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A trillion-dollar business
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From the statistics, Apple Inc has shown its dominance across all fronts as
the premium consumer technology company.
This is precisely why it became the most valuable company in the world and
the first ever to cross the US$3 trillion (RM12.6 trillion) threshold. It is an
extraordinary story of the American dream and innovation-spurred
capitalism, especially when Apple was only 90 days from bankruptcy in
1997.
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The irony was Apple being saved by its nemesis Microsoft Corp, when Bill
Gates announced an investment of US$150mil (RM628.5mil) to bail it out.
While Apple is currently the most valuable company in the world, Microsoft
is right behind with a market cap of US$2.5 trillion (RM10.5 trillion).
I can still vividly remember the long queue in London when the second-
generation iPhone was launched during my university days. It was as though
a legendary rock star was in town and the long queues outside the Apple
retail store in Regent Street was too fanatical to be true.
Many credit the cult following and loyalty towards the Apple brand to the
larger-than-life personality of Steve Jobs and his one-of-a-kind marketing
showmanship on stage during product launches.
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08/01/2022, 13:27 A trillion-dollar business
While Jobs has passed on for a decade now, his legacy and tradition lives on
with the people within the organisation.
Most MBA courses and business textbooks highlight the risk of a company
which is synonymous with its charismatic founder, for fear of the potential
risk of deterioration or worse, collapse in the event of the founder’s
departure.
Hence, when the news of Jobs’ late-stage cancer surfaced, there was panic on
the streets for investors and shareholders alike. Morale was low and the
images of Jobs’ gaunt physique sent chills down the spines of those who had
an interest in Apple.
Although the trusted COO, Tim Cook, and chief design officer Jonathan
Ive had been a steady pair of hands with Apple for years and were ready to
steer the ship, many were still anxious about the company’s future prospect.
Time has proven that the concerns were unfounded. At the time of Job’s
death, the market cap of Apple stood at US$340bil (RM1.42 trillion).
Today, it is nine-fold more than what it was worth only a decade ago. This
means if an investor had taken a RM100,000 position in Apple during the
time of Job’s passing, today it would be worth RM900,000.
While some would say it is in part due to inflation and extremely loose
monetary policies, the fact is the foundation laid by Jobs in his lifetime has
provided the groundwork and blueprint for the successors and professional
managers of the company.
This is made possible because of how Apple has continued to disrupt and
innovate in the technology space which affects our daily life, ranging from
communications, time, entertainment, work and now towards
transportation.
While many have said the mindset change for Buffet in embracing Apple, a
stark departure from his usual self, was due to the role of his two lieutenants
Todd Combs and Ted Weschler, Buffet have offered some indication of how
he view his investment in Apple. Buffet has notably called Apple Berkshire’s
“third-largest business,” after its insurance and railroad interests. He said the
iPhone is a “sticky” product, keeping people within the company’s
ecosystem. In 2020, he told CNBC that “Apple is probably the best business
I know in the world. I don’t think of Apple as a stock. I think of it as our
third business.”
to invest in good businesses. This pretty sums up the approach that investors
should adopt when looking at investments. It is more than just a ticker or a
stock, but the sum of its parts, which is ultimately comes down to it being a
business.
I believe the Apple playbook is quite well publicized and if one works on
emulating the best practices, there is a good probability that we will see
more trillion dollar businesses in the years to come, not only from US, but
other parts of the world.
Hann, is the author of Once Upon A Time In Bursa. He is a lawyer & former
Chief Strategist of a Fortune 500 Corporation.
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