The market valuation aside, these words from Ballmer brings to mind the discussion about marketshare vs. profitability in the smartphone threads.
They are not really the same.
1) Market Cap and Market Share have to correlation
2) Ballmer is right that profitability is what's important and Apple is on the verge of passing them.
3) In the smartphone space Apple's profitability lead has been increasing each quarter. So yes, Android has been gaining market share rapidly, however, their profits haven't been growing enough to keep up with Apple's profits in that space (yet).
The graph says it all really, what has this guy achieved since taking over from Bill Gates? I would be fuming as a shareholder. To constantly dismiss a competitors products and then copy them badly? That is his vision as head of one of the biggest companies on the planet? Where is the vote of no confidence? Microsoft can do better than this...
MSFT may be the most profitable, but it's not like Apple is trailing them by much. Seems silly to just brush off Apple's revenue when it's roughly 93% of what MSFT made during Q1 2010. It's not difficult to imagine Apple equaling or surpassing MSFT's revenue in the near future.
MSFT may be the most profitable, but it's not like Apple is trailing them by much. Seems silly to just brush off Apple's revenue when it's roughly 93% of what MSFT made during Q1 2010. It's not difficult to imagine Apple equaling or surpassing MSFT's revenue in the near future.
I fully expect that to happen the next holiday season.
Updated iPhone 4G. Potentially newer version of iPad (although that may not happen due to the current shortages). Updated iPods. Updated Macs.
These are 4 product categories that will just sell like blockbusters in that period.
It certainly is damning when he took over 10 years ago MS' Market Cap was $500+Billion and now it's less than half that! Wow!
Best
Well, to answer my own question above, it seems the inflation rate since April 2000 is about 27%, making Microsoft's value back then, in today's dollars, about $700 billion, so it's actually down to less than 1/3 of what it was. Apple's value 10 years ago, adjusted for inflation (assuming my calculations are correct) would be about $20 billion, a greater than ten-fold increase.
I wonder what he'll say when Apple's profits surpass Microsoft's....
My money is he'll switch to banging on about units sold being most important (i.e. they shift loads of crap at low margin).
Quote:
Originally Posted by christopher126
I can certainly see how as the CEO he has to be the top cheerleader too. But his comments and choice of words..come back to haunt him so often. Now he just seems a little out of touch!\
That's a very good point. In Balmers defense he's hardly likely to declare, "oh my God, everything Apple does is better than us and we're going to get killed". Even if it is true!
Quote:
Originally Posted by anantksundaram
Any CEO should know that value is not only a function of current profit ('performance') but also the market's expectation of growth in future profits ('perception').
Any good CEO should worry about both.
MSFT does very well with the former, from it's legacy businesses. It is the latter, the value from future growth opportunities, that seems to be their problem. (That is also why their PE ratio -- esp. The Forward PE ratio -- is so low for it's being a tech company). It is not rocket science.
You're right, but you also need to consider herd mentality. Some stocks are seen as inherently "sexy" whilst others are not. I suspect Apple are helped there too.
MSFT does very well with the former, from it's legacy businesses.... That is also why their PE ratio -- esp. The Forward PE ratio -- is so low for it's being....
it's -- a contraction of "it is"
its -- a possessive pronoun indicating association to an inanimate object
Keep in mind that MS stock trades at about 1/10th the price of Apple stock right now. So a $1 fluctuation requires a $10 fluctuation on Apple's part. Granted, MS has been going down these past few years, but adding a few cents to MS share price can change things overnight (either way, I might point out).
What Apple ought to do is institute a 10:1 stock split so their stock trades in the $25 range. Think of the psychological boost that will give to the stock price when people figure they can buy it for $25 (and remember the bad old days when you could get it for that price).
You're right, but you also need to consider herd mentality. Some stocks are seen as inherently "sexy" whilst others are not. I suspect Apple are helped there too.
Good points! The wind is certainly at Apple's back....Maybe MS needs more of a shake up than just changing to Division Heads?
It certainly is damning when he took over 10 years ago MS' Market Cap was $500+Billion and now it's less than half that! Wow!
Would any other CEO survive that sort of performance, over such a long period of time? It can't hurt Ballmer's position that he's an old FOB and a major MSFT stockholder himself.
Quote:
Originally Posted by rhyde
What Apple ought to do is institute a 10:1 stock split so their stock trades in the $25 range. Think of the psychological boost that will give to the stock price when people figure they can buy it for $25 (and remember the bad old days when you could get it for that price).
Think of what a pointless waste of effort that would be.
The market value of Microsoft has decreased from $556 billion in January of 2000, when Ballmer took over for Bill Gates as CEO, to $219 billion on Wednesday. In the same timeframe, Apple's market value has grown from $15.6 billion to $221 billion after the closing bell Wednesday.
Without question Steve J has done an amazing job at turning around Apple.
I'll be really impressed, though, when Apple surpasses $556 billion in market capitalization.
So can he explain why they have gone from 500+ Billion to where they are now. Isn't his math a little fuzzy? Oh right they spent too much on photocopiers.
Comments
The market valuation aside, these words from Ballmer brings to mind the discussion about marketshare vs. profitability in the smartphone threads.
They are not really the same.
1) Market Cap and Market Share have to correlation
2) Ballmer is right that profitability is what's important and Apple is on the verge of passing them.
3) In the smartphone space Apple's profitability lead has been increasing each quarter. So yes, Android has been gaining market share rapidly, however, their profits haven't been growing enough to keep up with Apple's profits in that space (yet).
If he were on Titanic he would say: don't worry, just switch off the engines and switch them on again and everything will be okay.
No, no. That wouldn't work, you would have to close all open windows first!
MSFT may be the most profitable, but it's not like Apple is trailing them by much. Seems silly to just brush off Apple's revenue when it's roughly 93% of what MSFT made during Q1 2010. It's not difficult to imagine Apple equaling or surpassing MSFT's revenue in the near future.
I fully expect that to happen the next holiday season.
Updated iPhone 4G. Potentially newer version of iPad (although that may not happen due to the current shortages). Updated iPods. Updated Macs.
These are 4 product categories that will just sell like blockbusters in that period.
I suspect they will say that their future looks bright with Windows Phone 7, and ... um, what else do they have to be excited about?
I guess they continue to have 100% of the Microsoft Windows market...
It certainly is damning when he took over 10 years ago MS' Market Cap was $500+Billion and now it's less than half that! Wow!
Best
Well, to answer my own question above, it seems the inflation rate since April 2000 is about 27%, making Microsoft's value back then, in today's dollars, about $700 billion, so it's actually down to less than 1/3 of what it was. Apple's value 10 years ago, adjusted for inflation (assuming my calculations are correct) would be about $20 billion, a greater than ten-fold increase.
I wonder what he'll say when Apple's profits surpass Microsoft's....
My money is he'll switch to banging on about units sold being most important (i.e. they shift loads of crap at low margin).
I can certainly see how as the CEO he has to be the top cheerleader too. But his comments and choice of words..come back to haunt him so often. Now he just seems a little out of touch!
That's a very good point. In Balmers defense he's hardly likely to declare, "oh my God, everything Apple does is better than us and we're going to get killed". Even if it is true!
Any CEO should know that value is not only a function of current profit ('performance') but also the market's expectation of growth in future profits ('perception').
Any good CEO should worry about both.
MSFT does very well with the former, from it's legacy businesses. It is the latter, the value from future growth opportunities, that seems to be their problem. (That is also why their PE ratio -- esp. The Forward PE ratio -- is so low for it's being a tech company). It is not rocket science.
You're right, but you also need to consider herd mentality. Some stocks are seen as inherently "sexy" whilst others are not. I suspect Apple are helped there too.
MSFT does very well with the former, from it's legacy businesses.... That is also why their PE ratio -- esp. The Forward PE ratio -- is so low for it's being....
it's -- a contraction of "it is"
its -- a possessive pronoun indicating association to an inanimate object
What Apple ought to do is institute a 10:1 stock split so their stock trades in the $25 range. Think of the psychological boost that will give to the stock price when people figure they can buy it for $25 (and remember the bad old days when you could get it for that price).
it's -- a contraction of "it is"
its -- a possessive pronoun indicating association to an inanimate object
could it be that we all know this already and it's just a typo?
You could work on something more useful like getting your City to use less consonants in its name!
Just teasing btw!
Best
What's worrying going to do for Ballmer except give him "worry lines" in his face and he's got enough already.
I guess they continue to have 100% of the Microsoft Windows market...
I guess they continue to have 100% of the Microsoft Windows market...
Not really. The most cracked software ever. Pirates, Pirates, Pirates!
You're right, but you also need to consider herd mentality. Some stocks are seen as inherently "sexy" whilst others are not. I suspect Apple are helped there too.
Good points! The wind is certainly at Apple's back....Maybe MS needs more of a shake up than just changing to Division Heads?
It certainly is damning when he took over 10 years ago MS' Market Cap was $500+Billion and now it's less than half that! Wow!
Would any other CEO survive that sort of performance, over such a long period of time? It can't hurt Ballmer's position that he's an old FOB and a major MSFT stockholder himself.
What Apple ought to do is institute a 10:1 stock split so their stock trades in the $25 range. Think of the psychological boost that will give to the stock price when people figure they can buy it for $25 (and remember the bad old days when you could get it for that price).
Think of what a pointless waste of effort that would be.
The market value of Microsoft has decreased from $556 billion in January of 2000, when Ballmer took over for Bill Gates as CEO, to $219 billion on Wednesday. In the same timeframe, Apple's market value has grown from $15.6 billion to $221 billion after the closing bell Wednesday.
Without question Steve J has done an amazing job at turning around Apple.
I'll be really impressed, though, when Apple surpasses $556 billion in market capitalization.