Wal-Mart (NYSE:WMT) Overtaken by Apple (NASDAQ:AAPL) As Third-Largest American Company

Saturday, March 13th, 2010

As measured by market capitalization, Wal-Mart (NYSE:WMT) was surpassed by Apple (NASDAQ:AAPL) on Friday, as the pre-orders for iPad generated a lot of interest in the stock.

In less than an hour, close to 2 million shares of Apple changed hands, as the price of the stock shot up to $227.73, bringing the market cap of the company to $206.5 billion.

The only companies in America larger than Apple, at least while this temporary surge lasts, are Exxon Mobil (NYSE:XOM) and Microsoft (NASDAQ:MSFT).

It has pulled back a little in weekend trading, but still is close to the market cap it closed at on Friday.

For me, it's hard to even contemplate Apple being in this position. While it is a good company as far as innovation and design goes, and knows how to market its products probably as good as any company in the world, it's hard to see them on par or higher than Wal-Mart as far as being valued as a company.

The major difference is the predictability of the two companies, as Apple is always dependent on coming out with the next big thing, while Wal-Mart, while innovative in a much different way, can be counted on to keep its focus on its core business and seemingly plod along while making its investors wealthy over a period of time.

Apple is of course a much more fun and interesting company when reading and talking about it, but they are always one product away from taking a huge hit, and there's always the Steve Jobs factor, which is uncertain as to his health since a few years ago.

Another large cap company with that type of exposure in Berkshire Hathaway (NYSE:BRK-A), which is vulnerable to a certain degree on their populist superstar Warren Buffett, who is aging, and unsurety as to his replacement and how that person will do in comparison to Buffett a major question and concern.

Wal-Mart on the other hand has long ago transitioned from Sam Walton and has successfully kept operations strong and growing, while attempting to maintain the foundation he laid.

Of these companies, Apple is the most vulnerable to me over the next years, as there seems to be no heir apparent or the desire to focus on raising one up. I'm not sure Jobs' ego could handle that. Yet it must be done sometime; whether before he leaves the company or afterwards.

Still, I've got to hand it to Jobs, he can create wealth for his shareholders by the shear power of his personality and marketing ability, and while he's still around that will never change.

In the short term Apple should continue to grow based on that alone, it's highly questionable how it'll do after Jobs leaves the scene.

Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com

Tags: apple , berkshire hathway , sam walton , steve jobs , wal-mart , warren buffett

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