Apple is the wiz-kid of the tech industry. He’s that one guy who always comes first in the class – in every single test or assignment. He’s the kid your parents point to when you show them your report card. He’s the “Pados-wale Sharma ji ka beta”.
And then, there’s that new kid who came in 11th standard. You know, the one who walks with the confidence and swagger of a rock star? He has long hair, he plays the guitar, excels at almost everything he does, and is adored by teachers and students alike. Well, that’s Google!
Last week, Google overtook Apple to become the world’s most valuable company. Well technically, it’s Alphabet that got the prize, but now we’re just splitting hairs. We know it’s Google.
The switch in rankings took place last Monday after Alphabet released its fourth quarter earning report. Interestingly, Apple had its earnings call the week before that. At the end of the day’s trading, Alphabet’s net market value stood at a staggering $555 billion. In comparison, Apple notched up $533 billion.
Alphabet’s report highlighted the robust growth it has witnessed after it was bought as a parent company by Google. Alphabet’s stock has grown by 45% since October 2015 (when it was still trading under Google’s name). Apple, on the other hand, has acknowledged that they are likely to see their first ever decline in iPhone sales in the eight years since its launch.
Alphabet earned $4.9 billion on revenue of $21.3 billion in the fourth quarter. That figure could easily have been doubled if not for employee stock expenses and certain other items.
The report was also special in other ways. Most prominently, because it brought a lot of transparency to Google’s earning.
“Until now, Google chose to hide the expense of running those peripheral operations in its financial statement,” reports IBNLive. “The company’s opaque accounting made it difficult to know just how much profit Google reaped from its primary business — selling digital ads next to everything from search results to YouTube videos.”
This report, however, also included the costs of all the running experimental tech Google is working on — from providing the world free wifi, to a DIY smartphone assembly to curing cancer and AIDS. And then maybe find some extraterrestrial intelligent life.
So all seems to be well in Google Town. However, we’d do well to be wary. The stock market is a fluctuating system whose equilibrium is always shifting. So this supremacy Alphabet seems to be enjoying could turn out to be just a one-time thing.
Also, these numbers are indicative of growth. They have meaning if a company can produce these numbers consistently over an extended period of time. Like Apple has done for over half a decade now. So, Google might have won this year’s financial battle, the fate of the war has yet to be decided.
Update: While the information was true at the time of writing this article, recent trading figures are showing that Apple is back on top. It grabbed its first place back from Alphabet within less than a week of being overthrown.