Aug 3, 2018

Why Apple's $1 trillion milestone matters

Illustration: Rebecca Zisser/Axios

Apple briefly topped $1 trillion in market cap, becoming the first U.S. company to do so. In and of itself, it's an arbitrary and not terribly meaningful milestone. But Apple's size really does matter.

The bottom line: A trillion dollars in market cap means Apple has both the cash and stock to buy anything it wants. That will be very important if the company decides to venture further into areas like self-driving cars or video content. (This NYT interactive graphic puts $1 trillion in perspective, showing all the things that amount would buy.)

History lesson: Apple was close to bankruptcy back in the late 1990s, before Steve Jobs' return to the company. In the two decades since, Apple has had a series of consecutive hits that allowed it to grow, step by step, into the tech giant it is today. Here are the three most important:

  • iMacIntroduced by Jobs in 1998, the brightly colored translucent computer allowed Apple's core business to recover and grow, and re-established the company as the leader in cool, unconventional thinking.
  • iPod (and iTunes) — It's hard now to state just how bold and important Apple's move into music was for the company. The iPod showed the world, and the company, that the values, aesthetics and approach Apple had developed with computers, could be applied to entire other industries.
  • iPhone — Obviously Apple owes much of its trillion dollars in value to the iPhone. While there were other smartphones before it, Apple literally changed the shape of the industry with the introduction of the multi-touch device in 2007.

For more on Apple's transformation from near insolvency to $1 trillion in market value, the New York Times' Jack Nicas has a great recap here.

What they're saying:

  • Apple CEO Tim Cook: "While we have much to be proud of in this achievement, it’s not the most important measure of our success. Financial returns are simply the result of Apple’s innovation, putting our products and customers first, and always staying true to our values."
  • CNBC flashed back to Apple's 1980 stock offering, which Massachusetts regulators banned from being sold there as too risky.
  • BusinessWeek trolled itself, posting a photo of its 1996 cover story on Apple, "The fall of an American icon," with the comment "LOL."
  • And while I usually hate it when people compare market cap to GDP, I have to applaud this effort. "Apple’s trillion dollar valuation is equal to the GDP of the state of Florida, but that’s comparing apples to oranges."

What's next: The big question now is what the next trillion dollar company will be, with most eyes on Amazon. As for Apple's future, the question now is whether Apple can use services, cars or another breakthrough to keep the growth going.

Go deeper

Scoop: Top NSC official reassigned to Energy Department amid "Anonymous" fallout

Photo: Mark Wilson/Getty Images

Deputy national security adviser Victoria Coates will be reassigned as a senior adviser to Energy Secretary Dan Brouillette, the National Security Council said Thursday — and a senior White House official said that the administration "rejects" the rumors that she is "Anonymous."

Why it matters: Coates has battled claims that she is the still-unknown Trump administration official that penned a New York Times op-ed and book critical of President Trump.

The Fed may be setting the table for 2020 rate cuts

Illustration: Sarah Grillo/Axios

The Fed looks to be laying the groundwork to lower U.S. interest rates this year, just as they did in April 2019 before cutting rates in July, September and October.

Why it matters: A Fed rate cut makes taking on debt more attractive for U.S. consumers and businesses, helping to juice the economy, but also puts the central bank in a weaker position to fight off a potential recession.

Morgan Stanley to buy E*Trade in a $13 billion deal

Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Morgan Stanley is planning to buy E*Trade Financial Corp. in a $13 billion all-stock deal, the Wall Street Journal reports, with plans to acquire the company known for helping everyday Americans manage their money.

Why it matters: The deal, which would be the largest by a major American bank since the financial crisis, signals Morgan Stanley‘s desire to bulk up in wealth management.