Apple overtakes Google as the new King of Silicon Valley

A sharp boost in its share price since the launch of the 3G iPhone has seen the market value of Apple overtake its near neighbour Google…

The headquarters of Apple and Google are just a few miles apart in the region to the south of San Francisco known as Silicon Valley”. The two businesses have long been favourites of investors, attracted by their market-leading global positions in fast-growing technology markets.

However, the recent surge in Apple’s share price, combined with a fall in Google’ s share price, has meant that the market capitalisation of the two businesses is now almost the same. In fact, depending on which day you measure it, Apple is now worth more. The stats are summarised below. You could use these to encourage the students to do a couple of calculations:

(1) Which business has the highest profit margin? (profits / sales)
(2) What is the valuation multiple of profits for each business (market value / profits)

Answers below

Apple v Google - the key financial measures:

Apple:

Market value: $158.8bn
Annual sales of $24bn and profits of $3.5bn
Profit margin - 14.6%
Market value multiple - 45.4

Google

Market value: $157.2bn
Annual revenue of $16.6bn and profits of $4.2bn
Profit margin - 25.3%
Market value multiple - 37.4