Nasdaq composite index reached its all-time high of 5,048. The tech bubble was bursting, and Cisco was on its way to losing 89% of its market cap by October 2002.

Cisco still is a tech leader today, of course, but it’s offering Apple no serious competition in the market-value race. Cisco’s current capitalization: about $114 billion.

-- Tom Petruno

 
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