Google takes Apple's title as world's most valuable tech company (by one metric)

Google's 'enterprise value' surpasses Apple's by $8bn, analyst claims

David Price (Macworld U.K.)
27 June, 2013 18:36

Google, and not Apple, is now the world's most valuable technology company - if you use the less common 'enterprise value' rather than market capitalisation.

Google, and not Apple, is now the world's most valuable technology company. That's according to a financial pundit who has calculated Apple and Google's respective worths using the less common 'enterprise value' rather than market capitalisation, which still puts Apple top.

Moneybeat's Rolfe Winkler made the call in an article on Tuesday, in which he wrote that while the market capitalisations of the companies remain tilted in Apple's favour (Apple has a market cap of US$378bn while Google is barely worth notice on a mere $286bn), the enterprise values - calculated by removing each firm's cash holdings - puts Google ahead.

"The market [capitalisations] of both companies are swelled by their huge bank accounts," Winkler argues. "Strip out Apple's $145 billion of net cash as of March, and Google's $45 billion. This leaves an enterprise value of $233 billion for Apple, but $241 billion for Google, reflecting the underlying value of the companies' actual operations."

In essence this alternative metric is designed to measure the companies' activity rather than their static worth; the value of their operations rather than their bank accounts. Winkler tries to explain the choice of measurement with an analogy:

"Another way to think about it: If you bought a house for $378,000, but there was $145,000 of cash lying on the living room floor, all you really paid was a net $233,000."

But we're not sure that's terribly helpful for the financially illiterate like us.

As Winkler also notes, Apple recently lost its overall title as world's most valuable company in any field to the oil giant Exxon Mobil. It's been a difficult year for Apple in terms of share price, even though its actual performance has remained strong; some pundits have pointed to the relative lack of big product announcements this year, although big things are expected in autumn.

What's happening to Apple's share price?

Apple stock manipulation: rogue AAPL trader pleads guilty, may face 25 years in prison

Did stock manipulation cause Apple stock to close at $500?