The long road to a trillion

THE stars aligned for Apple on Thursday as the company passed the trillion-dollar market cap threshold.

Apple cofounder Steve Jobs built a computer based on a very intuitive, easy-to-use system. As a result, Apple became the go-to choice in most classrooms that had computers, particularly in the 1990s.

This tactic developed deep, almost cult-like loyalty that to this day runs deep in today’s kids. Jobs pushed to be countercultural to corporate America (and Microsoft in particular) — and yet Apple has become the most valuable company in America.

Apple’s big leap into mass culture came from music with the iPod, which essentially allowed anyone to fit 10 jukeboxes into a player the size of a lighter.

Today, iTunes and Apple Music are mere features on all Apple devices, including the company’s major moneymaker, the iPhone.

Surprisingly, while Apple has been the most fantastic company at developing iterations of its innovations, it has not been particularly innovative for a while in creating new products. And so the world’s most valuable company trades at a merely ordinary market multiple.

So you could say hitting the trillion-dollar mark is a product of engineering of the last three years — financial engineering.

Apple has bought back a lot of stock. In fact, starting in March 2013, Apple has purchased 1.74 billion of its own shares, and it is not done yet.

“We returned almost $25 billion to investors through our capital return program during the quarter, including $20 billion in share repurchases,” said Luca Maestri, Apple’s chief financial officer, on the earnings call last week.

Despite initial consumer apprehensions, Tim Cook has not missed a step since he replaced Jobs. As a result, his company has been richly rewarded by investors, who in turn have reaped huge returns.