Will Apple Remain The Most Valuable Company?

Analysts anticipate that the Silicon-Valley giant, Alphabet Inc. is all set to overtake Apple's position of most valuable company.

When the market closed on Friday, it gave both the investors and analysts on a hot topic for discussion –will Apple be dethroned by Alphabet Inc.? In the closing hours, the tech titan; Apple Inc. stood at the market capitalization of $540 billion while the internet search giant Google’s parent Alphabet Inc. showed the market cap of $524 billion. Both the companies are neck-to-neck with the latter being just $16 billion less.

More than a year ago, Apple had a bolstering market cap of $643 billion while then Google was way far behind at $361 billion. However, things didn’t go well for the Silicon-Valley’s iPhone maker. The last quarter report was the final blow on the company. When the company declared that it has the slowest growth in iPhone sales since its first release in 2008, all hell broke loose.

Not only did the company lose the investors and analysts trust however it is also on the verge of losing its tag of “the most valuable company.” Whereas Alphabet has impressed the investors with its humungous growth in ad market and Internet search. It is also working on other products like video, mobile, web browsing, email, and mapping. Hence, the company witnessed the stock growing up by 43% since the beginning of 2015.

Moreover, the analysts are not quite happy regarding CEO Tim Cook’s attitude towards the company’s performance. The conflict of ideas is widening between the two. While analysts are concerned about iPhone slow rate of sales, Cook boosts about the company’s strong profit. He also persisted that the high tech gadget maker is performing reasonably well in its other businesses. For example, Apple Watch –the luxurious watch –stood with the likes of Rolex. Its iTunes Store and other app store generate strong revenue for the company. Further, the proposed “iPhone 7” may also bring high revenue for the company.

Analysts argue that iPhone is company’s “core product” and the company’s other core products including iPad and Mac laptops are not having high sales either. Moreover, it is not only the “revenues” which are making the investors and analysts skeptical. The company has also adopted an unfavorable strategy of raising debt to meet its capital return activities. Raising debt to pay dividends doesn’t appreciate the value of the stock.

Amidst all this it looks like that Internet giant may overtake the innovative mobile phone developers soon. Alphabet’s stock is skyrocketing and many analysts are optimistic about its earnings –scheduled on February 1, 2016. Also, in the world of finance, a colossal earnings report can add billions to the value of the company in a single day. The diminishing demand of smartphones and growing market of digital advertising paves the way for Alphabet to stand tall in the Silicon-Valley.

Ford Exits Indonesian and Japanese Market

The declining sales urge the America's top manufacturer to shut down its operations before incurring more losses

America’s top automobile manufacturer, Ford Motor Co. announces its exit from the Japan and Indonesian markets. The U.S. auto giant will exit the markets by the end of 2016. The U.S. based organization faces tough competition in the Asian markets. Dejected by the unprofitable ventures, it has decided to suspend its operations. The decision has been communicated to 350 employees of the company in both countries.

Over the years, Ford’s executives complained about the hindrances that importers were facing including non-tariff barriers and a series of regulations. Trade-barriers were huge blow for the company for the sector where the company relied on importing the vehicles. The organization does not positive views for  U.S. President Barack Obama’s 12-Nation Trans Pacific Partnership Trade, a treaty which would disband the U.S. duties on import cars from 12-Nations including Japan.    

The Japanese market is already dominated by big local companies such as Toyota Motor Corporation. In 2015, the company’s sale has been exceptionally low with a total of around 11,000 vehicles sold in both countries. In Japan, the U.S. top automobile manufacturer share remained at 0.1% with a number of only 5,000 vehicles sold.

According to analysts, trend of declining sales in Japan is inevitable because of shrinking population and lack of interest of the youngsters in cars trimming any possible chances of Ford’s success. Similarly, in Indonesia, Ford Motor managed to sale only 6,100 vehicles covering 0.6% share in the market.

The automobile organization has been operating in Japan for more than four decades with 52 dealerships in the country. The company’s personnel said that the company’s operations in Asia will remain in force. Lately, it has been performing quite at par in China. According to Ford’s spoke person, Ms. Karen Hampton, last year the company pulled off $1 billion sales in China, growing up by 3%.

 The business objective included import of Ford and Lincoln vehicles, sales, and dealership offices. The company didn’t set up production base in Indonesia. Moreover, Indonesia has the potential for the automobile industry’s growth. However, the tough competition by Japan deterred the company’s growth. Worldwide, Japan has the most developed automobile manufacturing structure.

In the year 2014, the company sold around 11,614 vehicles in Indonesia while in the foregoing year the figure came tumbling down at 6,100. The sales declined by almost 50%. Almost a year earlier, in Indonesia, the Detroit multinational General Motors Company shut down its assembly plan.

Keeping in view Ford’s poor performance in both countries, the company’s decision to shut down the businesses is prudent.   

At the market which closed on Monday, Ford Motor Corp. stock stood at $11.98. The stock currently has a rating of “Hold” with a 52-week range of $10.44 to $16.74. The higher price target is estimated at $22 while the lower price target is set at $14.