Market capitalization, also called market cap, means the total dollar market value of a company's all outstanding shares. It represents the aggregate value of a company or stock.
Market cap is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.
Company size is a basic determinant of asset allocation and risk-return parameters for stocks and stock mutual funds. The term should not be confused with a company's "capitalization," which is a financial statement term that refers to the sum of a company's shareholders' equity plus long-term debt.
There are several approximations of market cap to determine the size of a business. There are different definitions from different sources, but the following is an approximate listing:
Mega Cap: Market cap of $200 billion and greater
Big/Large Cap: $10 billion to $200 billion
Mid Cap: $2 billion to $10 billion
Small Cap: $300 million to $2 billion
Micro Cap: $50 million to $300 million
Nano Cap: Under $50 million
Different types of investors will invest in companies with market caps suited to their liking. Investments generally become more risky, and there is more potential for gain and loss as the market cap decreases.
Some investors tend to invest mostly in mid and small cap stocks because they want to maintain a riskier portfolio. Others have companies with different categories of market caps in order to maintain a mixed portfolio.
The top 10 largest U.S. companies by market cap are: Exxon Mobil Corp., Apple Inc., Microsoft Corp., International Business Machines, Chevron Corp., Google Inc., Berkshire Hathaway, General Electric, Wal-Mart Stores, and AT&T Inc.
Take a look at the top 10 U.S. companies by market cap by clicking start.
While ExxonMobil has reported record-breaking profits this year, the company has received billions in federal tax subsidies.ReutersApple has a market capitalization of $346.25 billion as on Friday at 10 am EDT. The company, formerly known as Apple Computer, Inc., was founded in 1976.The Cupertino, California-headquartered Apple designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide.The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store.The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally.AppleMicrosoft Corp. will host a conference for developers this week where Windows 8 and other new products will be unveiled. But there are things we'd love to see at the event but won't.ReutersIBM, which was founded in 1910, has a market capitalization of $203.35 billion as on Friday at 10 am EDT. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924.The Armonk, New York-based IBM provides information technology (IT) products and services worldwide. Its Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology-based support services.The company's Global Business Services segment offers consulting and systems integration, and application management services.Its Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, business analytics and intelligence, performance management, and predictive analytics; Tivoli software for identity management, data security, storage management, and datacenter automation; Lotus software for collaboration, messaging, and social networking; rational software to support software development for IT and embedded systems; business intelligence software, which provides querying and forecasting tools; SPSS predictive analytics software to predict outcomes and act on that insight; and operating systems software.Its Systems and Technology segment provides computing and storage solutions, including servers, disk and tape storage systems and software, point-of-sale retail systems, and microelectronics.The company's Global Financing segment provides lease and loan financing to end users and internal clients; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing services. It serves financial services, public, industrial, distribution, communications, and general business sectors.ReutersBrazil's Environmental Protection Agency announced today Chevron Brazil's oil leak off the coast of Rio de Janeiro may be bigger than previously reported.ReutersGoogle, which was founded in 1998, has a market capitalization of $185.28 billion as on Friday at 10 am EDT. The Mountain View, California-headquartered Google maintains an index of Web sites and other online content for users, advertisers, and Google network members and other content providers.It offers AdWords, an auction-based advertising program; AdSense program, which enables Web sites that are part of the Google Network to deliver ads from its AdWords advertisers; Google Display, a display advertising network that comprises the videos, text, images, and other interactive ads; DoubleClick Ad Exchange, a real-time auction marketplace for the trading of display ad space; and YouTube that provides video, interactive, and other ad formats for advertisers.The company also provides Google Mobile that optimizes Google's applications for mobile devices in browser and downloadable form; and enables advertisers to run search ad campaigns on mobile devices, as well as Google Local that provides local information on the Web; and Google Boost for small businesses to participate in the ads auction.In addition, it offers Android, an open source mobile software platform; Google Chrome OS, an open source operating system; Google Chrome, a Web browser; Google TV, a platform for the consumers to use the television and the Internet on a single screen; and Google Books platform to discover, search, and consume content from printed books online.Further, the company provides Google Apps, a cloud computing suite of message and collaboration tools, which includes Gmail, Google Docs, Google Calendar, and Google Sites; Google Search Appliance that offers real-time search of business and intranet applications, and public Web sites; Google Site Search, a custom search engine; Google Commerce Search for online retail enterprises; Google Checkout to make online shopping and payments streamlined and secure; Google Maps Application Programming Interface; and Google Earth Enterprise, a firewall software solution for imagery and data visualization. ReutersWarren BuffettReutersGeneral Electric Co. (NYSE: GE) and Nigeria signed an agreement for the U.S. company to build power plants as Africa's most populous nation continues to privatize and expand its power generation capacity, Reuters said Monday.ReutersWalmartWalmartAT&T is launching its 4G Long Term Evolution (LTE) network across various cities in the U.S., marking its first foray into the new high-speed data standard.
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