While Apple remains the most valuable tech company in the world, it retains that status thanks to its large pile of cash – $145b worth. Discount that, notes the Wall Street Journal, and its underlying value – its market cap minus the cash – is $223b, leaving it now behind Google with $241b on the same measure …
Why would you discount the cash? The WSJ gives this analogy:
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.
Another way to think of it is that all that cash represents the profits of past achievements, while its market capitalisation without the cash represents what the market thinks the company itself is worth today.
Of course, market cap is itself a limited measure of the value of a company, with billions added or wiped off a company’s value overnight on a whim of the market. The stock price at any given point in time represents little more than investor and analyst theories about how the company might perform in the future – something notoriously difficult to predict in the tech sector.
All the same, it’s an interesting perspective, and a stat that likely made it to the desk of Apple CEO Tim Cook.