Microsoft surpasses Apple, retakes crown of world's most valuable company

Microsoft CEO Satya Nadella. | Source: Microsoft

Microsoft passed Apple as the world's most valuable company with a market capitalization of $851 billion at the end of trading on Friday, retaking a position it last held more than eight years ago.

The result closes out a tumultuous week of trading that saw Microsoft jousting for — and briefly capturing — the throne that Apple has held since 2011.

Microsoft is enjoying massive returns on CEO Satya Nadella's strategy to refocus company efforts on building out existing strengths in enterprise and taking a measured risk on cloud computing. Azure, Microsoft's flagship cloud services offering, has experienced accelerated revenue growth over the past three years and now sits close behind segment leader Amazon Web Services in terms of marketshare.

At the same time, the Redmond, Wash., tech giant cut its losses on a poorly executed foray into the smartphone industry, notes the The New York Times. In 2013, then-CEO Steve Ballmer sought to challenge Apple's iOS and Google's Android with its own mobile solution, a program that involved the purchase of Nokia's mobile phone business. Nadella nixed the endeavor in 2015, a move that incurred a $7.6 billion charge and saw the release of 7,800 employees.

The ascendant Microsoft contrasts Apple, which has seen its stock price dragged down over the past month on rumors of lower than anticipated iPhone demand and the looming specter of America's trade war with China.

Earlier this month, a handful of Apple parts suppliers slashed revenue forecasts for the upcoming quarter, prompting concern of iPhone production cuts. Neither Apple nor iPhone were cited as a causal factor, though analysts believe the tech company is the only customer large enough to substantially move the needle.

Notably, segment watchers are seeing weak demand for Apple's new mid-tier iPhone XR model, a device previously viewed as the year's most attractive option in terms of price and performance. Apple VP of marketing Greg Joswiak sought to debunk rumors of production cuts earlier this week, saying iPhone XR sales have topped iPhone XS and XS Max since its release in October.

In addition to its iPhone woes, Apple might soon be caught in the middle of U.S.-China trade scrum. Apple devices, most of which are manufactured in China, escaped a first round of U.S. tariffs impacting some $250 billion worth of trade, but President Donald Trump last week confirmed his administration is thinking about including iPhone and laptop computers on the list of taxed items. If Apple were to pass that cost on to consumers, iPhone prices could increase by up to $160, according to estimates from Morgan Stanley analyst Katy Huberty.

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100 Comments

stantheman

said about 5 years ago

Microsoft actually is worth more than Apple, on Bizarro World.

pjs_socal

said about 5 years ago

Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.

Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.

In reality Microsoft is worth ⅓ the value of Apple.

rogifan_new

said about 5 years ago

pjs_socal said:

Microsoft has a P/E ratio of 45 and Apple has a P/E ratio of 15.

Apple and Microsoft have similar margins and Apple had better growth in 2018. Apple makes 2.5x more revenue and 3x more profits. So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.

In reality Microsoft is worth ⅓ the value of Apple.

Because Microsoft is diversified with recurring revenue streams which Wall Street loves. With Apple if iPhone sneezes the entire company gets a cold.

elijahg

said about 5 years ago

stantheman said:

Microsoft actually is worth more than Apple, on Bizarro World.

MS doesn't really have a singular product that is the source of most of their income any more, unlike Apple with their majority income from iPhone. That certainly didn't used to be the case for MS, they had Windows and Office and nothing else. Now they've got Azure and Office has switched to a subscription model, plus Xbox and to a lesser extent Surface. Wall Street also seems to love companies whose profits are based on services for some reason. The same services that people can easily abandon or switch to competitors; something that's not so easy with physical products. As I've said before, Cook unfortunately seems to have fallen into the trap of lower sales => raise prices, and is under the impression that'll cover up falling iPhone sales. Many apologists here seem to think marketshare and actual sales don't matter, but they really do. An increasing ASP is irrelevant if sales are falling.

9secondkox2

said about 5 years ago

Microsoft is Office.

Then Windows.

Azure isnt a monymaker. It’s a foot in the door.

Microsofts hardware business is nothing.

Basically, today’s valuation of MS is a charade.

Good imitation of success, but no actual success.

Meanwhilr Apple has a very healthy and stable PC business.

Then it has a psychotically great and stable phone business.

Then it has has an amazing wearables business.

Then it has an pustsnding services business.

It also boasys a second second to none retail business where it not only profits off its own products, but third party offerings as well.

The iBooks, iTunes, and App Store business are the stuff Microsoft can only dream of.

The idea that MS is even mentioned in the same sentence as Apple is laughable.

If office tanks, all of Microsoft goes with it. Windows as well.

Apple would be fine for a very long time if any number of its businesses went through through a severe famine - and that’s not due to its savings. THats due to cash flow. Apples business is heavily diversified and healthy on all points. Not the same for ms, which bleeds money on pet projects to project the illusion of diversification and relevance.

Its hilarious to see how the the stock market is manipulated. One moment, it makes sense and logic rules the day. The next, it’s 2+2=-22.

I give this s week before people realize there is no actual money in this error.

Its similar to google when people were giving google free money for no reason. It was a terrible investment. A company good at selling online ads. Then blew money like toilet paper on everything else. They would have tanked had an ignorant public not been so naive as to throw money at them.

Tjrn you hsve apple. They could go private and still hand the free money people a big blow. But they’re public and it’s like people don’t know what’s actually available to them.

In reality, Apple is worth over twice what it was a couple months ago.

No no other company has ever created and sustained their type of growth with their type of reliability and trust factor with how they handle business - never going in blind. Never taking stupid risks, but calculated ones. And having it pay off.

Lets see see how this plays out by next Friday.

Going to be a a fun ride.