NEW YORK – It doesn't take a visit to the Genius Bar to figure out how Apple became the most valuable company in America.

Its lineup of sleek phones, computers and iPods, irresistible to customers even in tough economic times, propelled it to the No. 1 position by market value Wednesday, surpassing Exxon Mobil. Apple's stock on the open market is now worth more than any other company's.

Apple's stock fell for the day, but Exxon's fell more. Apple finished with a market value of $337 billion, beating Exxon's $331 billion. A single share of Apple stock now costs $363.

Apple occupies a rarefied spot once held by General Electric and Apple's own rival Microsoft. Exxon had held the top spot since 2005.

The power shift is a substantial milestone for Apple, which has enjoyed a triumphant comeback since the 1990s, when it struggled to stay afloat before its co-founder Steve Jobs returned to take the helm.

But it's not just the comeback. Gleacher & Co. analyst Brian Marshall says Apple is giving investors something that has never been seen before. Apple's numbers are huge, with $30 billion in revenue in the latest quarter, for example. Yet Marshall said the 35-year-old company is "growing like a startup."

"Even in 2008 and 2009 Apple grew like a weed and the world was coming to an end," Marshall said.

Apple grew its net income 70 percent to $14 billion and its revenue 52 percent to $65 billion in the fiscal year that ended last September. A year earlier, even as other companies — though not Exxon — were reeling from the economic meltdown, Apple's earnings grew 35 percent and its revenue 14 percent.

Apple wasn't always a tech darling. The company, known as Apple Computer Inc. when it was founded in 1976, was on a steep decline before Jobs returned in 1997.

With Jobs as CEO, Apple is known for dreaming up gadgets that people don't think they need until they get their hands on them — or see friends and relatives with them. There were music players, smartphones and tablet computers before Apple introduced the iPod, the iPhone and the iPad. But the Apple gadgets' sleek, minimalist design and intuitive software have garnered them a loyal following among tech geeks and everyday consumers alike.

"Never underestimate the power of Joe Sixpack relative to expenditures on consumer electronics," Marshall said.

People want their gadgets, especially those made by Apple, even in a recession and even as they watch their stock portfolios and retirement funds shrink.

Still, Apple commands just a sliver of the overall smartphone and computer market. For that reason, Apple can grow at such a fast pace. "They have just a tremendous runway in front of them," Marshall said.

Exxon, which set a record in 2008 for the highest quarterly earnings by any company, will find it hard to compete with Apple's growth because its prospects are tethered to oil prices and new oil discovery.

Apple's growth is limited only by innovation. Investors expect it to grow as long as it keeps making products that people want. So investors are betting on Apple's stock even though it currently makes less money than Exxon.

In its latest quarterly report, Apple said stronger iPhone and iPad sales helped more than double its net income to $7.3 billion and grow revenue by 82 percent to $29 billion.

Exxon Mobil, meanwhile, posted a 41 percent increase in its second-quarter earnings to nearly $11 billion, the largest since it set a record of nearly $15 billion in the third quarter of 2008. Its revenue grew 36 percent to $125 billion.

International companies that vie for the most valuable spot include PetroChina Co., the publicly traded unit of China's biggest oil and gas company, and Petrobras, Brazil's state-controlled energy company.

In the U.S., Exxon and General Electric had been trading off the No. 1 and No. 2 spots until Microsoft surpassed them both in early 1999, at the height of the dot-com boom. By 2000, though, GE was No. 1 once again. According to data from FactSet, the three were close over the next five years, though Apple was ascending quickly. Irving, Texas-based Exxon Mobil took the top spot in 2005 and remained there until Wednesday.

Apple's ascendance to the top spot is a sign of the times. Howard Silverblatt, senior index analyst at Standard & Poor's, says the most valued company in the U.S. often reflects the demands of consumers. They also tend to have products that are unmatched by their rivals.

In 1986, for example, IBM Corp. was the most valuable company in the Standard & Poor's 500 index. At the time, the company was considered a pioneer in the technology world, having developed the floppy disk drive in 1971 and the personal computer ten years later.

AT&T Inc. was the most valuable company in the early 1980s when it was the dominant player in the telecommunications industry.

The top companies "tell us something about society, not just the market," Silverblatt said.

But, as history has shown, those companies can easily lose out to rivals if they don't keep coming out with products that appeal to consumers.

"If in 1999, you told anybody that one day Apple would be bigger than Microsoft, I think they would have laughed at you as if you were nuts," said Jonathan Berk, a professor of finance at Stanford University.

Apple generally introduces a new product every three years, which means something new in 2013. Marshall does not expect the company to slow down any time soon.

In fact, he expects Apple to pass yet another milestone next year, when it's likely to surpass Hewlett-Packard Co. as the world's largest technology company by revenue. In the most recent quarter, HP reported $31.6 billion in revenue, compared with Apple's $28.6 billion in its latest quarter.

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AP Business Writer Chip Cutter contributed from New York.

NEW YORK – The weak economy is hitting Americans where they spend a lot of their free time: at the TV set.

They're canceling or forgoing cable and satellite TV subscriptions in record numbers, according to an analysis by The Associated Press of the companies' quarterly earnings reports.

The U.S. subscription-TV industry first showed a small net loss of subscribers a year ago. This year, that trickle has turned into a stream. The chief cause appears to be persistently high unemployment and a housing market that has many people living with their parents, reducing the need for a separate cable bill.

But it's also possible that people are canceling cable, or never signing up in the first place, because they're watching cheap Internet video. Such a threat has been hanging over the industry. If that's the case, viewers can expect more restrictions on online video, as TV companies and Hollywood studios try to make sure that they get paid for what they produce.

In a tally by the AP, eight of the nine largest subscription-TV providers in the U.S. lost 195,700 subscribers in the April-to-June quarter.

That's the first quarterly loss for the group, which serves about 70 percent of households. The loss amounts to 0.2 percent of their 83.2 million video subscribers.

The group includes four of the five biggest cable companies, which have been losing subscribers for years. It also includes phone companies Verizon Communications Inc. and AT&T Inc. and satellite broadcasters DirecTV Group Inc. and Dish Network Corp. These four have been poaching customers from cable, making up for cable-company losses — until now.

The phone companies kept adding subscribers in the second quarter, but Dish lost 135,000. DirecTV gained a small number, so combined, the U.S. satellite broadcasters lost subscribers in the quarter — a first for the industry.

The AP's tally excludes Cox Communications, the third-largest cable company, and a bevy of smaller cable companies. Cox is privately held and does not disclose subscriber numbers.

Sanford Bernstein analyst Craig Moffett estimates that the subscription-TV industry, including the untallied cable companies, lost 380,000 subscribers in the quarter. That's about one out of every 300 U.S. households, and more than twice the losses in the second quarter of last year. Ian Olgeirson at SNL Kagan puts the number even higher, at 425,000 to 450,000 lost subscribers.

The second quarter is always the year's worst for cable and satellite companies, as students cancel service at the end of the spring semester. Last year, growth came back in the fourth quarter. But looking back over the past 12 months, the industry is still down, by Moffett's estimate. That's also a first.

The subscription-TV industry is no longer buoyed by its first flush of growth, so the people who cancel because they're unemployed are outweighing the very small number of newcomers who've never had cable or satellite before. Dish CEO Joe Clayton told analysts on a conference call Tuesday that the industry is "increasingly saturated."

But like other industry executives, Clayton sees renewed growth around the corner. Though his company saw the biggest increase in subscriber flight compared with a year ago, he blamed much of that on a strategic pullback in advertising, which will be reversed before the end of the year.

Other executives gave few indications that the industry has hit a wall. For most of the big companies, the slowdown is slight, hardly noticeable except when looking across all of them. Nor do they believe Internet video is what's causing people to leave.

Glenn Britt, the CEO of Time Warner Cable Inc. said the effect of Internet video on the number of cable subscribers is "very, very modest;" in fact, so small that it's hard to measure.

SNL Kagan's Olgeirson said the people canceling subscriptions behind, or never signing up, are an elusive group, difficult to count. Yet he believes the trend is real, and he calls it the "elephant in the room" for the industry.

Anecdotal evidence suggests that young, educated people who aren't interested in live programs such as sports are finding it easier to go without cable. Video-streaming sites like Netflix.com and Hulu.com are helping, as they run many popular TV shows for free, sometimes the day after they air on television.

In June, The Nielsen Co. said it found that Americans who watch the most video online tend to watch less TV. The ratings agency said it started noticing last fall that a segment of consumers were starting to make a trade-off between online video and regular TV. The activity was more pronounced among people ages 18-34.

Olgeirson expects programmers to keep tightening access to shows and movies online. A few years ago, Olgeirson said, "they threw open the doors," figuring they'd make money from ads accompanying online video besides traditional sources such as the fees they charge cable companies to carry their channels. But if looks as if online video might endanger revenue from cable, which is still far larger, they'll pull back.

"Are they really going to jeopardize that? The answer is no," Olgeirson said.

Already, News Corp.'s Fox broadcasting company is delaying reruns on Hulu by a week unless the viewer pays a $8-a-month subscription for Hulu Plus or subscribes to Dish's satellite TV service. Other subscription-TV providers may join in the future. TV producers and distributors want to discourage people from dropping their subscriptions.

Moffett believes it's hard to separate the effect of the economy from that of Internet video. Subscription-TV providers keep raising rates because content providers such as Hollywood studios and sports leagues demand ever higher prices. That's causing a collision with the economic realities of American households.

"Rising prices for pay TV, coupled with growing availability of lower cost alternatives, add to a toxic mix at a time when disposable income isn't growing," Moffett said.

By Liana B. Baker

NEW YORK |
Fri Jul 29, 2011 6:27pm EDT

WASHINGTON – New test results show that a proposed nationwide wireless broadband network would produce significant interference with GPS systems used for everything from aviation to high-precision timing networks to consumer navigation devices. Changes to the proposal could reduce interference, but wouldn't eliminate it.

The findings, based on extensive equipment tests conducted in Las Vegas, increase pressure on the Federal Communications Commission to block a Virginia company called LightSquared from launching the network, which is designed to compete with super-fast systems being rolled out by AT&T and Verizon Wireless.

Although the FCC in January gave LightSquared approval to build the system, the agency said it would not let the company turn on the network until GPS interference problems are resolved. The agency required LightSquared, GPS equipment makers and GPS users to establish a working group to study the matter.

That group filed its report with the commission on Thursday, with the two sides offering different interpretations of the test results.

LightSquared insisted that the interference problems are fixable.

But GPS equipment makers, and companies and government agencies that rely on GPS technology, warn that the planned network would jam their systems because LightSquared would use airwaves close to those already set aside for GPS.

They say that sensitive satellite receivers — designed to pick up relatively weak signals coming from space — could be overwhelmed when LightSquared starts sending high-powered signals from as many as 40,000 transmitters on the ground. GPS signals, they say, will suffer the way a radio station can get drowned out by a stronger broadcast in a nearby channel.

"The FCC needs to consider other options for the LightSquared signals where they do not run up against the laws of physics," said Charles Trimble, co-founder of Trimble Navigation Ltd., which makes GPS systems.

With the working group report complete, the FCC will now seek public comments. The FCC said it will review the report, adding that it has "a long-standing record of resolving interference disputes."

The working group's report follows the release of federal test results that also found significant interference with GPS systems used by a broad cross-section of government agencies, including the Coast Guard, the Federal Aviation Administration and NASA.

Faced with growing GPS industry resistance, LightSquared last week proposed to move some of its operations to a slice of airwaves located farther away from GPS frequencies. It also proposed to transmit signals at lower power levels to ensure that its network would not interfere with most nearby GPS systems.

Most of the testing conducted by the working group was based on the company's original plan to use airwaves next to the GPS band.

The working group said that plan would produce significant, across-the-board interference. Among the findings:

• GPS systems used for aviation would be unavailable over entire regions of the country at normal aircraft altitudes.

• GPS receivers built into cellular devices could experience interference at significant distances from LightSquared's base stations — resulting in delayed or inaccurate location readings.

• Space-based GPS receivers used in NASA science missions could be disrupted.

Although the working group conducted only limited testing based on LightSquared's proposal to use different airwaves, it said the change could reduce problems for some GPS receivers, including those used in aircraft navigation and cellphones.

LightSquared, however, acknowledges that other GPS devices, particularly high-precision receivers used in construction and agriculture, would still experience significant disruption.

LightSquared maintains that the interference is largely a problem of the GPS industry's own making. That's because GPS receivers are picking up signals outside their own bands — in frequencies licensed to LightSquared.

That had never presented a conflict until the FCC provisionally approved LightSquared's wireless broadband network. Until now, that spectrum has been used primarily for satellite communications, with only limited ground-based wireless service to fill coverage gaps. GPS receivers can easily screen that out.

LightSquared, which is based in Reston, Va., also insists the problem can be fixed by installing better filters in GPS devices to screen out its signals. Those filters, LightSquared says, cost as little as 5 cents each.

GPS manufacturers say that solution is speculative because such filters do not yet exist and were not available for testing. They add that although filters might work with some GPS receivers, such as those embedded in cellphones, they would not work in all GPS equipment and could significantly degrade performance and battery life.

Bronson Hokuf, an engineer with GPS maker Garmin Ltd., also said it would be nearly impossible retrofit hundreds of millions of existing GPS devices already in use. The working group said installing new filters in GPS equipment used for aviation, for instance, would be very expensive and could take at least 10 years.

Although the FCC has promised that it won't let the LightSquared network harm GPS systems, it is eager to see the company succeed.

The FCC views the network as one part of a broader government push to free up more airwaves for mobile broadband services to keep up with the explosive growth of online apps, mobile video and other bandwidth-hungry wireless applications.

The agency also hopes LightSquared will help it advance its goal of bringing high-speed Internet connections to all Americans. The company, which plans to wholesale network access to other companies that will rebrand the service under their own names, has pledged to reach 260 million Americans with its coverage by 2015.

SAN FRANCISCO – Google may be entering a make-or-break phase in its colorful history now that U.S. regulators have opened an investigation into whether the company has been abusing its dominance of Internet search and advertising to stifle competition.

The probe by the Federal Trade Commission, confirmed by the company Friday, will require Google to convince regulators that its closely guarded recipe for search results is designed to give people the best recommendations, not bury links to its rivals.

If you search for a local business, for example, Google might highlight its own listing, from a service called Google Places, instead of one on Yelp, a popular review site and Google competitor.

Requests for directions may turn up Google Maps, and queries for a video might point to the company's own site, YouTube. Or if you type "mortgage" in Google's main search box, the top ad might be for Google Advisor, which lists the lowest interest rates.

The inquiry also is expected to peer into Google's financial engine: the advertising links tied to the subject of each search request. Some of these commercial messages appear, shaded in color, at the top of the results page, while others are stacked in the right-hand column.

Even as Google has expanded into video, mobile phones and television, the text advertising that pops up alongside search results and other Web content generates most of Google's revenue — an amount expected to exceed $35 billion this year.

Some websites contend Google has rigged its system in a way that drives up the ad prices, even though Google says the rate is determined by bids submitted in an auction. Others say Google purposely blocks their ads from appearing because the company views them as competitive threats. A coalition of Internet travel companies, including Expedia, Hotwire and Kayak, have welcomed the investigation.

The FTC is following the lead of European regulators who launched a similar investigation last November. The Texas attorney general has been looking into Google's business practices, too.

The search engines for Microsoft and Yahoo also sometimes feature their own services in search results. The big difference: Google processes about two-thirds of all search requests in the U.S. and handles an even larger volume of advertising. Microsoft's Bing and Yahoo combined have less than 30 percent of the market.

Danny Sullivan, who follows the industry closely as editor-in-chief of the trade journal Search Engine Land, said what Google is doing is not unlike a newspaper running an ad to promote one of its products.

"From what I have seen so far," he says, "Google doesn't seem to be doing anything wrong."

Melissa Maxman, an antitrust attorney in Washington, said the FTC wouldn't have opened its inquiry unless it thought the complaints were credible.

"There is smoke if not fire," she said.

The FTC's investigation threatens to put Google on the same course as nemesis Microsoft, which was the target of a Justice Department lawsuit that began in the 1990s and dragged into the next decade. That case alleged that Microsoft used its dominant Windows operating system to kill competing software makers.

"It's right out of the same playbook," Maxman said of the FTC's probe into Google.

Although Microsoft thwarted an attempt to break up the company, it was distracted for years, and the company has never been quite the same. The investigation may have made Microsoft more vulnerable to companies such as Google during the late 1990s as the Internet emerged as an important new platform on computers.

Now, Google faces some of the same threats as it tries to figure out how to counter the rising popularity of services such as Facebook.

In an extreme scenario, the FTC's inquiry could be the first step in a long process that ends with Google having to spin off YouTube and some of the other pieces of the empire it has built for 13 years. Although it doesn't have to, the FTC could hand its case off to the Justice Department, as it did in the Microsoft inquiry.

"Inevitably, if we get to the point where Google is found to have abused its power, we are going to be talking about divestiture because divestitures are always a better way to go than trying to regulate something like this," said Gary Reback, an antitrust lawyer in Silicon Valley who is representing some of the companies complaining about Google's practices.

Other antitrust attorneys think the investigation could result in less radical solutions, such as prohibiting Google from featuring its own services at the top of its search results. Google could also agree to periodic audits of how it programs its search engine, much as did earlier this year in a settlement of an FTC investigation into its privacy practices.

Google is expected to put up a fierce fight. The investigation is aimed at the heart of its business, its formula for ranking the quality of websites and ads, which has evolved since Google co-founders Larry Page and Sergey Brin began working on it at Stanford University. The company views the recommendations that it produces as a matter of opinion protected by the First Amendment.

"It's still unclear exactly what the FTC's concerns are, but we're clear about where we stand," one of Google's top search engineers, Amit Singhal, wrote Friday on the company's blog. "Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow."

Google has been preparing for this battle since it was almost sued by the Justice Department over a proposed Internet search partnership two and a half years ago. The Justice Department drew up a complaint alleging Google had built a monopoly in Internet search, but never filed it because Google scuttled its agreement with Yahoo to avoid going to court.

Google has been under increasing government scrutiny since then. It has prevailed in the key confrontations and won regulatory approval for several key acquisitions, including its $3.2 billion purchase of online ad service DoubleClick in 2008, last year's $681 million purchase of mobile ad service AdMob and a $700 million purchase of airline fare tracker ITA Software in April.

To prove Google abused its dominance, regulators will have to get it to turn over sensitive documents that it has resisted sharing in the past. And Google probably won't be shy about fighting for the right to adjust its search formula to deliver more useful results to its audience.

The company says it needs to fine-tune search results to weed out the sites that try to game its system and win a high ranking even though they have little to do with whatever a person was searching for.

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Tessler reported from Washington. AP Technology Writer Barbara Ortutay in New York contributed to this report.