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It's Official: Apple Is Now Worth More Than Microsoft* | |
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| Time: 08:26 EST/13:26 GMT | News Source: *Linked Within Post* | Posted By: Robert Stein | ||
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Apple's stock market capitalization (AAPL) has not yet quite surpassed Microsoft's (MSFT), but the value of its actual business is now higher. Specifically, Apple's business is now worth $200 billion, while Microsoft's is only worth $197 billion--at least by one simple calculation of enterprise value.* What's the difference between a company's stock market capitalization and the value of its actual business (which is referred to as "enterprise value")? | ||
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| #1 By 342400 (24.12.33.49) at 5/26/2010 9:01:51 AM |
| Who didn't see this one comming? |
| #2 By 8556 (173.27.246.50) at 5/26/2010 10:15:02 AM |
| The bottom of the article points out that they made an error. It is odd that they post it anyway and then say "oops we were off by $18 billion. So, never mind." |
| #3 By 143 (216.205.223.146) at 5/26/2010 6:48:13 PM |
| The IT guys at work say we have 400 PCs and 1 MAC for the VP...our VP is the idiot. |
| #4 By 11888 (174.119.28.209) at 5/26/2010 9:39:52 PM |
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10 years ago who would have thought that we'd see Apple soaring and Microsoft stagnant and slowly slipping.
Here's to the crazy ones. . . |
| #5 By 10557 (71.175.244.175) at 5/26/2010 11:42:21 PM |
|
Just to keep things a little lucid...
AAPL p/e ratio is above 20. MSFT p/e ratio is about 13. Yes, AAPL's share price is notably more speculative than MSFT's. 'nuff said. |
| #6 By 2960 (72.205.26.164) at 5/27/2010 9:07:19 AM |
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#3,
Is there a point to your post, was this just a lucky time to call your VP an Idiot? |
| #7 By 2332 (173.13.97.180) at 5/27/2010 9:39:28 AM |
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Market cap is not the only measure of a company's worth, and it's certainly not a measure of the company's "presence" in the market place.
As somebody pointed out, the market *thinks* that Apple is worth roughly 1.5x as much as Microsoft on a per share basis. To put things in perspective, Microsoft's revenue *and* their profits are about 100% more (2x) than Apple's. The reason Apple's market cap is now equal to Microsoft's is because Wall Street thinks that Apple will roughly double their profits in the near future. Their stock price reflects a future value that has yet to be realized. It's a gamble. Given the fact that a huge percentage of Apple's revenue is from the iPod (saturated market), and the iPhone (ever more competitive market), this represents an extreme over valuation. |
| #8 By 143 (96.28.66.92) at 5/27/2010 10:09:44 AM |
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#6,
Any time to call our VP an Idiot is a good time. ;) |
| #9 By 143 (96.28.66.92) at 5/27/2010 10:19:01 AM |
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"Apple's Suicide Success"
http://www.huffingtonpost.com/2010/05/27/foxconn-suicides-continue_n_591616.html |
| #10 By 1896 (68.153.171.248) at 5/27/2010 2:57:15 PM |
| #7 While, up to a certain extent, I agree with your analysis "this represents an extreme over valuation" is your opinion...... not a fact. |
| #11 By 23275 (68.117.163.128) at 5/28/2010 9:28:14 AM |
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While it would be an over-simplification, it is useful to point out that since 2005, MS has paid quarterly cash dividends that per schedule, have increased steadily since that time. There were also (larger) special dividends as early as 2003, with the most significant special dividend being paid in 2004.
There have been several stock buy-backs, designed to increase shareholder value. Dividends are incredibly important to many groups of investors - many retirees depend upon them and their investments in companies over many decades pay out slowly and sustain them in their retirement. You may recall when General Motors dividend holders and their fund managers were vilified by the current US president and wiped out in favor of an entirely new company that is not yet publicly traded. The people most hurt weren't rich fund managers, but regular people like you and me. (sorry to digress, but proposed changes now in the Senate and House will all but kill investments - taxing twice and at higher rates that which should not be taxed at all!) The point is that Microsoft, having paid regular quarterly dividends, will push down on its own stock price - ceding in the struggle between management and their board and shareholders. Managers want to re-invest in the company and boards generally agree. Many shareholders want cash dividends. These push down on a company's stock price. Since Microsoft has so many more shares out, it also buys back its own stock, increasing the value of the stock, as well as the cost of paid dividends. One measure holds the stock’s value, or increases it, the other pushes down on it. Solid companies like Microsoft, try to sustain a balance. Apple pays no such dividend and its stock price reflects this. Finally, the markets today are just nuts. A couple of things to think about... it is volatile and volumes are low - it means that "investors" are gone from the market and into treasuries, etc.. so all that is left are traders working shorts, short covers and very few longs. Most are longer term on Apple (AAPL), because they reason the company will continue to increase its profits. They are probably right, but there is still great risk and my instincts tell me that Google is going to really hurt them and later, a reformed Microsoft (as it executes on its own cloud strategy, will hammer them both and harder than anyone might imagine). You'll see some of why very soon and exactly what is possible on that stack. |
| #12 By 1896 (68.153.171.248) at 5/28/2010 3:24:23 PM |
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#11 Actually the data that concern me is a different one:
Microsoft Market Cap 1999 $600.00 billion 2010 $227.86 billion Forget compare data with other companies; historical data is what show MS decline...... |
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