Apple Surpasses Microsoft In Market Capitalization 557
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.'"
Yeah consumers! (Score:4, Interesting)
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.
Re:Bubble (Score:4, Interesting)
[Citation Needed]
This article [seekingalpha.com] may not be completely solid financial data, but makes more sense than the populist reactionary stance you take:
Re:OK, let the flame wars begin... (Score:5, Interesting)
Re:OK, let the flame wars begin... (Score:5, Interesting)
It's funny how this new status appeared at exactly the same time as Apple's newly found controlling and assholish nature.
Re:Bubble (Score:5, Interesting)
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?
Re:Give me a break (Score:2, Interesting)
Microsoft? Yes, they make serious bank on Windows and Office but they've got nowhere to grow, no vision, iPhone and android (in particular) destroyed their smart phone presence (and any chance of making any money short of extortion plays like HTC). Steve Jobs is better than Steve Balmer and the market cap reflects that.
For historical comparison... (Score:5, Interesting)
Wolfram|Alpha is great.
According to that excellent tool [wolframalpha.com], 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.
Insight (Score:1, Interesting)
insightful commentary in the article: The fact that taste has overcome business value is a sign that the price is likely overvalued, though who knows for sure. When fair value isn't in play, I'd say it's cause for a second look.
Good luck, Apple investors!
Re:ladies and gentlemen: (Score:3, Interesting)
On /. ???
Re:Growth (Score:3, Interesting)
True, Apple's P/E is 20.69 versus Microsoft's 12.96 which means people are buying more into Apple's future than Microsoft. However, it's not that much either. Microsoft is about even with IBM (11.98), while Apple is about even with Oracle (19.58). If you want something that's more speculative you have for example Yahoo (27.74) or Red Hat (64.12).
I think the market is fairly right too. Microsoft is feeling the pressure on their margins from cheap low-end computers that just can't have a OS doubling the price, while Apple keeps on hitting it big in consumer electronics. Just look at the market for smart phones pre-iPhone and post-iPhone, they only have about 16-17% market share but most others only managed to sell the phone. Apple is the only one who has gotten a real application store going and it's already the dominating web browsing phone with some 70% of the market. There are some rather serious barriers to entry and Apple just steamrolled them without price dumping and is already very profitable. Unlike Microsoft which fights hard and long but still loses money [gamespot.com] on xboxes. The jury is still out on iPads but it looks like that from the iPhones they've got the beachhead of applications to create that market. They're certainly by far the best offering ever attempted in that market.
Judging from what I see now, I think Apple is building up the prerequisites for a real entertainment center. The iTunes store keeps on getting more and more TV series and movies, with the iPhone/iPad they're building a huge collection of minigames and such. Not just another software update the AppleTV, but a real hardware revamp and reboot as an "iCenter" or whatever with much more focus on applications and games as well. With a touch sensitive remote making it kinda like iPhone/iPad but you touch on the remote, look on the big screen. There's still plenty potential in Apple, Microsoft not so much.
Re:Only for VERY foolish investors (Score:5, Interesting)
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.
Re:It's so sad (Score:3, Interesting)
Microsoft lost its vision (Score:5, Interesting)
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.
Re:Bubble (Score:3, Interesting)
Being heavily consumer products driven now, Apple is very susceptible to a sudden shift in purchasing behavior. This year's hot commodity, is next years' rubick's cube or legwarmers -- 'that's so 2010!' or 'i already have one'.
I'd agree with you completely on this if it weren't for one thing: since the return of Steve Jobs, Apple has consistently and repeatedly delivered products that people want and are willing to pay a premium for.
Okay, okay, you're right--there was the G4 Cube but that was an exception to the overall rule and it proves that even if one product happens to tank, Apple can shrug it off and come up with something else.
Re:LOL (Score:5, Interesting)
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
Re:ladies and gentlemen: (Score:3, Interesting)
I just simplified after my house got destroyed last year and took the old G5 quadcore out along with 6 Mac Mini's I picked up cheap off ebay to play with Xgrid with and just bought a single Core2Duo Mac Mini with 4GB of Ram and hooked it up to the LED TV via the VGA port. My laptop at home is still my 6 year old 12.1" PowerBook G4, and recently an iPad 3G. At work I just gave my MBP to the new grad we hired as a developer (kid's worked for us for 2 years as an intern) and replaced it with an iPad docking station. Only thing the iPad is lacking the video camera for video conferencing.
I don't write code anymore. All I really need to do is answer emails and Skype inquiries while on the phone and iWork does enough on the iPad version for the things I need.
Re:Growth (Score:2, Interesting)
That analyst is an idiot. They have paid $54 billion in dividends during that period (which more than accounts for the 20% decline), and 10 years ago was the peak of the dot com bubble, hardly a period where the stock price of Microsoft reflected the actual value of the company.
Re:So close... (Score:3, Interesting)
And since 2007, all we have is facebook, twitter, complex mobile devices, always connected lifestyles, and as much Apple fanfare as MS had in 1997--except it's now all about you (iUniverse and stuff-aboutMe. All dictated by consumers... Do you really want this?
Absolutely, yes. I'm a consumer, not a business. I think it's absolutely wonderful that the driving force in tech is now consumer oriented and not business oriented. I would be happy (but less so) where the driving force Android or Linux. Less so only because both serve the consumer less capably, but at least they aren't as business-centric as MS, or IBM before them.
Cause what you're asking for may not end up being the great panacea you maybe thinking (and with Apple's closed, exploitative thinking...)
It's far better than having MS drive the market, as they have always been far more closed and exploitative than Apple. In fact, Apple is not exploitative at all (not in the way you mean it), and only closed in one[*] very specific way, a way which serves the consumer better. Once that manner of being closed ceases to serve the consumer, I'll be against it, but more likely than not, Apple will have already changed course. They tend to head for where the puck will be, not where it was.
[*] I'm referring, of course, to the App Store. Two other ways, but which are not as severe as the App Store lock-in, are iPods/iPhones/iPads requiring iTunes, and Mac OS X requiring Apple hardware. Neither of those are so severe as to be called "closed" in any meaningful sense, except from a Linux-type point of view.
Re:LOL (Score:3, Interesting)
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.
Re:Growth (Score:3, Interesting)
"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
Re:So close... (Score:4, Interesting)
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.