Apple’s share price hit a milestone on Wednesday — pushing the company’s market capitalization higher than Microsoft’s for the first time.
Apple’s shares closed at $244.11, putting its value at $222 billion. Microsoft’s shares slipped to $25.01, pegging the software giant’s value at $219 billion. Market cap is the dollar value of a company’s outstanding shares. Microsoft has far more employees, products and customers, but on paper, at least, Apple is the world’s highest-valued tech company.
“Very simply, investors believe Apple’s growth prospects are superior to Microsoft’s,” says Bill Whyman, research director at ISI Group.
Apple is worth more than Microsoft but less than ExxonMobil, No. 1 among U.S companies at $278 billion. Apple’s string of successes include the iTunes music store, iPod music device, iPhone smartphone and iPad tablet PC. Market value “in and of itself doesn’t help them,” says Gene Munster, analyst at Piper Jaffray. “What helps them is great products.”
Microsoft, on the other hand, has been plodding. Its newest PC operating system, Windows 7, has been a success, but only on the heels of its lackluster predecessor, Vista. Last year, Microsoft sold 15.9 million Windows smartphones, 9 percent fewer than in 2008; Apple sold 24.9 million iPhones, twice as many as a year earlier, research firm Gartner says.
Microsoft CEO Steve Ballmer this week announced the departure of two top executives to clear the way for him to take more direct control of key upgrades to the Xbox gaming system and Windows smartphones this fall. Apple’s milestone increases pressure on Ballmer to “find new growth opportunities while maintaining the health” of current core businesses, says Matt Rosoff, analyst at research firm Directions on Microsoft.
Apple has come a long way since co-founder Steve Jobs returned in late 1996 after a hiatus. Challenges remain. It doesn’t sell much to big organizations. Google is…