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Apple Surpasses Microsoft In Market Capitalization
je ne sais quoi writes "Today Apple surpassed Microsoft in market capitalization, a metric of the perceived worth of a company. At around 2:30 pm EDT, the total number of Apple shares were worth $227 billion, whereas Microsoft's were worth $226 billion. Both companies' stocks ended the day in the red, and have dropped in value since the Greek crisis began, but Apple's share price has been falling less quickly. Of American companies, only Exxon-Mobil has a higher market cap at this point at $278 billion. According to the article: 'This changing of the guard caps one of the most stunning turnarounds in business history, as Apple had been given up for dead only a decade earlier. But the rapidly rising value attached to Apple by investors also heralds a cultural shift: Consumer tastes have overtaken the needs of business as the leading force shaping technology.'"
The only thing this tells me is that investors are very slightly more confident in Apple's future.
Apple has a good business model for the current market, a vertically integrated company is well suited for fluctuation during violent market turns because investors worry less about shortages, missed financial targets and product competition. Microsoft is *hardly* moved by this in reality, though, and still makes most of their money on business licensing - and they are doing fine. MS employees are still having the private jet weddings to the caribbean with ice fountains flowing with rum.
I said no... but I missed and it came out yes.
[Citation Needed]
This article may not be completely solid financial data, but makes more sense than the populist reactionary stance you take:
Make sure everyone's vote counts: Verified Voting
The irony? Microsoft is big because it is a computer company. Apple grew this big because of all their non-computer stuff. Has Macintosh market share actually grown any more in the last few years? Does Apple even really care if it grows anymore?
Once you start despising the jerks, you become one.
It's funny how this new status appeared at exactly the same time as Apple's newly found controlling and assholish nature.
Mod me down, my New Earth Global Warmingist friends!
Looks like an excellent bubble to take advantage of. Sell (or short) Apple, buy Microsoft.
The thing is, with near 10% unemployment and having just come out of the worst financial crisis since the great depression, Apple is doing well.
If a company that specializes in expensive, high-end computer products is doing well in a weak economy... what happens when the economy improves?
Wolfram|Alpha is great.
According to that excellent tool, Apple was valued higher than Microsoft through the '80s, as high as 3.2x as much as Microsoft. Then, right around the turn of the decade to 1990, Microsoft pulled ahead.
By 1998, Microsoft was worth 100x Apple.
Now, they're back up to even.
Another non-functioning site was "uncertainty.microsoft.com."
The purpose of that site was not known.
On /. ???
I see your point, but I'm not sure the current situation is analogous to the dot-com bubble.
Apple's stock has little momentum. It's not in a bubble in the classical sense. Apple's earnings ratio (20.6) is reasonable given their earnings growth of the last few years. Although Apple's stock has a higher earnings ratio than Microsoft's, that's because of anticipated future earnings and not fanboys driving up the price.
Here are their actual profits, from finance.yahoo.com, as of today:
MSFT:
Net Income Avl to Common (ttm): 17.29B
AAPL:
Net Income Avl to Common (ttm): 10.81B
If Apple grew their profits by 100% for even a single year, they would surpass Microsoft.
I don't entirely agree.
Don't get me wrong, Apple could easily collapse in value. Not because they're in a bubble, but because they make profits from having cool/aesthetic/etc products. But cool is fleeting. As a result, Apple's profits are less certain than Microsoft's. If Apple puts out a few crappy products, their stock will drop like a rock. On the other hand, if Microsoft puts out a few crappy products, people will buy them anyway, and Microsoft will just release a new version in a few years.
I think the high point in the history of Microsoft was when they released Windows 2000. Here was an operating system that multi-tasked well, had perfected integrated networking and didn't blue screen. I remember a lot of people who had been using Redhat 9, which was crap, switched back to Microsoft and noticed that it didn't crash that much and they were pretty happy using it.
Then came WindowsXP and IE6, which gave everybody pretty much everything they wanted in an OS. It was easily pirateable and spread all over the world.
Then came malware, botnets, and the ensuing security disaster of science fiction proportions and Microsoft spent the next 10 years plugging security holes. Those were the big feature with Vista and Windows 7 remember-- more secure. This was all the fault of Microsoft demanding that unmanaged x86 code with full access to the win32 api run everywhere. It's an enormous, outlandish security hole just waiting to happen.
Meanwhile, I went to visit a relative in the hospital and all the computers are running Win2k. If you look at OS share online, WinXP still dominates. Nobody really knows what's new in Office 2010, except you can read Office 2010 files and that ribbon thing. China was a total disaster for Microsoft too. They even shared their source code and it's only 1 percent of their revenue.
Meanwhile Apple and Linux really got their act together and improved massively. Then the 3g and portable device boom happened and Microsoft was caught with Windows Mobile, in the face of Android and Iphone. They couldn't leverage their massive x86 code base and had to start over with a new OS from scratch. That's their problem, they have to start over on a new chipset and they just can't get anywhere meaningful without relying on the enormous barrier to entry that is the win32 api legacy.
Call me when Apple's PE ratio gets back down to 14 or so. Then maybe I'd buy it.
Apple's income last year $5.7B. IBM's income last year $13.4B. Apple's PE is 22, IBM's is 12. And IBM pays a dividend rather than back dating options for Steve Jobs
Support SETI@home
Good luck with that. Apple's been a growth company for the last decade and seems to intend to remain so. IBM isn't a growth company, it's in utility mode for more than 20 years turning good dividends but not trying to take over the world. As a result, Apple has more cash on hand today than 3x the entire value of the company 10 years ago and no debt. As a growth company that doesn't dominate most of the segments it's in, Apple's upside potential is huge.
IBM is still a strong conservative investment for folks who want to be confident their investment will grow into enough of an asset to retire on - especially if they reinvest their dividends.
There are several modes for companies, but Growth, Utility and Salvage modes are the commonest. In Salvage mode the folks with the most influence in the company get what they can out of it, and to hell with the common investor. This subsector of corporate governance is quite interesting for the morbidly curious. For companies that have achieved the heights we're talking about it turns into a freeding frenzy where a school of lawyers turn into a feeding frenzy of zombie sharks. It becomes a cancer that affects every company the giant ever touched. The lawyers eventually take conditional fractional options on the success of hopeless suits against unrelated third parties, because what else are they going to do with their idle time - work?
Growth companies pull more PER because they're agressive about growth. Duh. You want some of those in your folder if you're going to retire with something more in your retirement account than you put in.
Microsoft though? One big dividend ever on Bill's retirement from CEO (Coincidence? I think not.), and some symbolic trivial dividends since. Microsoft isn't managed to be a good value for all investors - it's managed to be a good value for a specific set of five investors, all of whom have incidental investments in related companies and who are incidentally on the board of directors. It's clear the company isn't managed for the benefit of the common investor.
Q: If a public company like Microsoft's Board of Directors chose to offload all of the value of a company onto affiliated companies in unwise for the company but wise for the boardmembers deals, how long would it take? A: an afternoon.
Q: How likely is this to happen during the course of my investment? A: Follow the money. Nature abhors a vacuum.
Q: If this huge value transfer happened how soon would it be public information? A: Several months later.
Help stamp out iliturcy.
"You either have no idea how equities actually work or you are being deliberately obtuse. Do you think huge companies just instantly vanish in some random event that nobody can predict? No."
Yes. See Pan Am, aka Pan American Airlines. A terrorist blew up one of their 747s over Lockerbie, Scotland. *because it was over a tiny scrap of land* the maritime rules for liability limitation didn't apply, and Pan Am got sued out of existence (think US$200m *per passenger*. If they'd been over water, the maximum liability is in the thousands).
Huge company? check.
Instantly vanished? Well, given as it had been around for decades and disappeared in months, check.
Some random event? Terrorism. Check.
That nobody can predict? Check.
It can and does happen. See also Bear Stearns, Lehman Brothers, and for other reasons Enron, WorldCom, and LTCM...
AC
For my company, the answer is a bit more clear cut. They have money invested in MS. ALOT of money, both in infrastructure, and client software. They also fear Open Source (that one puzzled me when I first heard it). They don't fear it because it's open, but rather because it comes from a group of people who may or may not be responsive to their needs. They actually find comfort in getting legal contracts for support, and working with a 'known' vendor.
Oddly enough, the iPhone itself seems to be making them more comfortable with Apple in the corporate world. They are already looking at the iPad (the execs seem to love the thing), and they've opened up limited usage for Mac, although they still support those via yet another outside vendor rather than our in-house IT shop.
It actually takes more hoops to get FOSS approved in our environment than it does for pay to play software.