Forgot your password?
typodupeerror
Businesses Microsoft The Almighty Buck Apple

Apple Surpasses Microsoft In Market Capitalization 557

Posted by samzenpus
from the big-bigger-and-biggest dept.
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.'"
This discussion has been archived. No new comments can be posted.

Apple Surpasses Microsoft In Market Capitalization

Comments Filter:
  • So close... (Score:5, Insightful)

    by v1 (525388) on Wednesday May 26, 2010 @07:37PM (#32355152) Homepage Journal

    Consumer tastes have overtaken the perceived needs of business as the leading force shaping technology.

    There, fixed that for you. The day of the PHB making decisions based on the novelty of the promo mugs and pens they just received is coming to an end. Thank god.

    • Re:So close... (Score:5, Insightful)

      by Knara (9377) on Wednesday May 26, 2010 @07:40PM (#32355206)

      Consumer tastes have overtaken the perceived needs of business as the leading force shaping technology.

      There, fixed that for you. The day of the PHB making decisions based on the novelty of the promo mugs and pens they just received is coming to an end. Thank god.

      That's pretty funny, and it seems like you actually believe it, too.

      • Re: (Score:3, Informative)

        by dangitman (862676)

        There, fixed that for you. The day of the PHB making decisions based on the novelty of the promo mugs and pens they just received is coming to an end. Thank god.

        That's pretty funny, and it seems like you actually believe it, too.

        Seems pretty accurate to me. Companies that operate that way might hang on for a bit longer, but their days are definitely numbered.

      • Re:So close... (Score:5, Insightful)

        by Anonymous Coward on Wednesday May 26, 2010 @08:03PM (#32355466)

        Back in my younger, stupider days, I got an MBA. One of my professors once asked me the question, "Have you ever seen a dog eat its own penis?"

        I responded "No", at which point the professor told me that, yes, I had seen a dog eat its own penis. He then explained to me how America's middle management had sold it out and destroyed its economy due to stupid decisions based not on need, but perceived need created solely by marketeers.

        Back then, he was referring to management's decision to ship heavy manufacturing overseas. Today, we see it happening with high technology. But the effect is the same; America the Dog has eaten its own penis, in effect. It has destroyed its ability to reproduce wealth, and as a result it is suffering economically.

      • Re:So close... (Score:5, Insightful)

        by Low Ranked Craig (1327799) on Wednesday May 26, 2010 @08:16PM (#32355626)
        Based on my 11 years working for a large company his statement is hyper-accurate.
  • by Dirtside (91468) on Wednesday May 26, 2010 @07:37PM (#32355158) Journal

    ...and?

  • by nimbius (983462) on Wednesday May 26, 2010 @07:38PM (#32355164) Homepage
    the mother of all flame wars. The only way this article could only be more dangerous is if it were posted to 4chan.
  • Watch out (Score:5, Funny)

    by MrEricSir (398214) on Wednesday May 26, 2010 @07:40PM (#32355196) Homepage

    Please don't tell the Apple fanboys about this, or we'll never hear the end of it.

  • Growth (Score:5, Informative)

    by TheRaven64 (641858) on Wednesday May 26, 2010 @07:40PM (#32355204) Journal
    Microsoft hasn't really been growing for a decade, while Apple has. The market capitalisation often reflects this, because people are more willing to buy shares in a growing company, expecting that their value will increase over the next few years. People only buy shares in a stable company based on the expected dividends. This means that Apple's stock price is likely to be more volatile than Microsofts and, as long as the continue to be perceived as growing, greater than the current 'real' value of the company.
    • Re:Growth (Score:5, Insightful)

      by maxume (22995) on Wednesday May 26, 2010 @08:08PM (#32355526)

      "Microsoft hasn't really been growing for a decade" is only true in the broader, "hahahahahaha" sense:

      http://www.microsoft.com/msft/download/Yearly%20Income%20Statements.xls [microsoft.com]

      Deciding just how much they grew is sort of a difficult exercise, as both 2000 and 2009 had 'interesting' business events, but the low end argument is that they increased earnings by $5 billion, which is about 50% of their 2000 income. It is also about 80% of Google's earnings (which is an interesting comparison, because Google is widely hailed as a success, whereas people often say that Microsoft hasn't don much).

      It wouldn't be insane to argue that they increased income by $7 billion, a 100% increase over their 1999 earnings, and it wouldn't be shocking to see them back near $18 billion for 2010 (they have already reported $14 billion of income), which is a $9 billion increase over 2000.

      Of course, none of those numbers account for inflation.

      So really, what happened is that Apple grew a whole bunch more.

    • Re: (Score:3, Interesting)

      by Kjella (173770)

      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

  • Bubble (Score:5, Insightful)

    by HEbGb (6544) on Wednesday May 26, 2010 @07:42PM (#32355228)

    Looks like an excellent bubble to take advantage of. Sell (or short) Apple, buy Microsoft.

    • Re:Bubble (Score:4, Interesting)

      by rsborg (111459) on Wednesday May 26, 2010 @07:54PM (#32355374) Homepage
      Looks like an excellent bubble to take advantage of. Sell (or short) Apple, buy Microsoft.
      [Citation Needed]

      This article [seekingalpha.com] may not be completely solid financial data, but makes more sense than the populist reactionary stance you take:

      So there you have it, Apple fans; your stock looks fairly priced. No debt on the balance and strong cash flows look good as well. By the numbers, Apple looks attractive as a growth story. Recent weakness may be enhancing the opportunity. Based on the thesis that earnings determine market price, Apple is currently trading at a PEG ratio of approximately one based on future earnings expectations.

    • Re:Bubble (Score:5, Interesting)

      by alphaseven (540122) on Wednesday May 26, 2010 @08:11PM (#32355570)

      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:Bubble (Score:5, Insightful)

      by phantomfive (622387) on Wednesday May 26, 2010 @08:17PM (#32355652) Journal
      And this kind of naive trading is why people lose money. The price/earning ratio is a simple measurement you can use to determine if a company is overvalued. Right now, Apple has a price/earning ratio of 20, which is really kind of low for a company that's been consistently increasing profits by 30% year over year, and has $30 billion in the bank. For comparison, Google has a p/e ratio of 21, and Amazon of 54. Amazon seems high, but because profits have been going up even more consistently than Apple, it is not a company I would bet against.

      You might be more right with Microsoft, since their p/e ratio is at 13, which is what you would expect from a consistent company with few chances at becoming more profitable in the future. If you feel Microsoft has good growth potential, you should invest in them, because their stock will probably go up. Personally I don't feel confident in their growth potential, and see some medium level downside risks (for example, the revenue from Office has dropped in the last few years, but they've managed to keep profits up by raising the price of Windows. But with netbooks, it may be hard to keep the price of Windows high).
  • by wringles (12507) on Wednesday May 26, 2010 @07:48PM (#32355282)

    Apple is now officialy THE ENEMY here at slashdot. M$ is just another bad guy now.

    • by pizzach (1011925) <pizzach.gmail@com> on Wednesday May 26, 2010 @07:55PM (#32355382) Homepage
      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?
      • Re: (Score:3, Insightful)

        by MBGMorden (803437)

        You're just being short sighted if you don't consider smart-phones and tablet devices to be computer equipment. It's not even at that level of when your teacher would say 15 years ago "You know your wrist watch has a computer in it!" - no, these things have general purpose input capabilities, general purpose programs and installable 3rd party applications. They're computers. Just because they don't have a keyboard, mouse, and separate monitor that doesn't change.

        • by walshy007 (906710) on Wednesday May 26, 2010 @11:47PM (#32357670)

          You're just being short sighted if you don't consider smart-phones and tablet devices to be computer equipment.

          Before the iphone, nobody would have considered a non-user-programmable phone a smart-phone, same thing with pda's, tablets etc

          no, these things have general purpose input capabilities, general purpose programs and installable 3rd party applications

          Without jailbreaking? or requiring cash for the apple development kit and abiding by their rules? apple has set back general purpose computing more than any other company, what they are great at, is making 'appliances'.

    • by binarylarry (1338699) on Wednesday May 26, 2010 @08:05PM (#32355492)

      It's funny how this new status appeared at exactly the same time as Apple's newly found controlling and assholish nature.

  • Yeah consumers! (Score:4, Interesting)

    by Panaflex (13191) <convivialdingo AT yahoo DOT com> on Wednesday May 26, 2010 @07:50PM (#32355310)

    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.

  • by Anonymous Coward on Wednesday May 26, 2010 @07:51PM (#32355318)
    ...we're all seriously fucked.
  • by epp_b (944299) on Wednesday May 26, 2010 @07:51PM (#32355328)
    Apple's imaginary value is greater than Microsoft's imaginary value. Now I'll have to spend some of my imaginary money to buy an imaginary Apple to get some imaginary work done.
  • P/E Ratio (Score:5, Insightful)

    by HockeyPuck (141947) on Wednesday May 26, 2010 @07:54PM (#32355366)

    Apple's PE ratio is also 2x of MSFT, Walmart, IBM, GE, XOM etc...

  • by Simonetta (207550) on Wednesday May 26, 2010 @08:05PM (#32355494)

    "It was ten years ago today, all my tech stocks blew away,
    they've been going in and out of style, but you're guaranteed to lose a pile"

    apologies to Sir Paul...

    But seriously, folks, this is a bubble price. Like the $656,565 valuation on that crappy three-room clapboard box-house that you almost bought in Fresno three years ago. *I hope that you passed that one by*.

    Bubbles exist in markets. When they burst, the people who believed that the price was a realistic valuation lose most if not all of their money.

    Now is the time to sell your Apple stock. EXXON owns the world's energy supply: Apple owns some coolness. Is Apple the second most valuable company in the world behind Exxon?

    No f***ing way.

    A lot of people lost a lot of money believing in tech stocks ten years ago. Heed their lesson.

  • by rahvin112 (446269) on Wednesday May 26, 2010 @08:16PM (#32355630)

    Only foolish (lowercase f) investors believe market capitalization (or number of shares times share price) is meaningfull as any real metric of the value of a company or it's stock. It can be a valuable indicator of a company that's price is way to high though (usually because of stupid investors).

    Let me give in you an example, it's a test I call the Walmart Test. Walmart does billions in revenue a year and make billions in profit, they are a highly successful business with solid growth in earnings every quarter, reliable profits and has a massive book value (the total value of assets). At the peak of the Dotcom era Cisco had a market capitalization that was the highest on the stock market, close to 500B IIRC. This exceeded the Walmart Market cap by more than 5 times (~76Billion IIRC) and edged GE by several dozen Billion. Even if every dollar of revenue for Cisco was profit and that profit was passed directly to shareholders they weren't even a 1/5th of the earnings per share Walmart was making. In the ideal world all profit from the enterprise passes onto the stockholder, in fact that's the basis of the worth, the promise of future dividends for companies that are reinvesting capital rather than paying a dividend (but that's another lecture all together)

    Because Cisco was valued so much higher than Walmart with significantly less earnings it was apparent that the stock was highly overvalued. Later at the dot-boom correction Cisco lost nearly 90% of their market capitalization (falling to less than 10Billion from 500Billion). That translated into a decline in price of the stock by about 90%. The same can be said for Apple, compared against real (boring) companies making solid profits they are extremely overvalued. Even if Apple were to grow sales 100% a year for 5 years they still couldn't match Microsofts actual profits. If you are looking for a long time short Apple is your game boys and girls. It's going to correct some day and it's going to be a brutal correction.

    This over-valuation is quite common in tech stocks, people invest in companies whose products they like (terrible investment strategy BTW). Stocks of this nature are almost 100% over valued and when they correct due to bad news it's a very vivid correction. Beta on these stocks can be 3-5 because of the casual investor who panics at the bad news, that and the stocks usually have high short percentages that will exacerbate a drop.

    The lesson of this post People is don't invest based on meaningless metrics and in tech stocks with rabid fan-bases that invest in the company. They are almost always over priced, and react much faster to negative news with the potential for much larger declines in the price. Put simply the market cap of Apple should scare you away from investing in it easily.

    • by cartman (18204) on Wednesday May 26, 2010 @08:46PM (#32356004)

      At the peak of the Dotcom era Cisco had a market capitalization that was the highest on the stock market, close to 500B IIRC. This exceeded the Walmart Market cap by more than 5 times (~76Billion IIRC) and edged GE by several dozen Billion.

      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.

      Even if Apple were to grow sales 100% a year for 5 years they still couldn't match Microsofts actual profits.

      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.

      If you are looking for a long time short Apple is your game boys and girls. It's going to correct some day and it's going to be a brutal correction.

      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.

    • by jamrock (863246) on Wednesday May 26, 2010 @10:19PM (#32357004)

      Even if Apple were to grow sales 100% a year for 5 years they still couldn't match Microsofts actual profits.

      Really? Let's see:

      Microsoft - Year ending December 31, 2009, Net Income $16.26 Billion on Revenues of $58.69 Billion

      Apple Inc. - Year ending December 31, 2009, Net Income $7.477 Billion on Revenues of $42.05 Billion

      According to you, if Apple grew sales 100% per year for 5 years, over that period they'd earn $16.26 billion in net income on revenues of more than $1.3 Trillion. Let's assume Apple's net income remains 17.78% of revenue. On sales of $1.303 Trillion, they'd show net income of $231 billion, not $16.26 billion as you assert.

      We're supposed to take any part of your post seriously? You're spouting bullshit in such an authoritative manner you'd be right at home behind the anchor desk of Fox News.

  • Can you say TROLL? (Score:5, Insightful)

    by Xyrus (755017) on Wednesday May 26, 2010 @08:19PM (#32355676) Journal

    This "story" is either an intentional troll or it was posted by someone who has no clue.

    Market capitalization means dick in the overall scheme of things, especially since it can change at the drop of a hat. Changing of the guard? What the hell does market capitalization have to do with that? It might mean something if you had two companies who compete in exactly the same market segments, but Apple and MS only compete in a couple.

    You can't compare Apple to Microsoft unless you specify what market segment your talking about. Going strictly by market capitalization alone is idiotic. You might as well compare Boeing to Walmart and then claim there is a changing of the guard.

    • by mschuyler (197441) on Wednesday May 26, 2010 @08:29PM (#32355788) Homepage Journal

      Mod parent up. Market capitalization is nothing more than perceived value by those who play the stock market gambling game. It's driven by a combination of factors, including the falling Euro, the Greek disaster, and the Gulf oil spill, all which have nothing to do with Apple. I suppose it gives Apple some bragging rights for awhile, but it doesn't have much to do with the real world. Microsoft isn't selling iPhones or marketing music. Apple isn't marketing Microsoft Office.

  • by Anonymous Freak (16973) <prius.driver@nOSPam.mac.com> on Wednesday May 26, 2010 @08:19PM (#32355682) Journal

    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.

  • Wow... (Score:5, Funny)

    by pandrijeczko (588093) on Wednesday May 26, 2010 @08:22PM (#32355722)

    ...imagine a whole Beowulf cluster of Apple companies!

  • All this means (Score:5, Insightful)

    by Dunbal (464142) * on Wednesday May 26, 2010 @08:26PM (#32355766)

    Is that AAPL is grossly overvalued. Especially when you consider price to earnings and return on equity. Microsoft sells 8 billion more per year than Apple (59 bn vs 51 bn), and keeps a larger percentage of it as profit. Sales growth has also been greater for MSFT than for AAPL. And Microsoft pays a dividend to boot, Apple doesn't.

    But I guess like everything else Apple, it's no surprise that their stock is overpriced as well. Feel free to buy it.

  • by pz (113803) on Wednesday May 26, 2010 @08:57PM (#32356134) Journal

    Greek. Mod me troll, offtopic, whatever. Getting something like this wrong is a big deal. It is not a greek crisis, but a Greek crisis. It is a crisis of the national government of Greece. Moreover, since "greek" is rarely used as an adjective on Slashdot, it reads too easily as "geek" which is a common adjective here, so the submitter and editor would need to be extra careful to avoid confusion.

    Yet another instance where an editor worth their salt would perform their appointed duties and correct submitted text, but a Slashdot editor fails to do so.

  • by TheNarrator (200498) on Wednesday May 26, 2010 @09:02PM (#32356192)

    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.

  • by Bad Mamba Jamba (941082) on Wednesday May 26, 2010 @10:40PM (#32357198)
    ...am I the only one who perceives a very subtle shift in MS being the good guy and Apple becoming the bad?

    Not that I'd argue MS has done anything different than they always have, just seen a lot more press on Apple and rather dubious strong-arm moves. For example

    http://www.sevensidedcube.net/business/2010/apple-investigated-for-abuse-of-power-in-the-online-music-market/ [sevensidedcube.net]

  • Horserace (Score:3, Insightful)

    by Angst Badger (8636) on Wednesday May 26, 2010 @11:02PM (#32357364)

    So we have the latest news on the competition between a nefarious closed-source near monopoly on the one hand, and a nefarious closed-source and closed-platform wannabe monopoly on the other hand.

    As Henry Kissinger said during the Iran-Iraq war, "Too bad they can't both lose."

  • by Tweezer (83980) on Thursday May 27, 2010 @12:21AM (#32357874)

    Do we now prefer Microsoft to Apple now? Last I knew Slashdot likes the underdog.

1 1 was a race-horse, 2 2 was 1 2. When 1 1 1 1 race, 2 2 1 1 2.

Working...