Slashdot Mirror
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.'"
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.
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