Investors click out of Apple into Google

Google's share value has hit a new high.

Story highlights

  • Apple's stock plumbed new depths on Monday just as Google hit an all-time high
  • Wall Street struggles to come to terms with the rapid shifts in the smartphone market
  • Investor rethink about the two companies has led to a striking readjustment in valuation

Apple's stock plumbed new depths on Monday just as Google hit an all-time high, reflecting Wall Street's struggle to come to terms with the rapid shifts in the smartphone market.

The investor rethink about the prospects of the two tech companies has led to a striking readjustment in valuation, with Google climbing from barely a third of Apple's worth six months ago to more than two-thirds yesterday, or $267bn.

At Monday's close, Apple's market capitalisation stood below $400bn for the first time in more than a year.

Reports that Apple could introduce a new smart watch as soon as this year and an endorsement of chief executive Tim Cook's strategy from Warren Buffett failed to counter the negative sentiment that has plagued Apple's shares, which are now 40 per cent below their highs.

Some Apple investors, led by Greenlight Capital's David Einhorn, have been pushing the company to pay out more of its $137bn cash pile, something founder Steve Jobs long resisted.

On Friday, Mr Einhorn dropped a lawsuit against Apple over corporate governance changes but continues to push for higher returns of cash, something Mr Cook has said the board is actively considering.

Speaking on CNBC on Monday, Mr Buffett said that if he were in Mr Cook's shoes, he "would ignore" Mr Einhorn but added that he did advise the late Mr Jobs to buy back stock.

Warren Buffett: If he were Tim Cook, he'd be buying Apple

"I would run the business in such a manner as to create the most value over the next five to 10 years. You can't run a business to push the stock price up on a daily basis," the Berkshire Hathaway chief said. "I think Apple's done a good job of building value. They may have too much cash."

Apple's recent stock market weakness stands in stark contrast to the strong momentum in Google's shares, which have risen by 15 per cent since the start of 2013. At the same time as investors' love affair with the iPhone has waned, many have warmed to Google's prospects in mobile.

Its Android smartphone operating system has gained market share at the iPhone's expense over the past two years, and Samsung is set to unveil its latest flagship Android device, the Galaxy S4, this month.

Wall Street's worst fears that the shift to mobile would devalue Google's advertising have been dispelled in recent weeks. In January, Google reported that it had managed to hold the decline in its overall pricing to 6 per cent in the final months of last year.

That news, along with other indications of strong momentum in its core search business, sparked a rally that has since seen its shares rise by nearly 16 per cent, pushing them through $800 for the first time two weeks ago.

At the close in New York, Google had climbed 1.9 per cent to $821.12, a new high, while Apple's stock was down 2.5 per cent to $419.57.

Last week, Mr Cook said he sympathised with "disappointment" among Apple shareholders about its stock price, saying: "I don't like it either . . . We are focused on the long term."

Colin Gillis, technology analyst at BGC Partners, said Apple shares were suffering mainly because investors had soured on the stock and were looking for a catalyst to revitalise its share price.

"Another Monday has come and gone with nothing from Apple's management," he said. "There's been no news on new products, there's no news on dividends, there's no news period from the company."

In January 2012, when Apple's market capitalisation first passed $400bn, its valuation was compared with nation states, and little more than a month later it went on to surpass $500bn, a figure few companies have attained.

After its shares touched an all-time high of $705.07 in September, Apple's valuation fell back below $500bn in December amid fears about iPhone sales and its slowing growth rate. Those concerns have intensified since quarterly results in January, with many Wall Street analysts projecting limited earnings growth for fiscal 2013.

Ben Bajarin, principal analyst at Creative Strategies, a technology researcher, said Wall Street was unable to see past the negative sentiment despite the company's strong fundamentals.

"Wall Street was enamoured by Steve," Mr Bajarin said. "Investors are not getting that captivating, gripping view that they used to have. It's actually better positioned in the long term than when he was alive."

        CNN Business

      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Why are Iraq oil markets stable?

        Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
      • A view of gloves and boots used by medical staff, drying in the sun, at a center for victims of the Ebola virus in Guekedou, on April 1, 2014. The viral haemorrhagic fever epidemic raging in Guinea is caused by several viruses which have similar symptoms -- the deadliest and most feared of which is Ebola. AFP PHOTO / SEYLLOU (Photo credit should read SEYLLOU/AFP/Getty Images)

        Ebola's economic 'scare factor'

        The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
      • People enter a casino in Las Vegas, Nevada, on April 18, 2009. Las Vegas is the most populus city in the US state of Nevada and internationally renowned major resort city for gambling, shopping, fine dining and entertainment. Las Vegas which bills itself as the �Entertainment Capital of the World� is famous for the number of casino resorts and associated entertainment. AFP PHOTO/Jewel SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

        Casinos beat the banker

        Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
      • spc marketplace middle east ata atmar a_00010015.jpg

        Bateel's new bakery venture

        Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
      • Vantablack designed by Surrey NanoSystems absorbs 99.96% of all light. It however will not be the solution to the creating the world's ultimate slimming black dress! A dress made out of this material would render the curves and contours of the human body invisible and would leave the wearer looking like 'two dimensional cardboard cut-out.'

        Is this the real new black?

        A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
      • Move over Siri, here comes Jibo

        Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
      • A picture taken on March 15, 2014 shows children playing at the sprawling desert Zaatari refugee camp in northern Jordan near the border with Syria which provides shelter to around 100,000 Syrian refugees. Syrian refugees in the seven-square-kilometre (2.8-square-mile) Zaatari camp in Jordan fear that President Bashar al-Assad's likely re-election this year will leave their dream of a return home as distant as ever. The brutal war in Syria between the regime and its foes shows no sign of abating and has killed at least 146,000 people since it erupted in mid-March 2011. And 2.5 million Syrians have fled abroad and another 6.5 million have been internally displaced. Jordan is home to more than 500,000 of the refugees.

        Jordan: Seeking calm in chaos

        Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
      • SHEFFIELD, ENGLAND - NOVEMBER 18: Queen Elizabeth II wears 3 D glasses to watch a display and pilot a JCB digger, during a visit to the University of Sheffield Advanced Manufacturing Research centre, on November 18, 2010 in Sheffield, England. (Photo by John Giles - WPA Pool/Getty Images)

        Forget 3D, it's 4K now

        At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
      • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

        Where is Iraq's oil?

        Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
      • Valves of gas pipe-line are seen in the gas station not far from Kiev on March 4, 2014. The European Union will help Ukraine pay the $2.0 billion it owes to Russian gas giant Gazprom, a top official said Tuesday, as part of an aid package reportedly worth more than one billion euros. AFP PHOTO/ ANDREY SINITSIN (Photo credit should read ANDREY SINITSIN/AFP/Getty Images)

        Why Europe needs Russian gas

        The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.