In the past few years, Apple has been in berzerker mode. Not even 15 years ago, they were on the verge of collapse when Michael Dell famously said that if he were CEO of Apple he would, “shut it down and give the money back to the shareholders”. Apple now has a market cap well over ten times that of Dell’s. And in the past year or so, Apple has even managed to far surpass their old nemesis, Microsoft, in terms of market cap, revenue, and profit.
Today, Apple’s stock closed above $400 a share for the first time. This has pushed their market cap up to roughly $375 billion, making my prediction that they have a shot at catching Exxon to become the most valuable public company in the world this fall, look pretty good (they’re now “just” $45 billion away).
But what’s next? What other mountain can Apple scale? Well, there’s still a pretty big one in the tech sphere.
It’s easy to forget that despite all of the financial success Apple has had in recent years, they’ve still been far behind a couple rivals in one key metric: revenue. In the previous full financial years, both IBM and HP have towered over Apple in this category. IBM’s last fiscal year saw them report $99.87 billion in revenue. Meanwhile, HP reported an astounding $126 billion. Apple? They reported roughly $65 billion. Yes, HP was still nearly double Apple in revenue.
But that was last fiscal year — which ended almost a year ago for all the companies. Things are changing quickly when you look at the more recent numbers. And they very much point to Apple taking this crown as well.
In the last four quarters, Apple has reported $100.32 billion in revenue. In the same timeframe, IBM reported $104.6 billion. Given these numbers, it wouldn’t be surprising at all if Apple surpasses IBM in yearly revenue next quarter.
But what about HP? In the past four quarters, they’ve reported $127.9 billion in revenue. So they’re still quite a bit ahead of Apple. But not far enough ahead that Apple can’t catch them in the next year or so.
HP’s reporting timetable is a bit odd. While many tech companies reported earnings in the past few weeks or will do so this week, HP doesn’t report their Q3 2011 numbers until August 18. So the most recent numbers we have for them are Q2, which ended in May. In that quarter, HP reported $31.6 billion in revenue. In Apple’s last quarter just ended, they reported $28.57 billion. So Apple is clearly closing the gap — and fast — but there’s still some ground to make up on a quarter-to-quarter basis. That could change next quarter, or it could take until Apple’s next holiday quarter (in two quarters). But it seems almost a foregone conclusion at this point that Apple will surpass HP in revenue on a quarterly basis soon.
Is it fair to compare HP and Apple in this regard? Yes. While some complain that comparing Microsoft to Apple is comparing a software company to a hardware company (even though both do both), HP and Apple are much more akin.
HP is the largest PC-maker in the world. With the recent launches of devices like the TouchPad and the Pre, they’re clearly going right after Apple. They also now make their own software, webOS, thanks to the Palm acquisition. And while HP won’t admit it, insiders suggest that their strategy the past year or so has been to become more like Apple.
When I wrote that a year ago, some were up in arms, citing the fact that HP brings in so much more revenue than Apple does. But again, that was then. Things looks very different now. And the trends should be clear to all.
Further, while HP still holds the revenue crown, Apple has far surpassed HP in the one metric more important: profit. You know, the money you actually get to keep.
In the last four quarters, HP did $11.4 billion in profit. Apple? $23.61 billion. Yes, Apple pulls in more than double the profit despite trailing in revenue.
As we enter the “post-PC” world, where iPhone and iPad sales far outpace Mac sales for Apple (a chart by asymco today illustrates this nicely), HP will have their work cut out for them in order to maintain their revenue crown. Unless the Pre or the TouchPad take off, I’m not sure that HP will be able to hold off Apple for long. I give them a year.