The old big event that had been impossible to imagine was Apple Inc. (NASDAQ: AAPL) overtaking Microsoft Corporation (NASDAQ: MSFT) with the world’s highest valuation for any technology company. Apple achieved that some time ago and is now worth about 50% more than Microsoft. Now there is a new market capitalization race. International Business Machines (NYSE: IBM) is now challenging Microsoft Corporation (NASDAQ: MSFT) in market capitalization for the number two spot.
Microsoft Corporation (NASDAQ: MSFT) closed at $24.17 today after falling by $0.32 or by 1.31%. Its market cap at the close was $203.82 billion. International Business Machines (NYSE: IBM) closed down at $168.26 after falling by -$1.90 or by -1.12%. Its market cap was $203.80 billion. If you were to use a free-float of the shares not locked up by insiders, IBM is already far ahead if you back out the Bill Gates and Steve Ballmer holdings and that has been the case for some time. What has happened is a rather simple concept. IBM recently hit new all-time highs, and Microsoft has continued to remain a dead-money stock.
If Wall Street analysts turn out to be correct, then it is just the recent price performance that is the cause and that will rectify itself. At $168.26, IBM has a Thomson Reuters consensus price target objective of $179.30. Microsoft shares are at $24.17 and Thomson Reuters has a consensus target on it of $33.04. Microsoft shares were last over $30 in early 2010 and shares were above $35 in late-2007 before the recession kicked in. IBM shares hit a new high of $173.54 just on May 2, 2011, and that was a new all-time high for the company shares.
Microsoft continues to lag and continues to offer little reward. The company’s lack of vision, the decline in the importance of PCs as the rise of mobile computing leaves Microsoft behind, and a strategy of “sticking by your guns” without a shareholder-friendly option, and several other key issues have kept Microsoft in the dead-money category for too long.
Amazingly, there are two more companies that could be challenging Microsoft shares in the months or the year ahead if they can keep growth alive and if Microsoft shares continue to flounder. Oracle Corporation (NASDAQ: ORCL) has a market cap of $167.8 billion and Google Inc. (NASDAQ: GOOG) has a market cap of $167.05 billion. With acquisitions or with new models providing above-peer growth, either of those companies could be jockeying for That #3 spot or even that #2 spot for technology’s most valuable companies.
Keep in mind that almost every single system counts a different market cap as they source different data for total and accurate share counts. Our own Real-Time 500, which tracks daily market caps, shows IBM trailing Microsoft by the same amount today.
JON C. OGG