Apple has taken a big bite out of Microsoft's reputation by edging past its old rival to become the richest technology company in the world. The darling of Wall Street had a market value of US$222.1 billion (Dh706.3bn) on the NASDAQ Stock Market in New York on Wednesday compared with Microsoft's $219.2bn. Not bad for a company that nearly went to the wall in the 1990s. "Apple really checks all the boxes when you look at the tech sector," said Ryan Jacob, a fund manager at Jacob Internet Fund in Los Angeles. "Do they have the opportunity to gain share in their markets? What are the prospects for margins? It's hard to find a company that you can have more confidence in than Apple."
The California-based company, which makes Macintosh computers, iPod music players, iPhone mobiles and iPad tablet computers, is also the second-largest US firm by market value, behind the oil giant ExxonMobil, which is valued by investors at $278.6bn. Apple shares have soared more than 550 per cent since 2005 as consumers snapped up the company's devices. During the same period, Microsoft shares have fallen by about 2 per cent.
Yet back in 1997, Apple was on the verge of bankruptcy before the charismatic Steve Jobs returned as chief executive. He transformed the company from the maker of the Mac into a consumer electronics trendsetter with the release of the iPod in 2001, the iPhone in 2007 and this year's release of the iPad tablet. "With their relentless pursuit of technological and design innovations, driven largely by Steve Jobs, Apple has become the dominant technology company of this decade," said Michael Obuchowski, the chief investment officer for First Empire Asset Management in New York.
With Apple on a roll, it is now unclear how Microsoft plans to reclaim top spot. The Seattle company has long relied on its Windows operating system and software offerings such as its Office suite to dominate the technology industry. But recent ventures into the mobile and search-engine sectors have failed to return adequate revenues and have been considered by many industry observers as a failure.
Last week, Microsoft announced the departure of J Allard and Robbie Bach, both senior executives with its entertainment division that includes its Xbox video game business and two employees out of the more than 5,000 people who have left the company through redundancies and cost-cutting in the past year. "Microsoft has been extremely weak over the last month, underperforming other technology stocks and that's really what's moved Apple into the leading position in terms of market cap," Mr Jacob said.
* with Bloomberg dgeorgecosh@thenational.ae
