Joseph Mariathasan wonders what, if anything, can check the technology giant’s astonishing growthApple was valued at more than $770bn (€687bn) at its peak in February, making it by far the single-most valuable listed company on the planet. Despite its mammoth size, its chief executive, Tim Cook, announced that it could grow at a rate more akin to a start-up. But how large can a company grow? For some companies, there may be a clear upper limit – how many cans of sweetened fizzy drinks can Coca-Cola sell to a global population, with increasing worries over an epidemic of obesity-related afflictions such as diabetes?That may be a reasonable question to ask of Coca-Cola, but can an analogous question be asked of Apple, with an enormous market, global distribution and a strong brand that, despite being enormous, still has a lot of growth in front of it? Will the limit to Apple’s growth be set when every person on earth has an iPhone?Mega companies were clearly growth companies at an early stage of their lives to reach their gargantuan sizes. But, at what stage should mega-cap mega brands be seen as purely post-growth and value/dividend plays? Deciding when a company such as Apple has reached that position is unclear. The limits to growth are clearly dependent on the business strategy a company chooses to follow. Apple is clearly not a one-trick pony. It is not just a hardware company like Dell, having built an ecosystem around a seamless integration of innovative products and applications way beyond production of commodity hardware. The limits to growth are further away for companies with three key characteristics. First, as famously outlined by Warren Buffet as the companies he favours, are those with an economic moat that protects them against competitors, with a well-known brand name, pricing power and a large portion of market demand. This can provide the ability to grow enormously, but, sometimes, disruptive technologies can overwhelm even the widest moat. Kodak is a classic example, where its domination of photography could not withstand the impact of digital technology. But Apple has become the ultimate consumer brand, with the ability to create interest in any new product or variation of an existing product by just adding the prefix ‘i’.A second economic driver for growth also requires high-quality companies to be able to get better as they get bigger. Bigger does not always mean better, and the banking industry is the prime example of this. Citibank has a global footprint, but its value lies in having a few particularly strong local franchises in countries like Mexico.The insurance industry is another case in point. Life insurance and property and casualty insurance are locally regulated and require capital to be domiciled in local markets, giving few benefits in size, beyond reducing the overall volatility of results. Reducing volatility benefits senior management but not shareholders who could gain equivalent diversification themselves. At the reinsurance level, however, size can bring benefits because of the nature of the business and the size of the transactions. For Apple, the iPhone ecosystem that has grown is a classic example of something that gets better the bigger it grows.The third key characteristic that virtually all mega companies have is the ability to seek customers in the emerging markets.Any constraints to its size are further away for Apple than for most other companies, as it has all the three factors for growth in spades. So what can be the limits to growth for Apple? “The biggest risk for most of the companies we own is anti-trust regulation in the US that will force them to split apart,” said one fund manager on his Apple weighting. “We don’t like that problem, but we certainly prefer it to others we might have!”That is exactly what happened to the old AT&T, which once dominated the US telephone market and was forced to split up in 1982 into seven regional telephone companies – the ‘baby Bells’. That is unlikely to happen to Apple, given that it does not operate in oligopolistic markets and its innovations have attracted rapid and ferocious competition.There appears to be no limits to size for Apple. But then, AT&T, at its height, employed 1m people. Apple employs less than one-tenth of that. A great investment for its shareholders but perhaps also a sign of the problems society faces with the new generation of mega companies that are great at producing returns for shareholders but lousy at producing jobs.Joseph Mariathasan is a contributing editor at IPE
According to reports from Diario Sport, club president Josep Bartomeu acknowledged an offer for the teenager during a virtual board meeting earlier this week. The rumoured bid was immediately rejected by Bartomeu however, who confirmed the club have no intention of selling the Spanish U21 international in the near future. Read Also: Dutch legend confirms contact over Barcelona job Fati burst onto the scene at the start of the 2019-20 campaign, becoming the club’s youngest ever goal scorer back in August 2019. He has continued to play an important first team role, under both Ernesto Valverde and new boss Quique Setien, with 24 appearances and five goals in all competitions in 2019-20. FacebookTwitterWhatsAppEmail分享 Advertisement Loading… The 17-year old forward agreed a new contract at the Camp Nou less than 12 months ago, with his current deal expiring in 2023, with La Blaugrana retaining the option of extending it until 2025. Barcelona have reportedly turned down a shock €100m bid from a unnamed rival club for teenage superstar striker Ansu Fati.
Here’s the top transfer-related stories in Tuesday’s newspapers…Manchester City are ready to launch a fresh bid for Everton and England midfielder Ross Barkley, 20, next summer after the Toffees’ £50m valuation drove them away during the last transfer window. (Daily Mirror) Arsenal and Liverpool have been dealt a blow in their pursuit of out-of-favour Real Madrid midfielder Isco, 22, after Real boss Carlo Ancelotti confirmed that the club will not sell him in January. (Metro) Roma have joined Manchester United and Liverpool in the race to sign 15-year-old midfielder Martin Odegaard from Stromsgodset. (Daily Express) Manchester United are ready to reject a move for one of their former heroes, 29-year-old forward Cristiano Ronaldo – now of Real Madrid – to avoid upsetting their current crop of stars. (Metro) Meanwhile, United also want to patch up their defence with Netherlands defender Ron Vlaar, 29, who is out of contract at Aston Villa at the end of the season. Arsenal are also interested. (Daily Express) Cardiff are keen on signing West Ham midfielder Ravel Morrison on loan – but will send the 21-year-old back to the Hammers in January when he starts his court case. (Daily Mail) Former Watford and West Ham boss Gianfranco Zola, 48, is on Fulham’s five-man managerial shortlist along with Chris Hughton, Tim Sherwood, Steve Clarke and caretaker boss Kit Symons. (Daily Mirror) And here are the latest talkSPORT.com transfer rumours…Exclusive – Man United boss Van Gaal does NOT rate Shaw, claims MeulensteenEx-Red defends Liverpool’s poor start to the season: ‘New players need time to settle’Exclusive – Van Gaal’s ‘strange’ decision to sub Di Maria gave Leicester a lift, admits Phillips Exclusive – Warnock: Captial One Cup not on Crystal Palace’s radarRoma join Man United in race for Norway starletFiorentina weigh up move for Liverpool and Tottenham targetNothing in Liverpool and Newcastle transfer talk, insists Lyon starRoma issue transfer warning over Man United target Strootman