Hedge fund manager Cody Willard: ‘Apple could become more valuable than Microsoft sometime in 2007’

Cody Willard is the manager of a hedge fund and the author of the Telecom Connection, an investment newsletter. He is also a headliner on TheStreet.com, writes for Razor Magazine, VON Magazine and the Financial Times, is a frequent featured guest on CNBC and has been quoted in many publications, including the New York Post and the Hollywood Reporter.

Willard writes for TheStreet.com, “with Apple having blown by Oracle in market cap already, I wonder how much longer before it catches Cisco. Then Intel. Then Microsoft? Let me go ahead and be the one to throw it out there first: I wouldn’t be shocked to see Apple more valuable than Microsoft sometime in 2007. What a mind-blowing thing to think to ponder.”

“Apple’s market cap has gone from $6 billion to $60 billion in the past two and a half years. Can it keep running? If the company delivers the growth it looks like it will: heck yes it can keep running. I’m sticking with it, although I have trimmed the exposure in the past few weeks, as I’ve noted on the site.”

Full article (subscription required) here.

[Thanks to MacDailyNews reader “jalex” for the heads up.]

MacDailyNews Note: Apple’s market value is currently $59,888,758,930, thanks to recent profit-taking. Dell’s, for one example we’re keeping a very close eye on in relation to Apple for obvious reasons, is currently $78,182,273,298. Microsoft’s current market value stands at $287,850,410,220.

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50 Comments

  1. Microsoft’s current market value stands at $287,850,410,220

    That’s a billion dollars more than Switzerland’s GNP.

    Amazing that a single corporation can hold more value than a WHOLE FRIKKIN’ NATION!! We’re not talking about some backwater third-world bananna republic, we’re talking about the banking center of the industrialized western world…

  2. Screw Microsoft! It’s just a software developer! It should have never been allowed to get where it is and only got there illegally. The result has been to ghettoize the entire industry.

  3. As the name implies, I am a Linux Guy. I started with the Mac, but was forced to go with Windows for practical professional reasons. Then I moved over to NeXt, at home at least, and then to Linux when NeXt became moribund.

    But back in my Mac phase, I made the biggest investment bet in my life — AAPL. I never sold, hoping that than ounce of intelligence would infect an Apple CEO to take the most creative company and make it soar.

    Now I feel like Meg Ryan in that scene in “When Harry Met Sally.” My wife almost fainted when I told her what the stock she wanted me to dump was worth.

    I happily agree with the author. Apple might just well keep growing at a spectacular rate and blow past MS. Yes, yes, oooooooo, ooooooweeeeeeee ….

  4. Sounds very unlikely. Much as I am a fan of Apple, for this prediction to come true, Microsoft would have to stand still, or start to lose value.

    Let’s assume that MS dips from 287B to 200B. Apple would have to more than triple to hit that point in two years.

    Possible? Yes. Probable? Learn from history.

    I used to own a lot of AOL shares that were at $95 in December 1999. I thought I was retired. I made the mistake of holding on to them. I didn’t recognize the bubble.

    Apple is ahead of itself. Don’t assume that the stock will sustain this rate of growth. If you have shares, protect them. Don’t make the mistake I made with AOL. Fortuneately, Apple is in much better hands than Case, Schuler, and the other idiots that were running AOL/Time Warner circa ’99-03.

  5. I don’t think Apple overtaking Microsoft in value is all that farfetched. As Apple gains share, Microsoft, by definition, has to lose share. The loss of share, even in the face of good earnings, will cause MSFT to decline in value (perception of future value equation). So Apple does not have to gain $220 Billion in value to overtake Microsoft. The transition could happen with a gain of just $140 billion. Not unreasonable considering Apple’s leadership in music, positioning in video and expanding CPU share.

    Having said all that, I would be more comfortable with a forecast of 2008. 2007 is pretty aggressive.

  6. I’m not sure about catching M$, but I do think Apple can definitely pass up Dell’s market cap by 2007. And what a glorious day it will be when Mikey boy has to eat that HUGE plate of crow…

  7. Apple did have some debt, and I recall Steve making an announcement to the employees about paying it in full while I was there. I think that was close to two years ago.

    Also speaking as an investor, I’m happy to see Apple sitting on a large war chest. The deal for flash memory supplies was a great move, and it probably wouldn’t have been prudent if Apple’s cash balances weren’t so high.

    There’s really no such thing as excess cash. That money makes it possible for Apple to make bold moves, like launching the iPod or the Mac Mini, or building out the server capacity to make the video store possible. I don’t know what else they’re developing, but I’m quite sure that Apple’s future product plans aren’t scaled back from what they’ve done already.

    I’m very long on AAPL, and I just bought another 500 shares in the dip that the recent analyst downgrades caused. (bought at 70.85, and I’m already up over a dollar from that.)

    As for Apple overtaking MS, I do see that coming, and the trigger for it will be Windows Vista. That product is SIX YEARS late, and they’ve dropped so much of the highly-touted feature set that it’s barely more than XP with a couple of new skins. Once the customers discover that Vista is still the unsecureable mess that Windows has always been, we will have reached the tipping point.

    MS is also suffering a brain drain. The “get rich at MS” story depended on a constantly rising stock price, and they’ve been flat for years now. Any top engineer who chooses MS over Google or Apple, or even any of the latest round of start-ups, is just wasting his talent.

    I’ve read what MS’s new CTO is saying, and frankly, I’m underwhelmed. XML? AJAX? RSS? Running Word and Excel as a web service? Give me a break! Those clowns are completely out of ideas, and they can’t even figure out how to copy Google.

    Apple worth more than MS? Hell, yes!

    -jcr

  8. The coming OS war may be the real reason that Apple is switching to Intel processors. Microsoft’s Vista means a lot to all the PC makers (Dell, HP, etc) because it will trigger an upgrade cycle as all those corporate users buy newer, faster computers to run the new operating system.

    This is Apple’s big chance to make a real dent in the market – all they have to do is convince some of those “upgraders” to switch instead to a Mac. By using Intel-based hardware, the new switchers can taste the Mac, but still have the option to revert to MS Vista if things don’t work out.

    This could sell a lot of Apple hardware. Alternatively, Apple could license OS X to PC makers to compete head-to-head with MS during this upgrade cycle.

  9. OS War? What war? That one was won a long time ago – and I give you one guess as to who won it.

    Apple’s fighting a guerrilla war, at most. And winning a little bit on the edges.

    Step out of this echo chamber for a second and remember that the biggest growth markets for computers in the coming decade are China and India. Those are definitely not going to Macs and probably not even to Windows. Maybe some home-grown version of Linux.

  10. Me again (and my song). I don’t want Apple that successful. I want them strong, but lean and hungry, not bloated and corrupt. I like where they are right now – innovating, producing everything I could want or need, and looking for ways to make it better. I’ll happily accept a higher price point for a better user experience (and dare I say it, perhaps a little smugness).

    I don’t want Apple to be the next Microsoft, Dell, or Walmart. I don’t want to have to look elsewhere for the next best thing.

  11. Linux can run on a Mac, there are several flavors for the PPC. If OS X is guerrilla, Linux is militia.

    Besides, those lentil-lickers will flock to the Mac once they realize that their Macs can be powered by cow dung and/or untouchables in a treadwheel, and last 5-10 years longer than their Dells or Zeniths or ASUSs or whatever.

    Unfortunately most people will probably have their computers made from scratch by some opportunistic but unemployed IIT drop out, à la “Short Circuit” (1986, dir. John Badham)

  12. “The Romans won a lot of wars too, and their empire still collapsed.”

    You’re comparing apples to oranges. In today’s business world if a competing technology appears that could threaten your monopoly you buy it out or crush it before it can grow. Look at Intel, Cisco, etc. Microsoft can’t follow that route because of government intervention in the market. When M$ loses market share the competitors won’t be able to use the “monopoly” argument against it anymore and M$ can go back to doing what it does best – killing the competition. I actually want M$ to lose market share so they can get these Socialist G-men off their backs and do exactly that.

    But not to Apple, of course. Too many FanBois will be crying in their soup…

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