Bypassing Microsoft, Again?

The Wall Street Journal, America's traditional stock market observer, notes that IBM is creeping up on Microsoft (stock symbol MSFT) in terms of "market capitalization." Market capitalization is one measure of the value of the company: the number of shares outstanding multiplied by the current share price.

At the close of trading last week, IBM had a market capitalization of $205.2 billion, while Microsoft had a market capitalization only $9.2 billion higher. (The gap was even narrower earlier in the week.) As the Journal also points out, IBM already has a higher "enterprise value," which includes net debt. Apple (AAPL) passed Microsoft about a year ago, but Microsoft has had a higher market capitalization than IBM for just over 15 years.

Remarkably, IBM has transformed its business multiple times. For example, today's modern mainframe is both the descendant of IBM's biggest business transformation gamble (the birth of the System/360) and right in the thick of the next (cloud computing). Under ex-CEO Bill Gates's stewardship, Microsoft transformed itself once, from the primary supplier of BASIC programming language interpreters for microcomputers into the establishment of two franchise businesses: Windows and Office — with a big assist (MS-DOS) from IBM along the way. Transformation and evolution are hard, but Microsoft is full of talented people who just might figure out where the company should go.

UPDATE #1: As of May 17, the difference in market capitalization between the two companies has fallen to about $4 billion. If present trends continue, IBM could pass Microsoft in just a few more weeks.

UPDATE #2: Maybe I was a little too conservative in my assessment. At the close of trading on Tuesday, May 17, Microsoft had a market capitalization only $260 million higher than IBM's. Will IBM pass Microsoft in market capitalization this week? It's quite possible.

by Timothy Sipples April 24, 2011 in Economics


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Really, this is nice blog. IBM would calculation the MIPS as System z accouterments revenue, and IBM would calculation the BladeCenter and blades sales as Power, System x, and/or software sales.

Posted by: toshiba coupon codes | Apr 28, 2011 2:00:56 PM

In my opinion, IBM would bypass Microsoft in just a couple of days or a week. IBM leads the production in laptops and other software for computers, while Microsoft holds much of the operating systems for computers, other than the Mac which is large competitor as well.

Posted by: Shania Simpsons | Mar 2, 2012 10:01:48 AM

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