iBubble? Apple Now Bigger Than Microsoft, With an Asterisk

Last Updated Apr 23, 2010 12:08 PM EDT

Apple shares closed at $266.47 on Thursday, making it a bigger company than Microsoft and second only to Exxon among U.S. publicly-traded companies, according to S&P's rankings. When analysts there multiplied outstanding shares by share price, Apple's market cap was $241.5 billion and Microsoft's only $239.5 billion, and Apple picked up another $5 a share in the first hour of trading on Friday morning.

Turns out there's an asterisk, though. S&P calculates market cap using "float-adjusted" numbers, which leave out closely held shares that are not actively traded, including a bucketful that are held by Bill Gates. Put all those shares back in, and Microsoft is actually still worth about $25 billion more than Apple.

Despite this discrepancy, the point is that Apple's stock is getting pretty pricey. It's doubled in a year, and the enthusiasm for iStuff and shares seems boundless.

So is Apple a buy or a sell? Oh, probably. I'm not going to tell you which because (1) I'm not qualified to call stocks; (2) We don't do that sort of thing here on MoneyWatch; and (3) full disclosure: I'm married to a Mac nut who started buying iEverything, including a few shares of Apple, back when Steve Jobs (and said husband) were still kind of hippies.

But I will say this. There are more than a billion people in China to sell iPhones to, and more than 40 million Americans under the age of 10, who are probably already nagging their parents for iStuff, so Apple has some prospects. At 26, the company's price-to-trailing-earnings ratio is high, but not stratospheric. And, yes, iProducts are awesome.

But so are some products from competitors that are catching up, like the HP Slate, Android, the Kindle and even Pandora Radio, which could eat up some iProfits in the future. Steve Jobs won't be around forever. And trees never do grow all the way into space.

Photo by kyz on flickr.
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