Wake Up Call For Microsoft's Board

I woke this morning to find the best proof that what I've been saying for years now is right on the money:
It's Official: Apple (AAPL) Is Now Worth More Than Microsoft (MSFT).  Ina Fried has more to contribute here, also.

Back in 2003 (or so) I made the statement to a number of people that Microsoft would never have the influence over the microcomputer industry that they had then.  Sure, Windows XP was doing well and Office 2003 was a significant improvement over Office 2000, but with rumors that Apple had been working on an Intel-based Mac if the PowerPC line didn't keep up (which, tbh, it wasn't even back then despite Apple's misleading advertising to the contrary) and Mac OS X having gained popularity since its release in March 2001(yes, Mac OS X Server was released back in 1999 - but I'm talking popularity here), with the iPod being a brilliant success since 2001 and with Bill Gates having handed the CEO title over to Steve Ballmer, the writing had been appearing on the wall for a while.

And now this (from finance.yahoo.com as at the time of the publication of this blog post):

Valuation Measures	Apple (AAPL)	Microsoft (MSFT)	Google (GOOG)	Amazon (AMZN)
Market Capitalization	222.12B	219.18B	151.43B	54.91B
Enterprise Value (2010-05-26)	199.98B	197.29B	125.43B	50.71B
Trailing P/E	20.69	12.96	21.64	53.69
Forward P/E (fye 2011-06-30)	15.83	10.83	14.83	31.43
PEG Ratio (5yr expected)	1.12	1.49	0.93	1.58
Price/Sales (ttm)	4.36	3.84	6.10	2.08
Price/Book (mrq)	5.67	5.00	3.97	9.91
Enterprise Value/Revenue (ttm)	3.91	3.31	5.03	1.90
Enterprise Value/EBITDA (ttm)	12.65	7.81	12.10	32.40

While I was at it, I thought I'd throw both Google's and Amazon's figures in for good measure.  Please click on the title links above for the full set of figures and any descriptions as per the Yahoo Finance pages.

This has been on the cards for some time - obviously - but it has now finally happened.  (Even including Apple's interesting way of calculating Cash On Hand, if this "Apple's bigger than Microsoft" point hasn't been reached now, it will in the very, very near future.)

Sure, Apple *still* sells overpriced PCs, but they make a fat wad of cash on each one.  It is a very different model to Dell's and Microsoft's and it seems to be working rather well for them!  According to Business Insider, Apple only has around 7% market share but they have 35% of the operating profit - until people all wake up, that's rather lucrative.

In ballpark figures, since around the time Microsoft injected a measly US$150m into Apple to ward off the legal system and to show support for continuing developing for Apple's Mac platform, Microsoft's profits have risen by $25B from around $37B to $62B - an increase of 67%.  In the same period, Apple's income has risen by $28B from $8B to $36B - an impressive increase of 450%!

It will be interesting to keep an eye on this and also on Google to see where they move with their Android-based mobile (and maybe soon desktop) devices and their Google TV (as I blogged recently).  But one thing's for sure - Microsoft no longer has the influence they once had when Bill Gates was running the company - "visionary" has been replaced by "myopic" and they can't seem to see the wall they are walking towards!

Regards,

The Outspoken Wookie