Could Apple buy Canada?

Apple Inc., the maker of iPhones, iPads and other must-have gadgets, crossed the US$300-billion market capitalization threshold earlier this month, making it the second most valuable publicly traded company in the world behind oil giant Exxon Mobil. The milestone has caused some industry watchers to murmur about the possibility that Apple could be The One—not as in a Matrix-type saviour, but the first corporation to crack the trillion-dollar mark, possibly as early as 2013.

With its shares trading around US$334 each, the current valuation of the California company, headed by CEO Steve Jobs, is already bigger than the GDP of several developed countries, including Denmark and Israel. A valuation of US$1 trillion would put it near par with Canada’s GDP of US$1.34 trillion, a measure of the value of all the goods and services produced in the country annually.

James Altucher, a hedge fund manager and financial columnist for CNBC, recently suggested that growth projections for Apple “easily make a rationale” for Apple to reach the trillion-dollar mark. While he throws out a lot of numbers to make his case—growing iPhone and App Store sales coupled with enviable 30 per cent margins—his argument boils down to the often irrational love affair people have with Apple’s products. “I have a 30-year relationship with Apple,” he confesses. “I love it. I don’t think I have a real relationship with any other company on the planet. That’s why it’s going to be a trillion-dollar market cap.”

But it’s worth recalling that there have been previous contenders for the title. Back in 2000, analysts were saying the same thing about Cisco Systems, which designs computer networking equipment and software. After all, what could be more important in a Web-connected world than a company that makes all those connections possible? At one point, Cisco’s market valuation hit US$480 billion.

Then the tech bubble burst. Today, Cisco is still the world’s largest maker of computer networking equipment, but its market cap is only about US$116 billion. Then again, it wasn’t as though people were lining up around the block every time Cisco took the wraps off a new edge router.