“For the first time in 20 years, Apple’s quarterly profit exceeded Microsoft. Thus, on the face of things, the companies should be roughly equally valued. But they aren’t. This week Microsoft’s market capitalization is about $215B, while Apple’s is about $365B – about 70% higher,” Adam Hartung writes for Forbes. “The difference is, of course, growth – and how a lack of it changes management – including Microsoft.”
“When a company hits a growth stall, 93% of the time it will be unable to maintain even a 2% growth rate. 75% of the time we can expect it will fall into a no growth, or declining, revenue environment. And 70% of the time it will lose at least half its market capitalization,” Hartung writes. “That’s because the market has shifted, and the business is no longer selling what customers really want. No matter how hard management tries to recapture the past, customers have decided to move on.”
At Microsoft, we see a company that has been completely unable to deal with the market shift toward smartphones and tablets:
• The overall PC market declined by 2% last quarter
• Consumer PC shipments dropped 8% last quarter
• Netbook sales plunged 40%
When revenues stall earnings become meaningless.
Hartung writes, “Even though Microsoft earnings were up, it wasn’t because they are selling what customers really want to buy. Microsoft has caught the ‘Wal-Mart Disease’ – constantly trying to do more of what it always did, hoping it can regain old results – even as the market keeps shifting… Earnings in a declining company are, well, often worthless. Those who see this early get out while they can – before the company collapses.”
Much more in the full article, including why RIM is in the same boat (The Titanic) as Microsoft, here.
MacDailyNews Take: It’s times like this we think of times like this: “What I can’t figure out is why [Steve Jobs] is even trying [to be the CEO of Apple]? He knows he can’t win.” – Bill Gates, June 1998
[Thanks to MacDailyNews Reader “Phil M.” for the heads up.]
Bingleberry: Ballmer announces surprise Microsoft-RIM deal; Bing to be default search in BlackBerries – May 3, 2011
Anatomy of failure: Mobile flops from RIM, Microsoft, and Nokia can’t compete with Apple’s iPhone, iPad – April 23, 2011
Apple overtakes Nokia as world’s largest vendor of mobile handsets by revenue – April 21, 2011
Analyst cuts forecasts for Motorola on disappointing Xoom, Atrix sales – April 5, 2011
Apple makes roadkill of deer-in-the-headlights CEOs – April 1, 2011