Could Apple surpass Microsoft in market value?

26 May 2010

In 1997, a struggling Apple accepted a US$150m investment from software giant Microsoft. Today, Apple surpassed Microsoft in stock value – Apple is worth US$200bn while Microsoft is worth US$197bn.

During the 1990s, Apple’s relationship with Microsoft was fractious, though Microsoft executives have often described Apple as their best partner and vice-versa.

In 1994, Apple sued Microsoft for copyright infringement and sought to prevent Microsoft Corporation and Hewlett-Packard from using visual graphical user interface (GUI) elements that were similar to those in Apple’s Lisa and Macintosh computers. Apple lost the case and the subsequent appeal.

The years that followed saw Apple drift into the wilderness with different CEOs: John Sculley, Michael Spindler and Gil Amelio fighting product flops and missed deadlines. However, by 1997 Steve Jobs – who had been removed from managerial duties in 1985 and who in the meantime founded NeXT Computers – was brought back in as an adviser and the struggle back to profitability began.

First came the iMac, then came the iPod, then came the iPhone and now the iPad – Apple’s stock has continued to soar based on the continued success of these product lines.

In its latest quarterly results, Apple posted revenues of US$13.50bn and net quarterly profit of US$3.07bn, or US$3.33 per diluted share.

Microsoft, in its recent results, reported revenues were up 6pc year-on year to US$14.5bn, driven by strong demand for its Windows 7 operating system, which is now running on 10pc of PCs worldwide.

As its iPad gets ready to roll out in the UK this week, it emerged today that 13 years after Apple had to accept an investment of €150m from Microsoft, both companies started today with nearly the exact same market capitalisation of US$223bn a piece.

At the time of writing this afternoon, Microsoft had a market capitalisation of US$228bn while Apple had a market capitalisation of US$227bn.

Apple has US$223bn worth of cash and no debt. Microsoft has US$37bn of cash and US$6bn worth of debts.

It is interesting to note that in 1997 Michael Dell suggested Apple was a spent force and should do the right thing and shut up shop and return all the money to its shareholders.

It’s 2010 and Dell is worth barely a tenth of Apple. How things can change.

By John Kennedy

Photo: Apple CEO Steve Jobs

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years