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

Posted:
in AAPL Investors
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.

Satya Nadella
Microsoft CEO Satya Nadella. | Source: Microsoft


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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Comments

  • Reply 1 of 100
    Microsoft actually is worth more than Apple, on Bizarro World.
    edited November 30 racerhomie3magman1979watto_cobrajony0
  • Reply 2 of 100
    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.
    baconstangharrykatsarosred oakcgWerksmattinozThrashmanapplesauce007williamlondonStrangeDayscornchip
  • Reply 3 of 100
    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.
    elijahgmazda 3spatchythepiratejorgiered oaklkruppGeorgeBMacbb-1578Bandit
  • Reply 4 of 100
    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. 
    edited November 30 mike54croprmuthuk_vanalingam78Bandit
  • Reply 5 of 100
    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. 


    applesauce007dedgeckochiacornchipracerhomie3magman1979jony0
  • Reply 6 of 100
    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. 


    "Azure isnt a monymaker."

    Wrong.  Azure & Office 365 are MS' fastest growing businesses.
    elijahg
  • Reply 7 of 100
    chasmchasm Posts: 994member
    It should be noted that:
    1. There is ZERO hard evidence that the iPhone XR or any other iPhone is doing poorly, and a statement from Apple that points to the XR as the best selling iPhone model.
    2. To be fair, that could be (mis)interpreted that the iPhone XR is doing well but under company expectations. However, assuming that would require believing that all the other iPhone models are also doing poorly (since they're all doing less well than the leading iPhone), and there's no evidence of that. Furthermore:
    3. If the iPhones were doing less well than expected, Apple would be required by law to revise its record-breaking guidance to investors. It has not done so.

    So the bottom line is this: until stronger actual evidence emerges, Apple's lack of a guidance warning suggests that the company is on target for a record-breaking fiscal Q1 again this year. While I certainly don't begrudge Microsoft its moment in the sun, they've done nothing different from the last five years to warrant this sudden re-evaluation as compared to, say, Amazon or IBM or other companies experiencing new growth. Apple's services business -- the core of the reason why MS has suddenly found favour amongst the punditry -- is healthier and wealthier than Microsoft's, and there is no analyst that doesn't think it is growing significantly faster than anyone else's on the planet.

    Conclusion: this downturn in AAPL is driven 100 percent by unproven speculation, which is a sure sign of market manipulation. Microsoft's sudden rise in its stock price is also seemingly driven by speculation and market manipulation. Expect big corrections in January when MS again reports lacklustre results (after its execs cash out on this windfall) and Apple reports exactly what it has promised it will: a record-breaking fiscal Q1.

    Just hope that the general US economy doesn't crash in the meantime ...
    baconstangandrewj5790buckalecapplesauce007netmageStrangeDaysmacplusplusracerhomie3magman1979minicoffee
  • Reply 8 of 100
    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.
    That's part of it.  The other part is that Satya Nadella re-focused MS' efforts on cloud computing which is a high-growth segment and an area of MS' strength.
    rogifan_newelijahg
  • Reply 9 of 100
    If you reduce iPhone revenue to a 3rd of its current level (which is completely unrealistic) that would bring the iPhone into line with Apple's other businesses:
    • Phones 19% (from 59%)
    • Personal computers: 19%
    • Services 16%
    • Other.
    Leaving Apple with a last quarter earning of just 38.16 billion, 9 billion more than Microsoft's best 1st quarter of 29.1B.

    Now lets add into the mix: Apple has better margins and its business model is not based on large individual sums, instead it's based on a very large number of users with an ecosystem - something that is very hard to shift.

    This is why people like BH are constantly buying Apple stock, it's very safe and undervalued from nothing more than portfolio diversification and investor fatigue.

    MS's share price increases are the result of renewed interest due to their growing revenue and profit - which is completely logical, but at this stage the press are over hyping the significance of this because Apple have set the unrealistic expectation that every year can be bigger than the previous. (I.E. People don't realise that Apple are making regular and significant innovations to keep this pace moving forward.)

    All that it would take is Amazon to reduce the cost of their AWS cloud services to seriously impact Microsoft's ability to make gains and keep their large-sum wins: Oh look, Amazon have developed their own server chips to bring down the cost of AWS, reducing costs to customers by as much as 45%. 

    You just won't get this level of disruption in Apple's businesses because Apple regularly disrupt their own business model.
    baconstangpatchythepiratebuckalecretrogustochiaadamcnetmagebadmonkStrangeDaysmagman1979
  • Reply 10 of 100
    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. 


    Can Apple buy itself and go private?

    apple sure don’t need outside investors to fund ny project like many company. 
  • Reply 11 of 100
    lkrupplkrupp Posts: 6,520member
    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.
    So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
    elijahgnetmagebadmonkStrangeDaysmacplusplusmagman1979
  • Reply 12 of 100
    davgregdavgreg Posts: 129member
    Microsoft under Nadella has followed the Jobs pattern of picking a couple of things to do and then skating to where the puck is. Apple under Cook has followed the Ballmer pattern of imitate and iterate instead of innovate. Nadella taught the elephant to tap dance and Cook took a once lean Apple and created a top heavy organization that seems unable to do anything other than design and market cell phones.

    Apple is a one trick pony.
    mike54williamlondon
  • Reply 13 of 100
    lkrupplkrupp Posts: 6,520member

    viclauyyc said:


    Can Apple buy itself and go private?

    apple sure don’t need outside investors to fund ny project like many company. 
    Absolutely not, no way. Apple is way too expensive to buy itself out and go private.
  • Reply 14 of 100
    lkrupplkrupp Posts: 6,520member
    Okay, this news is being plastered all over the Internet. When Apple retakes the lead tomorrow or next week, or next month will THAT be plastered all over the Internet? Can you hear me laughing? Only negative things about Apple are newsworthy.
    baconstangmattinozadamcStrangeDaysmagman1979
  • Reply 15 of 100
    wood1208wood1208 Posts: 1,634member
    Bravo!! Go and post on Microsoft crappy windows site !!!
    StrangeDays
  • Reply 16 of 100
    mike54mike54 Posts: 267member
    Tim Cook has made Apple into an iPhone, iOS for Phone, and services around the iPhone company, TV shows, infused with fashion and Tim's politics. It has lost interest in macs, macOS, stopped a number of products, ignored products, quality control needs addressing, etc. They no longer make the best products they can, but instead hobble configurations in order to up-sell and to purchase addition accessories to get functionality that should be included in the product, and all this while they are substantially raising prices. Apple has always been more expensive, but combined with the other factors it's getting out of hand. And look at the product range in a category, it has grown into a convoluted mess.

    elijahgdocno42
  • Reply 17 of 100
    harrykatsarosharrykatsaros Posts: 14unconfirmed, member
    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.
    They generate approx. 15 billion in recurring services revenue per quarter. Apple is at currently at approx. 10 billion in services revenue per quarter and growing at a faster rate... so I get your point but even then it doesn't really add up. 
    Rayz2016netmageStrangeDays
  • Reply 18 of 100
    The stock market is based on fear.  I.e. Apple has had a great run... but xyz

    Microsoft’s products are entrenched in business.  You can’t stop paying Microsoft for Office 365 if there is an economic downturn.  What you can do is delay buying Apple’s latest and greatest.

    The reality is the IPhone’s are wants not needs (for most people).  Because revenue relies on mostly one product (the iPhone) it’s easy to see how revenues could dip 20%.  Revenue from Microsoft is sticky, and because of their diversification a disaster in one product isn’t that big a deal.  

    For example, my opinion is Windows 8 & Windows 10 were crap.  All that means is businesses stay with Windows 7 until the problems get fixed.  Joe consumer essentially acts as Microsoft’s beta tester...  And, low & behold Windows 10 gets better and businesses migrate. 

    Right now, there is a perfect storm for fear mongering acting as a headwind for Apple.  The trade war is potentially damaging, both from tariffs and lost China sales.  On top of that, Apple has a new product launch and decided not to give iPhone unit sales numbers going forward.  It isn’t any surprise Apple’s stock is down.

    I think it’s short term.  I don’t think President Trump can afford (politically) to keep the trade war going.  It’s been negative for the American worker (in job losses) and in the stock market decline.  My bet is Apple will bounce back in the next 3 months, overtaking Microsoft, and then some. 
    elijahgrogifan_newchia
  • Reply 19 of 100
    zoetmbzoetmb Posts: 2,350member
    lkrupp said:
    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.
    So when did the iPhone sneeze? I must have missed that. The only thing I’ve heard are the predictions of analysts based on supply chain reports which Tim Cook has consistently advised against using to provide meaningful data about Apple. So remind me, when did the iPhone sneeze and give the entire company a cold? In your wet dreams?
    Reality doesn't matter.  It's about perception.   The iPhone is approximately 66% of Apple's gross revenue.  And Apple announcing that they're no longer going to break out iPhone units sales is sending the message, correct or not, that they expect declines in unit sales.  Wall Street doesn't like a lack of transparency and in that regard, I don't blame them.   Combine that with the insanity of believing supplier chain complaints and that's a recipe for killing the stock and that's if the stock is not being manipulated.   

    Declines in iPhone sales wouldn't surprise me one bit.  At least in the U.S., the market is mature, phones are no longer subsidized and Apple keeps raising the prices.   Does Apple really think that their users are going to buy a new phone every two years for $1000 or more per pop?   

    On the Mac side, Apple's price hikes combined with the inability to replace the battery, memory and storage as well as the fact that so many people don't really need a computer anymore is going to continue to affect sales, but the Mac is only about 10% of Apple now anyway.   Apple probably thought they could replace Mac sales with iPad sales, but that's only about 8% of Apple.    While I realize that Apple has never wanted to be the low-end, low-margin provider, I think the high salaries paid to Apple managers and executives has completely warped their perception of what most people are willing and able to spend, especially for a machine that can't be upgraded after purchase.    A 15" MBP now starts at $2400 and tops out at $6700.   That's ludicrous.   The MBA starts at $1000 at tops out at $2600.   The Mini tops out at $4300.   $5K for the 27" 5K Retina iMac (topping out at $13,200)?   IMO, this is either desperation to keep revenue high or unbelievable arrogance.     


    elijahgmuthuk_vanalingam
  • Reply 20 of 100
    cgWerkscgWerks Posts: 1,759member
    pjs_socal said:
    So, why are Microsoft shares valued at 3x Apple’s? Because investors are morons.
    That, combined with the fact that most of those who aren't morons, aren't really investing. As one of my friends who 'plays' the markets has noted... if the intent were investment, the rules would be different.
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