Apple’s stock price has spent the day up anywhere from five to fifteen dollars after yesterday’s strong earnings report from the company which showed strong growth across the Mac, iPhone, and iPad platforms (the latter being a given, of course, since it didn’t exist in the previous quarter). The willingness on the part of investors to go in even deeper with Apple, which has already surpassed Microsoft as the world’s largest technology company in terms of market cap size. And perhaps more importantly, it shows that investors no longer consider the “iPhone 4 antenna controversy” to be a concern, if they ever did in the first place.
Apple attempted to square away antenna talk on Friday with an event in which the company both proved on a statistical basis that there never an iPhone 4 antenna issue to begin with and offered to give away free iPhone 4 cases, both moves seemingly aimed at silencing journalists who’d spent weeks trying to create a story where there wasn’t one. Even as some tech journalists are still bizarrely writing articles all but begging their readers to return the iPhone 4 for a refund, Wall Street has sided with 99.45% of iPhone 4 who never claimed to have antenna issues, and more money is being invested into Apple stock accordingly.
If Apple’s stock price climbs by six dollars tomorrow or Microsoft’s drops by a mere fifty cents, or some combination of the two, Apple will become a larger company than Microsoft. The development would have seemed stunning a decade ago, when Apple was toying with bankruptcy and benefitted from a Microsoft cash infusion. But with Apple gaining momentum on several fronts including its hot selling iPad, iPhone, and iPod products, along with dominance in digital music sales with iTunes and continued growth of its Mac computers, the company has attracted investors who’ve steadily driven its stock price and market capitalization over the past several years. In contrast, Microsoft is treading water with its popular Windows and Office product lines and has only seen momentum with its Xbox division, while some of its other efforts like the Zune have flopped to the point of embarrassment.
While tomorrow may or may not be the day in which Apple supposes Microsoft in market cap size, it now seems inevitable barring major bad news out of the Apple camp or major good news from Microsoft; as it turns out the major news on the horizon is Apple’s expected introduction of the next iPhone model in early June, which is widely expected to be viewed as good news for the company.
A few years ago, Steve Jobs allegedly sent a company wide email to his employees to brag about the fact that Apple had just surpassed Dell in terms of marketcap, meaning that – according to the stock market, at least – Apple had become a larger computer than its computer selling rival. This may have had something to do with the fact that Dell CEO Michael Dell had once suggested during Apple’s lowest point that the company should be shut down and the money given back to the shareholders. But with Apple now having eight times the marketcap of Dell, that particular battle is fairly far into the rearview mirror. In fact, with a string of good news out of Cupertino continuing to drive Apple’s stock price ever higher here in 2010, the company is now threatening to surpass a rival of a different kind. That’s right: at least on paper, Apple is now about ninety percent as large as Microsoft itself.
How is that possible? While Microsoft continues to largely be a three-trick pony in terms of revenue (Windows, Office, Xbox), the company’s steady growth isn’t exactly exciting investors as they realize that most of the company’s most rent high profile launches (Zune, Bing) haven’t taken off in any meaningful way. In contrast, Apple, despite its continued small share of the computer market, is showing its greatest ever gains in that area – along with dominance of the digital music market (on the hardware and software side), great success in the smartphone business with its iPhone, and has recently become the first company to have any notable success in the tablet computing market. In other words, Apple gives investors plenty of reasons to get excited about opportunities for significant growth, while Microsoft now more resembles a bank than a technology company; an investor’s money is almost certainly safe, but the growth potential is limited.
As it stands at the moment, Apple’s marketcap is $236 billion, while Microsoft’s is at $266 billion (according to Yahoo! Finance). This means that Apple’s individual share price would have to jump from its current $260 mark to roughly $290 a share, with Microsoft’s share price standing still, in order for Apple to surpass in marketcap the rival which so many people once mistakenly thought either owned Apple or had already put it out of business.