Apple beats Microsoft in fall quarterly earnings

Posted:
in AAPL Investors edited January 2014
This summer Apple only approached Microsoft in revenues, but in the fall quarter, the iPhone maker has handily beat its partner and rival after reporting a new record of $20.34 billion in revenues compared to Microsoft's $16.20 billion for the fall quarter.



In the spring, Apple surpassed Microsoft in market capitalization, which is the value placed on the company by its investors in the open market. But this quarter is the first time in a decade and a half that Apple has brought in more revenue.



In fact, Apple's new peak just above $20 billion in quarterly revenues surpassed Microsoft's best quarterly revenue performance ever, when the company just exceeded $19 billion in revenues.



Very different businesses



Apple's business is vastly different than Microsoft's, with most of the company's income coming from consumer hardware products, supported by growing sales of music and software.



Microsoft makes the majority of its revenues from licensing deals with PC makers and corporations (market segments where Apple is either weak or doesn't even seek to enter) and, conversely, has repeatedly failed to find much success in the competitive consumer markets Apple has done so well in over the past several years.



Microsoft reported that the biggest chunk of its quarterly earnings came from sales of Office within its Microsoft Business Division, which brought in $5.13 billion. The company's Windows & Windows Live division, historically the company's strongest leg, booked revenues of $4.79 billion.



The company's Server and Tools Business reported $3.55 billion, while its unprofitable Online Services Division (Bing) brought in 527 million and its Entertainment Devices Division (Xbox, Zune, Windows Phone) reported revenues of $1.8 billion.



In contrast, Apple reported $8.8 billion in revenue from iPhone, $2.8 billion from iPad, and $1.4 billion from iPod sales, $1.2 billion in music related products and services in iTunes, and about $1 billion in software, services, and peripherals, leaving about $4.9 billion in revenue from Macs (Apple's retail business accounted for $3.5 billion of those revenues).







Microsoft still ahead in profits



While Apple is now larger in market cap and revenues, Microsoft continues to make greater profit margins on its software-centric business than Apple does on its mostly hardware and retailing business. Microsoft reported quarterly profits of $5.41 billion compared to Apple's reported profits of $4.31 billion.



While Apple's competitive outmaneuvering of Microsoft's aspirations in smartphones, media devices and tablets humiliated the Zune and Tablet PC, and has left its Redmond-based rival scrambling to reinvent its sagging Windows Mobile platform as "Windows Phone," the two companies are also working together as partners.



Microsoft just delivered what most critics have described as the best version of Office ever released for Mac OS X, and has also launched new software intended to sync Windows Phones with iPhoto and iTunes on the Mac.



Apple and Microsoft have also acted in concert to derail the cheap netbook, with Apple diverting attention to its iPad and higher end MacBooks, while Microsoft independently announced plans to push PC makers toward higher priced targets, successfully converting cheap netbooks into more expensive low end notebooks.
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Comments

  • Reply 1 of 38
    That's a Rounding Error...
  • Reply 2 of 38
    lkrupplkrupp Posts: 9,730member
    Apple has surpassed Microsoft in market capitalization.



    Apple has surpassed Microsoft in revenue.



    Apple is within range of Microsoft in profit.



    What does this say about the mantra of the trolls who have now placed all their eggs in the market share basket? What does market share have to do with the value, revenue, and profits of a company? Can we even compare Apple to Microsoft anymore? Apple is a hardware company. Microsoft is a software company. Who's the irrelevant one if such a label even applies?
  • Reply 3 of 38
    Quote:
    Originally Posted by lkrupp View Post


    Apple is a hardware company. Microsoft is a software company.



    Apple makes software and hardware.

    Microsoft makes software and hardware.



    They are both tech companies.
  • Reply 4 of 38
    Quote:
    Originally Posted by OllieWallieWhiskers View Post


    Apple makes software and hardware.

    Microsoft makes software and hardware.



    They are both tech companies.



    Name me 1 computer, phone, tablet Microsoft makes. They don't even make the Zune, or XBox 360. Keyboards and mice are hardware but hardly in the same league as Apple's hardware.



    Think about this though.



    Microsoft makes $5.13 billion dollars profit based on mostly software sales. Apple has to make hardware and sells that hardware with minimal margins and yet makes $4.79 billion dollars profit. Apple makes ALL the hardware and yet is only something like $340 million less in profits.



    It takes less to make software than it does to make hardware so even with Microsoft charging ludicrous prices for their software they are only a pittance more profitable than Apple.



    Who really has the most value now.
  • Reply 5 of 38
    steve-jsteve-j Posts: 320member
    Headline:



    Apple beats Microsoft in fall quarterly earnings





    Text:



    Microsoft still ahead in profits







    Seemingly, "earnings" and "profits" mean different things at AI?
  • Reply 6 of 38
    g93g93 Posts: 1member
    Hey y'all.



    The headline of this article is actually incorrect;

    Earnings = profits, not revenues.



    great site!
  • Reply 7 of 38
    steve-jsteve-j Posts: 320member
    Quote:
    Originally Posted by lowededwookie View Post


    Apple ... sells that hardware with minimal margins



    That's not really true. They make margins that are the envy of the industry.



    Just saying.
  • Reply 8 of 38
    Bill Gates not allowing Apple products in his household won't be enough to keep AAPL from kicking his ass. FInally he gets what he deserves.
  • Reply 9 of 38
    Quote:
    Originally Posted by AppleInsider View Post


    Microsoft just delivered what most critics have described as the best version of Office ever released for Mac OS X, and has also launched new software intended to sync Windows Phones with iPhoto and iTunes on the Mac.



    And yet a turd is still a turd, even if it doesn't smell like it.
  • Reply 10 of 38
    shadashshadash Posts: 470member
    Quote:
    Originally Posted by lkrupp View Post


    What does this say about the mantra of the trolls who have now placed all their eggs in the market share basket? What does market share have to do with the value, revenue, and profits of a company?



    Exactly what I've been saying. Apple just needs to sell the iPhone for $1,000,000,000,000. Screw market share. Imagine the profits!
  • Reply 11 of 38
    Quote:
    Originally Posted by Steve-J View Post


    Headline:



    Apple beats Microsoft in fall quarterly earnings





    Text:



    Microsoft still ahead in profits







    Seemingly, "earnings" and "profits" mean different things at AI?



    Yes, it's amazing how many people think earnings are the same as revenues. That being said, it won't be too long before Apple surpasses Microsoft in earnings (i.e., net profits) as well. I'd give it about a year or a little more. First, it was the market cap, then revenues and, finally, it will be earnings.
  • Reply 12 of 38
    Quote:
    Originally Posted by DougDolde View Post


    Bill Gates not allowing Apple products in his household won't be enough to keep AAPL from kicking his ass. FInally he gets what he deserves.



    How is Apple hurting Bill Gates?



    The person on the hot seat (and very deservedly so) is Steve Ballmer. Apple eclipsed MS under his watch.
  • Reply 13 of 38
    cameronjcameronj Posts: 2,357member
    Yeah, I don't know the difference between earnings and revenue either. Me and AI, best buds!
  • Reply 14 of 38
    Quote:
    Originally Posted by sippincider View Post


    How is Apple hurting Bill Gates?



    The person on the hot seat (and very deservedly so) is Steve Ballmer. Apple eclipsed MS under his watch.



    I'm sure how Apple is doing compared to Microsoft is hurting his pride.



    Yes, Ballmer is definitely in the hot seat but I don't think it's all his fault. Microsoft has a culture that's hellbent on protecting its Windows/Office monopoly franchise and you can't blame them for it. It's obscenely profitable, so they naturally develop a defensive mechanism against anything that could threaten that franchise. Microsoft has become a victim of its own success.
  • Reply 15 of 38
    crunchcrunch Posts: 180member
    Oh please...As much as I find Ballmer painful to look at and to listen to, Apple would have had the same success if Gates had stayed on as Microsoft's chief.



    Anyone remember the D5 "All-digital conference" in 1H 07 where Walt Mossberg interviewed both Bill Gates and Steve Jobs, which occurred shortly before the release of the initial iPhone? I wish they would do one now after Apple's onslaught of successes, which is, of course, ongoing, and for all we know, Apple's stock price will double again in the three years. It might go a little differently today.
  • Reply 16 of 38
    Quote:
    Originally Posted by shadash View Post


    Exactly what I've been saying. Apple just needs to sell the iPhone for $1,000,000,000,000. Screw market share. Imagine the profits!



    If Apple can do one of those even just every couple of years, the stock would be in the stratosphere. It would be a screaming buy at $305.
  • Reply 17 of 38
    Quote:
    Originally Posted by lkrupp View Post


    Apple has surpassed Microsoft in market capitalization.



    Apple has surpassed Microsoft in revenue.



    Apple is within range of Microsoft in profit.



    What does this say about the mantra of the trolls who have now placed all their eggs in the market share basket? What does market share have to do with the value, revenue, and profits of a company? Can we even compare Apple to Microsoft anymore? Apple is a hardware company. Microsoft is a software company. Who's the irrelevant one if such a label even applies?



    No arguments from me! Good points!



    Best
  • Reply 18 of 38
    Quote:
    Originally Posted by AppleInsider View Post


    In the spring, Apple surpassed Microsoft in market capitalization ......



    I remember that day well.



    May 26, 2010. Apple ended the day at a mkt cap of $221B, and MSFT at $219B.



    And, as an indicator of continuing trends, five months later -- almost to the day -- Apple closed the day today at a mkt cap of $280B (+$59B), MSFT at $227B (+$6B).
  • Reply 19 of 38
    Quote:
    Originally Posted by DougDolde View Post


    Bill Gates not allowing Apple products in his household won't be enough to keep AAPL from kicking his ass. FInally he gets what he deserves.



    I agree, not to pile on...But MS has been notorious for putting out inferior sw and then looking at the customer complaints to figure out what the top five problems they need to address are.



    Me being up till 3am wondering why my windows 98 won't upgrade is not acceptable. Only to find out 4 days later I need a driver for my modem...And it was a frigg'n windows engineer doing the upgrade for me! Good times!



    MS lost me as a customer a long, long time ago. I will never, ever go back to a windows product! I won't even buy Office for the mac...and as I understand it, it's been mainly designed by Mac guys!



    No MS on my Mac, ever!





    Best
  • Reply 20 of 38
    solipsismsolipsism Posts: 25,726member
    Let’s keep in mind that MS broke several of its own records this quarter and beat the street again, including 51% YoY net profit increase. In an odd twist of numbers, Apple bested Apple’s revenue by ≈25% but MS bested Apple’s net profit by ≈25%.



    Even with such a negative mindshare these days MS is still a very strong and powerful company. While I expect Apple to beat MS’ net profit within the next couple quarters MS is and will be a force to be reckoned with for a long time to come.
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