IBM Unseats Microsoft As Second Most Valued Tech Company

First time accepted submitter FlatEric521 writes "The BBC is reporting that for the first time since 1996 IBM's market value has exceeded Microsoft's. The values cap a sustained period in which IBM's share price has moved steadily upward as Microsoft's has generally been in decline. Of course, Apple is still the #1 company by far."

Comments

Re:What about Microsoft owning part of Apple?

[Anonymous Coward]

IBM is worth more to the U.S. government then INTEL, Apple, and Microsoft combined.

Re:Who cares?

[Locutus]

Steve, the legs of that chair sticking through your office window say otherwise.

LoB

Stock market fluctuations

[bjourne]

Apple is the largest tech company followed by IBM and Microsoft, if measured by how much the stock market thinks each company is valued at. It is a completely meaningless metric that does not say anything about either company. The stock market is detached from the real world and how well a company's stock is doing is not proportional to how well that company is doing.

Re:Stock market fluctuations

[BBCWatcher]

If you believe in rational markets -- I do, if the time horizon is long enough -- the market is simply valuing the respective companies according to the net present value of their expected after-tax profit streams. (That's an oversimplification but only slightly.) Looking at profit growth, IBM has outpaced Microsoft for several years running now. If the market simply extrapolates that trend forward, at some point IBM's and Microsoft's valuations had to cross.

For the first time since MAY

[md65536]

What happened to the last time this happened?
http://news.slashdot.org/story/11/05/22/0232216/ibm-now-officially-worth-more-than-microsoft

Prospering After Its Founder

[BBCWatcher]

It's extremely difficult for a major company to sustain its business leadership after its founder leaves. IBM was fortunate they had a son at the helm who was every bit as smart as his father. After the son the company lost its way but then found a new, better path after huge, painful adjustments. That's the exception, though. Apple had a near-death experience losing Steve Jobs, but the founder returned and put Apple back on track. It'll be interesting to see what happens now that Tim Cook is in charge, but we won't know the impact for several years. Likewise, Microsoft has yet to prove it can prosper in its post-founder era, and that experiment has been running a lot longer now. True, Ballmer has been with Microsoft a long time, but he's no Bill Gates, Thomas Watson (Jr. or Sr.), Steve Jobs, or even Lou Gerstner/Sam Palmisano.

Re:And apple's market cap is going to collapse

[TheRaven64]

Apple's strategy for the last decade has been to ride the cusp of the wave of commoditisation. They identify a market that is about to be overrun by commodity products, enter it at the point when they can get commodity prices from their suppliers but still charge premium prices to their customers, and then move on to a new market while keeping a small share at the expensive end of the newly commoditised market. Home computers, laptops, portable media player, smartphones and tablets have all followed this trend. The problem that Apple now has - and the reason that they're resorting to lawsuits to slow down other tablet makers - is that they don't have the next market identified and they don't have a product ready for it.

This strategy is very profitable, but only as long as they keep moving forward. Apple's market cap is based on the fact that their net income has increased by a huge amount year on year. As soon as it stops increasing, or the rate of increase slows, it will collapse.

It remains to be seen whether post-Jobs Apple can keep this going. Steve Jobs was always good at identifying this kind of market (look at PDO and WebObjects, for example), but it wasn't until he returned to Apple that he was really good at exploiting them, and I suspect that this was largely due to other people on the management team. I'm not sure that Apple still has the expertise to both identify and exploit a new market.