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Apple (AAPL): Putting $558 Billion Into Perspective

|Includes: Apple Inc. (AAPL), ARMH, BB, DELL, HPQ, INTC, MSFT, SNE

Is Apple (AAPL) really worth the money people are paying to own the shares? Is Apple's dominance so entrenched that they can withstand the upcoming assault from their competitors?

One way to answer those questions is to put the total market cap of Apple into perspective by understanding what $558B can buy. First we point to the argument that Apple is worth more than the entire US Retail Sector or the entire Semiconductor space. Just stop and think about how big those sectors are and what that fact is saying about the size of Apple.

Next, we compare Apple against 8 competitors combined in their space. In fact, if these 8 companies were combined, they would shake governments around the world with anti-trust claims of "how could anyone compete?". Could Apple? How safe do you think the future would be for Apple if these 8 worked to protect their market positions and market caps?

Apple vs. Our 8

Company Symbol Price Market Cap
Microsoft MSFT $32 $268.46B
Sony SNE $20.55 $20.62B
Intel INTC $27.9 $139.36B
ARM Hldgs ARMH $28.11 $12.89B
Dell DELL $17.02 $29.99B
Hewlett-Packard HPQ $23.03 $45.54B
Research In Motion RIMM $13.78 $7.11B
8 Total (*not counting $34B of excess cash to shop with)     $523.97B
       
Apple AAPL $599.34 $558.81B

If an investor could waive the magic wand and purchase chip leaders Intel and ARM Holdings ; hardware providers Sony , Dell , and Hewlett-Packard ; software titan Microsoft ; and waning but still significant Research in Motion ; would the value of these 8 companies be greater than that of Apple. Note: to be
fair our fictitious roll-up would still have $34.8B in additional cash to go shopping with.

Would AAPL really be worth more than the combination of:

a) the largest software provider
b) the largest microprocessor producer AND the most dominant low-power microprocessor producer
c) 3 international personal computer, laptop, and printer producers
d) 2 of the 3 largest video game producers
e) a large phone handset and operating system provider for smartphones

Imagine the combined power these 8 companies would have; the established business relationships, the customer branding possibilities, the technology, the earnings, the synergies, and yes, even the cash on hand.

Conclusion

Apple is a very successful company and has earned its place on top. They have great products, excellent vision, and have executed beyond anyone's dreams. Simply stated, they are a fantastic company.

However when looking at their valuation in terms comparable to their peers, Apple seems to be priced to "definitely succeed". When looking at the list of the 8 companies above, I noticed more than a few that also carried the same label at one time or another in the past. It made me think: Is Apple really "the one that will definitely succeed", or is it more likely that competition catches up to them?

Each investor can form their own conclusions, but for me the answer is simple: Apple operates in a very competitive space and no company's success is definite in the ever-changing technology space.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.