Apple becomes first company to reach $1 trillion

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San Francisco:

Apple is the world’s first publicly traded company to be valued at $ 1 trillion, the financial fruit of stylish technology that has redefined what we expect from our gadgets.

The milestone reached on Thursday marks the latest triumph of a trend-setting company that two mavericks named Steve started in a Silicon Valley garage 42 years ago.

Apple’s shares gained $ 5.89 to close at $ 207.39, leaving the company’s market value a notch above $ 1 trillion around $ 1,001,679,220,000, according to FactSet.

Apple sits atop a US stock market that has become dominated by technology-centred companies: Amazon, Google’s parent Alphabet, Microsoft and Facebook round out the top five in market value.

The achievement seemed unimaginable in 1997 when Apple teetered on the edge of bankruptcy, with its stock trading for less than $ 1, on a split-adjusted basis, and its market value dropping below $ 2 billion.

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To survive, Apple brought back its once-exiled co-founder, Steve Jobs, as interim CEO and turned to its arch rival Microsoft for a $ 150 million cash infusion to help pay its bills.

Jobs eventually shepherded a decade-long succession of iconic products such as iPhone that transformed Apple from a technological boutique to a cultural phenomenon and money-making machine.

In its most recent quarter, Apple fetched an average price of $ 724 per iPhone a nearly 20 per cent increase from an average of $ 606 per iPhone at the same time last year.

The price escalation has widened Apple’s profit margins to the delight of investors, who have boosted the company’s market value by about $ 83 billion since the quarterly report came out late Tuesday.

The 9 per cent gain was Apple’s biggest two-day advance in nearly a decade.

Apple’s stock has climbed by 23 per cent so far this year.

As mighty as Apple may seem now, economic and cultural forces can quickly shift the corporate pecking order.

Some analysts believe e-commerce leader Amazon.com will supplant Apple as the world’s most valuable company in the next year or two as its spreading tentacles reach into new markets.

This much is certain: Apple wouldn’t be atop the corporate kingdom without Jobs, who died October 2011. His vision, showmanship and sense of style propelled Apple’s comeback.

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But the recovery might not have happened if Jobs hadn’t evolved into a more mature leader after his exit from the company in 1985. His ignominious departure came after losing a power struggle with John Sculley, a former Pepsico executive who he recruited to become Apple’s CEO in 1983.

Jobs remained mercurial when he returned to Apple, but he had also become more thoughtful and adept at spotting talent that would help him create a revolutionary innovation factory.

One of his biggest coups came in 1998 when he lured a soft-spoken Tim Cook away from Compaq Computer at a time when Apple’s survival remained in doubt.

Cook’s hiring may have been one of the best things Jobs did for Apple. As Jobs’ top lieutenant, Cook oversaw the intricate supply chain that fed consumers’ appetite for Apple’s devices and then held the company together in 2004 when Jobs was stricken with a cancer that forced him to periodically step away from work.

Just months away from his death, Jobs officially handed off the CEO reins to Cook in August 2011.

Cook has leveraged the legacy that Jobs left behind to stunning heights. Since Cook became CEO, Apple’s annual revenue has more than doubled to $ 229 billion while its stock has quadrupled. More than $ 600 billion of Apple’s current market value has been created in that time.

Cook hasn’t escaped criticism, however. The Apple Watch has been the closest thing that the company has had to creating another mass-market sensation under Cook’s leadership, but that device hasn’t come close to breaking into the cultural consciousness like the iPhone or the iPad.

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That has raised concerns that Apple has become far too dependent on the iPhone, especially since iPad sales tapered off several years ago. The iPhone now accounts for nearly two-thirds of Apple’s revenue.

But Cook has capitalized on the continuing popularity of the iPhone and other products invented under Jobs’ reign to sell services tailored for the more than 1.3 billion devices now powered by the company’s software.

Apple’s services division alone is on pace to generate about $ 35 billion in revenue this fiscal year more than all but a few dozen US companies churn out annually.

Apple had also come under fire as it accumulated more than $ 250 billion in taxes in overseas accounts, triggering accusations of tax dodging. Cook insisted what Apple was doing was legal and in the best interest of shareholders, given the offshore money would have been subjected to a 35 per cent tax rate had if it were brought back to the US.

But that calculus changed under the administration of President Donald Trump, who pushed Congress to pass a sweeping overhaul of the US tax code that includes a provision lowering this year’s rate to 15.5 per cent on profits coming back from overseas.

Apple took advantage of that break to bring back virtually all of its overseas cash, triggering a $ 38 billion tax bill. All that money coming back to the US also spurred Apple to raise its dividend by 16 per cent and commit to buy back $ 100 billion of its own stock as part of an effort to drive its stock price even higher.

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