update – The stock market loves Apple. Microsoft and Dell, once darlings of Wall Street, are falling out of favor. Apple could overtake Dell in value within a week.
What happened? Is it the market? Is it Apple? Is it another mini “bubble” stock run up that’s only the result of iPod’s market dominance? All of the above?
Lies, damned lies, and statistics. In this case, numbers tell much of the story but not the whole story.
Apple’s stock price has been on a steady, meteoric rise for the past two years. Microsoft has been in a slump for five years; some say MSFT is flatlined.
That has a good ring to it unless you’re an investor and your investment in Microsoft has gone nowhere for five years.
Dells’ stock is trading at around $30 per share while Apple’s stock is now in the mid-$80s. What’s telling is that Dell has been on a six month drop, while Apple continues to increase in value.
As of today, Dell’s market capitalization (the amount per share times the number of shares outstanding) is just less than $73-billion.
Apple’s market cap is now valued at just under $72-billion.
Stock analysts say Dell will continue to face eroding profits and slowing revenue growth as the Chinese PC company Lenovo takes greater market share.
Those same analysts also put a new target on Apple stock which ranges from $95 to $110 per share. With in a week or two, even including some profit taking, Apple could be worth more to the stock market than Dell Computer.
My, how things change. I wonder if Apple CEO Steve Jobs will send Dell Chairman Michael Dell an email. Maybe it would say something like this…
“Mike, the Chinese are coming, the Chinese are coming. Maybe it would be best if you’d just close the doors and give the shareholders all their money back.”
You get the idea. What goes around comes around. Also, what goes up, must come down.
Software giant Microsoft doesn’t appear to be in immediate danger of losing tens of billions in market cap. But it could happen. Let me speculate for a moment.
MSFT is trading at about $27 a share, and there are gazillions of share outstanding, making a market cap of nearly $290-billion. What would happen should Windows Vista be a flop, the XBox be a flop, Microsoft Search be a flop, Microsoft’s “Live” initiative be a flop, and so on?
The market would react by driving down Microsoft’s stock which hasn’t gone up for five years.
Institutions hold a huge chunk of stock and if it goes down quickly, they may dump their holdings.
Even at $9 a share, Microsoft would still be worth a stunning $96-billion, which is more than Apple or Dell. Still, stranger things have happened in the stock market.
The point is, things change. Microsoft was once the runaway darling of stocks, splitting sometimes twice a year and driving investor wealth to crazy levels. But MSFT has been flat for about five years, doing nothing for investors.
Dell was once a darling. Apple, too. Apple, for now, still is. Apple’s quarterly earnings report will be issued next week. That’s just in time for the stock to rise a few dollars more.
Does that make Apple worth more than Dell to you?
Yes. Why do you ask?
Carol Mary Miller
I have chunks of AAPL (not much, but chunks to me) from $39, $45, and $62, respectively. I don’t have MSFT or DELL. What’s that say?
Jack D. Miller
I’m with Carol. I drive and carry heavy things. It’s my lot in life. It’s not a lot, but it’s a life.
Tera Jean Patricks
update – Check this MacDailyNews link for the update as of Friday’s market close.