Google Tops Exxon Mobil to Become World’s 2nd Most Valuable Company

Google surpasses Exxon to get the world’s second largest market capitalization, behind only Silicon Valley rival Apple.

Google began as a simple search engine founded by Larry Page and Sergey Brin. Photo: Robert Scoble/ Flickr

Silicon Valley is home to the world’s two most valuable companies as of Friday, when Google Inc. beat Exxon Mobil Corp.  as the second-most valuable company, trailing only Apple Inc. and underscoring the growing role of technology in the economy.

The race for the top has been a battle between Exxon Mobil, Apple and Microsoft for years. For the past 18 months, Google, Exxon and No. 4 Microsoft have all lagged behind Apple, whose market value Friday stood at $463.6 billion.

Now Google, which became the world’s largest online advertiser through its dominant search engine, has clearly taken the lead with a market cap of just more than $394 billion it has surpassed Exxon Mobil Corp. and its market cap of just over $393 billion.

“Google’s market cap reflects investor recognition of the growing strength of its digital platform, which is growing leaps and bounds,” Frank Gillett, an analyst with Forrester Research Inc., said in an e-mail.

Apple shares have been in decline since September, destroying enormous amounts of market value. Apple’s value increased to more than $600 billion in September 2012 as it dominance in mobile hardware appeared uncontested.

Last week, Apple shares slumped 8 percent after the company revealed slower-than-expected iPhone sales in a lackluster Christmas season. This week, CEO Tim Cook said Apple has bought back 14 million shares since its earnings miss last week — a move that had been loudly demanded by billionaire investor Carl Icahn, says NY Post.

Exxon, the world’s largest oil producer by market value, has been under pressure since it reported fourth-quarter output declined last month. Net income fell 16 percent to $8.35 billion, or $1.91 a share. Sales dropped 3.3 percent to $110.86 billion. Global output for the Irving, Texas-based company dropped for the ninth time in 10 quarters, reports Bloomberg.

Microsoft has the fourth largest market cap, FactSet reported Friday, giving tech three of the top four spots. The next largest market cap for a Silicon Valley tech company is Oracle, which ended Friday with a valuation of $167.3 billion, just ahead of Facebook at $163.8 billion.

In October of 2012 Google first passed Microsoft’s market value becoming the fourth most valuable company in the world, though the two companies did trade places after that. A year later, Google’s stock hit $1,000 a share for the first time, driven by a strong third-quarter earnings report and investor optimism for Google’s ability to grow ad revenue and continue innovating with other products.

Google is now about $75 billion behind Apple, one of its chief competitors and currently the most valuable company in the world.

However, Google dominates the online advertising market, taking some 41% of all online ads. Its dominance in search is even greater, approaching 70% in the U.S. and even higher in some European markets.

“It’s working and it’s continuing to work,” Martin Pyykkonen, an analyst at Wedge Partners Corp., said. “They invented something that people use constantly, every day of their life.”

Most recently, Google reported disappointing adjusted quarterly profit of $12.01 a share for the period ended Dec. 31, missing expectations by 2.4%, says S&P Capital IQ.

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