Should Exxon be scared of Apple?

The glitz, the flash, the hype have made Apple the second-most-valuable company in the world. Its market cap is almost as big as Exxon's -- whose sales are nearly 7 times larger.

By Charley Blaine Jun 28, 2010 11:30PM
Steve Jobs holding Apple's new tablet, 'iPad' © Kimberly 
White/Reuters/LandovUpdated 6:45 p.m. ET, Tuesday

As a crummy second quarter comes to an end, here's perhaps the most startling fact: Apple (AAPL) is within $36 billion of being worth more than Exxon Mobil (XOM).

At the end of Tuesday's trading, Exxon, down 2% to $57.29, had a market capitalization of $269.2  billion. Apple's was $233 billion after the shares fell 4.5% to $256.17.  Exxon had $336.8 billion in revenue in the last 12 months; Apple just $51.1 billion.

That shows how much the second quarter is about the company's capacity to excite millions of consumers to plunk down hard cash to buy its iPhones and iPads and pay still more to make the  devices work.

Despite today's fallback, Apple is still up 9% for the quarter, and its strength has led investors to think: "Apple is fun. Exxon is, well, a big oil company. Like BP (BP)."

Exxon, in fact, is down 14.5% in the quarter, which helps explain why Apple has made up so much ground.

Apple shares are up 27.3% this year, while the Dow Jones industrials ($INDU) are down 5.4%. The Standard & Poor's 500 Index ($INX) is off 6.6%, and the Nasdaq Composite Index ($COMPX) is down 5.9%.

Apple's market cap has zoomed past Procter & Gamble (PG) ($174.6 billion), Wal-Mart Stores (WMT), ($181.4 billion), Berkshire Hathaway (BRK.A) ($198.4 billion) and Microsoft (MSFT) ($204.7 billion -- Microsoft publishes MSN Money). 

All but Berkshire are lower this year. Berkshire is up 21% on the year.

It's also a reflection of how the second quarter proved so disappointing for everyone except the holders of Treasury bonds and gold. And Apple shareholders.

The risk is building in the stock, however.

The first problem Apple has is that the shares are up 214% since the end of 2008. Gains that big and that fast for a company that large can lead to blowoffs, something Apple knows well. After a 133% rise in 2007, it fell 57% in 2008.

And the gains are starting to get harder because the stock price is so high. Monthly gains in February through April of 6.5%, 14.9% and 11.1% were followed by a 1.6% decline in May and 4% so far in June.

The stock is selling at 22% above its 200-day moving average, a frothy differential, but in 2007 it nearly reached 50% over its 200-day average.

Apple 's surge has not been accompanied -- at least in the last six months -- by the market overall.

In fact, only seven of the 30 companies with the largest market caps in the world are higher in the first half of the year. Only two of those giants had gains in the second quarter -- Apple and China Mobile (CHL).

So, it's pulling money in as money managers scramble for stock performance in a market that's off 10% or so since the end of April.

Thus, while the stock is surging and there's talk of $300 or higher on the shares, it can and will be affected if the market correction gets worse.

Apple is helping its suppliers.

SanDisk (SNDK), which supplies chips for the iPad, is up 58% this year.

OmniVision Technologies (OVTI), whose chips are powering the camera mechanism of the iPhone, has boosted guidance this year substantially. The shares are up 65% this year alone, closing at $23.96 on Monday.

How Apple and its component makers are faring in 2010
Company 

Mon.

June chg.

Qtr. Chg.

YTD chg.
Apple 

$256.17

-1.24%

9.01%

21.56%
Omnivision Technologies
$22.24

15.29%

29.45%

53.17%
STMicroelectronics

$7.97

2.97%

-19.17%

-14.02%
Triquint 

$6.05

-13.82%

-13.57%

0.83%
Skyworks 

$17.01

6.78%

9.04%

19.87%
Broadcom 

$33.43

-3.10%

0.69%

6.23%
Corning 

$16.46

-5.57%

-18.56%

-14.76%
Texas Instruments 

$23.96

-1.88%

-2.08%

-8.06%
SanDisk

$42.64

-8.54%

23.13%

47.09%

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