Microsoft market cap gains on Apple's

Worries about competition from Motorola's Droid X phone push Apple shares lower, while Microsoft advances. Analysts also worry that Apple's profit margins may shrink.

By Charley Blaine Jul 19, 2010 2:29PM

Apple iPhone 4 (© Jeff Chiu/AP)Updated at 8:40 p.m. ET

 

Hell hath no fury like an investor/customer scorned. And that may explain why Apple (AAPL) shares are down more than 3% today -- and Apple is neck and neck with Microsoft (MSFT) for the title of world's most-valuable tech company.

Steve Jobs' defense of the iPhone 4 antenna problem on Friday was so spirited -- some said arrogantly spirited -- that some investors were turned off.

Plus, there's a different problem the company now has to contend with: competition with Motorola's (MOT) Droid X device, which uses Google's (GOOG) Android system, and competition from others including Microsoft, which publishes MSN Money.

So, here's where things stand at the end of trading today. Apple was down 1.7% to $243.58, translating into a market cap of $223.46 billion. Microsoft was up 1.4% to $25.23, with a market cap of $221.01 billion. The difference: $2.45 billion, in Apple's favor, or about 1.1%.

But several times during the day, however, Apple shares dropped enough that it was worth less than Microsoft.

 

At 1:47 p.m. ET, for example, Apple's market capitalization was $219.6 billion. Microsoft's was $219.61 billion. The difference: $8.3 million, in Microsoft's favor. Apple

 

We should note that Exxon Mobil (XOM) still has the largest market cap in the world: $274.5 billion.

That the market caps of the two companies have converged will probably shock Apple fans. Apple's market cap first exceeded Microsoft's on May 26, and the gap widened to as much as $31.1 billion on June 28.

But Apple shares have fallen 10.3% since hitting a closing peak of $273.85 on June 22.

Microsoft hit a low of $23.01 on June 30 and is up 9.7% since then. Microsoft

The Android problem may be fascinating to watch. Verizon Wireless reportedly sold out all of its Droid X devices after they went on sale last weekend.

In addition to the Android problem, Apple was getting hit, according to Marketwatch.com, because some analysts were worried about profit margins a day ahead of Apple's earnings report.

Stifel Nicolaus analyst Doug Reid told Marketwatch he's worried about component shortages for the iPhone 4 and the iPad mobile device and declining average prices of Apple products. He sees the gross-profit margin coming in at 38.6%; the Street expects 39.5%.

Apple will release fiscal-third-quarter results after Tuesday's close. The consensus Wall Street estimate is that earnings per share will rise to $3.10, up 130% from a year ago's $1.35. Revenue is estimated at $14.74 billion, up 76.8% from a year ago.

Microsoft reports after Thursday's close. Analysts expect 46 cents a share in earnings, up 28% from a year ago. Revenue is estimated at 15.3 billion, up 16.4% from a year ago.

 

Here's how the market caps have come together this month.

 

Apple and Microsoft market caps move closer 
Date  Apple* Market cap** Microsoft* Market cap** Difference**
7/19/2010 $245.58 $221.70 $25.23 $221.00 $2.45
7/16/2010 $249.90 $223.50 $24.89 $218.03 $9.36
7/15/2010 $251.45 $227.40 $25.51 $223.50 $5.34
7/14/2010 $252.73 $228.80 $25.44 $222.90 $7.11
7/13/2010 $251.80 $229.00 $25.13 $220.10 $8.98
7/12/2010 $257.29 $229.10 $24.83 $217.50 $16.60
7/9/2010 $259.62 $234.10 $24.27 $212.61 $23.63
7/8/2010 $258.09 $236.20 $24.41 $213.83 $21.02
7/7/2010 $258.67 $234.80 $24.30 $212.87 $22.51
7/6/2010 $248.63 $235.40 $23.82 $208.66 $17.58
7/2/2010 $246.94 $226.20 $23.27 $203.85 $20.86
7/1/2010 $248.48 $224.70 $23.16 $202.88 $23.22
* Daily closing price. ** Market caps and differences in billions of dollars

 

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