As Apple shares soar, company probes China labour exploitation

Feb 13, 2012, 21:19 GMT

San Francisco/Beijing - Shares of Apple crossed the 500-dollar barrier for the first time Monday as the company launched a probe of reported labour exploitation at its factories in China.

The share price milestone was reached even as reports emerged from China about officials there seizing iPads after a court ruled that the device violated trademarks for the iPad name.

The company's valuation of around 460 billion dollars, following a two-week gain sparked by record profits and revenues, make it worth more than the combined value of rivals Google and Microsoft.

But stock analysts say the company is still undervalued compared to the size of its earnings.

Apple has surpassed Exxon-Mobil as the most valuable company on US stock markets. The only companies ever to have crossed the 500-billion-dollar mark are Microsoft, Cisco, General Electric and Exxon-Mobil, which each briefly passed that threshold in stock run-ups over the last 15 years.

Also on Monday, Apple said that it had engaged the non-profit Fair Labour Association (FLA) to begin audits of its foreign suppliers, in what Tim Cook, Apple's CEO, called an 'unprecedented' step in the industry.

The massive Foxconn factories in Shenzhen and Chengdu, China will be included in the audit as the company tries to battle charges of worker exploitation.

'We believe that workers everywhere have the right to a safe and fair work environment, which is why we've asked the FLA to independently assess the performance of our largest suppliers,' said Cook.

Apple's stock passed the 400-dollar level only four months ago and has risen over 40 per cent in the past year. According to its latest earnings report, Apple made a record profit of 13 billion dollars in the fourth quarter of 2011, when it sold 37 million iPhones, 15 million iPads and 5 million Macs.

But future sales could be hit if Apple fails to counter challenges in China to the iPad name. Officials in at least one Chinese city have seized Apple iPads following a court ruling in favour of a company that claims to own the Chinese trademark for the computers.

Local media and vendors said some iPads were seized in the northern city of Shijiazhuang after a court in the southern province of Guangdong said the Chinese company Shenzhen Proview had the right to use the iPad name.

The Shijiazhuang-based Hebei Youth Daily said officials had seized dozens of iPads in the city's Xinhua district, while other vendors told dpa they had removed iPads from display to avoid their confiscation.

Shenzhen Proview claims it registered the iPad trademark in China in 2001, according to the company's lawyer Xie Xianghui. A Shanghai court plans to hear another petition by Shenzhen Proview next week to ban Apple Inc from selling the iPad in China, state media said.

Apple's probe of working conditions in China further underlined the problems of many foreign companies doing business there.

'The inspections now underway are unprecedented in the electronics industry, both in scale and scope, and we appreciate the FLA agreeing to take the unusual step of identifying the factories in their reports,' Cook said.

The FLA is an independent labour organization that conducts monitoring and verification to ensure that the FLA's workplace standards are met. In January, Apple became the first technology company admitted to the FLA.

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