Analysis: Apple wouldn't bolt it in

22/08/2012 - 14:45


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After Usain Bolt won the 100 metre title at the Olympics this month there was a lot of interesting analysis about how humans had become progressively faster in the past century.

Bolt would not only have won comfortably – he did set an Olympic record of course – but if matched against winners from every year going back to the first games, he would have left some gold medallists dozens of metres behind.

Clearly the pool of talent, training techniques, diet, equipment and opportunities have made sure that runners have become faster and faster. Most importantly, the key measure, time, has not changed during that period, and, although timing devices might have been refined, the Jamaican would bolt it in even if we were still using handheld analogue stopwatches.

Of those who have competed, Bolt is the fastest, of that there is little doubt.

But measuring value is a different matter which makes this week’s news that Apple was the biggest company by market capitalisation so pointless because the so-called record is set in nominal terms, rather than adjusting it for inflation.

The news suggests that Apple has reached some form of historic milestone reaching $US665 billion, beating Microsoft’s $US620 billion market capitalisation in 1999 at the height of the technology boom.

But that is not comparing apples with apples, so to speak. The 1999 version of Microsoft, if all shareholders sold all their shares and put them in safe investments that simply matched inflation, would be worth $US850 billion in today’s dollars, a peak that Apple falls significantly short today. At least Microsoft is still around today to be compared with Apple. Bill Gates’ company is valued by the market at nearly $US260 billion.

Using another historic example, Standard Oil was estimated to be worth around $US380 million when it was forced to split into more than 30 separate entities due to US anti-trust laws in 1911. In today’s dollars that would be worth somewhere between $US8 billion and $US10 billion, which seems small.

Of course, that neglects to take into account that several of the new entities went on to become major companies in their right, including Mobil and Exxon. The latter of those two alone is worth $US405 billion today. Some commentators believe that if in one piece Standard Oil would be worth $US 1 trillion today.



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