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Mon, 08 Oct 2007 Apple 'to be bigger than IBM'

Analysts see Apple market capitalisation exceeding that of IBM within a few months

Jonny Evans

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Apple looks set to be bigger than IBM, according to a leading investment website.

Apple "currently has a market capitalisation of $140 billion," writes Georges Yared of Yared Investment Research.

Writing on the Seeking Alpha blog Yared compares Apple's market worth with that of IBM, $158bn. He observes: "Apple will surpass IBM before the first quarter of 2008 is in the books, if not sooner."

Yared expects analysts to raise their Apple stock target prices to $200 a share after the forthcoming Apple earnings conference call, which he expects to see buoyed by strong Mac and iPod sales and continued success for the iPhone.

"The iPod is still a phenomenon and is not, according to many Apple insiders, cannabilisng the iPhone," Yared writes.

In related news, Forbes notes that the value of Apple shares may cause the company to initiate a stock-split. Historically, the company engaged in two for one splits in 1987, 2000 and 2005.

Analysts at UBS, Caris and Company, Credit Suisse and BMO Capital Markets all recently raised or reiterated targets on Apple stock, citing the shares as "outperform". BMO Capital Markets initiated coverage on the stock last week with a $182 target price.

"We believe Apple's business continues to accelerate and is firing on all cylinders going into December," W R Hambrecht analyst Matthew Kather wrote in a late September note to investors.

Apple will debut Mac OS X 10.5 Leopard this month, and analysts anticipate further gains from the release of the operating system - and maintain Apple continues to be dedicated to the Mac, despite the success of its other products.

"Even though these other products are getting headlines, Apple continues to refresh and innovate [its computer business], even when they don't have to," IDC analyst Rick Shim told Mercury News. "If they didn't put Leopard out, they'd still be doing well in the market."

Apple had 5.9 per cent of the US PC market as of Q2 2007, Shim confirmed. That's up from 4.8 per cent for the same period a year ago. Globally, Apple had 3 per cent of the market, up from 2.5 per cent for the same period a year ago.

Apple shares are currently trading at $161.45 each, though early pre-market trades this morning see further gains, with stock valued at $162.05 at time of writing.

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