Valuation mirage

Apple is now the most valuable company of all time (http://money.cnn.com/2012/08/20/technology/apple-most-valuable-company/index.html?iid=HP_LN)

This story and more articles are being written about Apple being the most valuable company ever… (traded on the stock exchange)

To counter this argument, a soul with common sense wrote that Microsoft’s valuation in 1999 is not adjusted for inflation which would make it $856 Billion in today’s dollars and not $618 Billion (http://www.businessinsider.com/apple-most-valuable-company-controversy-2012-8?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+(Business+Insider))

To me both are a mirage, this ‘valuation’ is based on stock market prices and not the balance sheet of the company. Both companies had excellent cash-in-hand (50 billion plus for many years) but they also had trade outstanding. Meaning they owe people money. Put everything into perspective you will see the risk of using this valuation.

The best criteria to judge a company is net profits & net assets. There aren’t many who have both in stratospheric levels but for those who do, to me, those are the most valuable companies. They have successfully generated profits and built assets that will stand the test of time. When you look at the whole company from a value point, you can happily transfer the shares that you bought over to your children & your grand children if need be and they will reap the benefits of owning these company’s shares.

When you have customer life-time value metric to sustain profits over a long period. Why not see this from a shareholder life-time value perspective?