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Cramer: Apple Still a Buy

Thursday, 6 Oct 2011 | 6:25 PM ET
Apple vs. the World
Steve Jobs left behind the greatest company on earth, says Mad Money's Jim Cramer, and that means the stock is still worth owning because it will keep creating value for shareholders by destroying the value of its competitors. It's Apple against the world, and the world doesn't stand a chance.

While everyone, including Cramer, mourns the loss of Apple’s visionary co-founder and former CEOSteve Jobs, the “Mad Money” host said we also have to recognize that the company he left behind is still the greatest company on earth. And that means the stock is still worth owning.

“Even though Steve Jobs is gone,” he said, “the company he built is still with us, and I have to believe this story isn’t over, not by a long shot.”

In fact, Cramer thinks the tech titan deserves an even bigger valuation. Just look at what it’s done to its competition. All the value creation at Apple has been accompanied by value destruction at its competitors in every market it is in.

The secret, he said, is that Apple has not only created its own operating system, it’s built a whole ecosystem.

The numbers prove his point. Apple’s competitors have lost $311 billion in value since the launch of the iPod ten years ago, the iPhone in 2007 and the iPad last year. And that’s just counting public companies that are still around, not companies that were destroyed, taken over, or got out of the business.

When Apple launched the iPod in 2001 and the iTunes store soon thereafter, the Sony Walkman was king. Now the iPod has 70 percent of the market share, and Sony has lost 48 percent of its value. Warner Music lost about 45 percent of its value between when it became public in 2005 an when it was taken over earlier this year.

The company’s PC business is also growing, while the rest of the PC business is in secular decline. Dell, Hewlett-Packard and Microsoft have lost a total of $127 billion since the introduction of the iPad.

The hard drive makers have also been hit, since Apple uses flash memory in all of its portable devices. Western Digital and Seagate Technology have lost a combined $5.5 billion in value since the launch of the iPad.

The iPhone will continue to take market share, Cramer said. Since the original smartphone was first released in 2007, Nokia and Motorola Mobility have lost a combined $108 billion in value.

Apple also invented the tablet market, and they own it, he said. Since the launch of the iPad, Research in Motion lost $51 billion in market capitalization and Google lost $7 billion.

The bottom line—Apple has gained over 13,000 percent since it first went public in 1980, and Cramer thinks the tech giant will continue to create value for shareholders.

“It's Apple against the world, and the world still doesn't stand a chance,” he said.

Call Cramer: 1-800-743-CNBC

When this story was published, Cramer’s charitable trust owned Apple.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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