Who's worth more: Apple or Microsoft?

Standard & Poor's uses a measure that puts Apple's market cap ahead of Microsoft's. But Microsoft says how the number is generated is wrong.

By Charley Blaine Apr 22, 2010 9:19PM

Here's a battle royale for you. Standard & Poor's said Thursday that Apple's (AAPL) market capitalization has moved beyond that of rival Microsoft (MSFT) to become the world's second-most-valuable company. (Microsoft is the publisher of MSN Money.)

 

S&P says Apple's market cap hit $241.5 billion as the stock has soared to $266.47. Microsoft's market cap, S&P says, is $239.5 billion. Both trail Exxon Mobil's (XOM) market cap of about $323 billion.

Microsoft begs to differ. And so do most Web sites that measure market capitalization. They put the market cap at $260 billion to $275.5 billion.

So, who's right? It looks like both.

 

The argument hinges around two issues:

  • Apple's shares have outperformed Microsoft since May 2003, after the dot-com bust and stocks bottomed. Apple shares are up some 2,700% since then as consumers and investors have gone gaga over the iPod, the iPhone and now the iPad. Microsoft shares have ranged roughly between $21 and $37 over that time period.
  • How do you account for the float -- the shares that anyone can buy and sell at any time.  

S&P says its version of market cap is adjusted for the float and excludes shares not available to public investors. That means shares closely held by "control groups," other companies and government agencies.

 

Marketwatch.com noted today that 99.2% of Apple's shares are, in fact, available to anyone who wants to buy them. CEO Steve Jobs' stake -- 5.55 million shares -- is about 0.6% of the total.

 

His holdings are now worth about $1.48 billion, but that's a different story.

 

But 12.6% of Microsoft's shares are controlled by Chairman Bill Gates and CEO Steve Ballmer. Neither trades his shares, which are worth about $22.1 billion and $12.7 billion, respectively. They do, however, sell shares on a regular planned basis.

 

"Just because Bill Gates and Steve Ballmer don't trade their shares doesn't mean that the market cap doesn't include them," Bill Koefoed, general manager for Microsoft investor relations, told Marketwatch.com in an e-mail.

 

So, both can claim bragging rights, but the gap between the two when you measure market cap by all shares outstanding has been narrowing.

 

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