Apple earned twice the revenue of Microsoft last quarter but still lost over 10 percent of its market value. What does that say about the differing expectations concerning Apple and Microsoft? Mostly that investors expect more out of Apple and when they don’t get it they are quick to punish the company.
The Washington Post reports that Apple’s revenue for last quarter was $54.5 billion, up from $46.3 billion. Microsoft announced that its revenues were $21.46 billion for the quarter up from last years $20.89 billion for the fourth quarter. $54.5 billion versus $21.46 billion. Hmmm.
Apparently investors were disappointed that Apple’s growth seems to be slowing even though Apple’s sales of the iPhone were an all time high of 47.8 million. Still Apple has lost 35 percent of its value since September dropping from a high of $705 per share to $450.5 as of the close of the stock market today. As The Register points out, there were some unique aspects to Apple’s earnings figures.
And that’s where things get interesting. As Apple’s CFO Peter Oppenheimer, who shared the call with Cook, pointed out, the quarter reported on Wednesday had 13 weeks; last year’s Q1 had 14 weeks. "As such," Oppenheimer said, "average weekly revenue was $4.2bn in the current-year quarter, compared to $3.3bn in the year-ago quarter." That’s a per-week revenue increase of 27.2 per cent.
Meanwhile Microsoft’s ending price on the stock market was $27.63 which was a gain of $.07 percent for the day. The Verge pointed out that Microsoft’s 2012 fourth quarter revenues increased just 2.7 percent over the same period last year.
But here is where the difference lies. Investors see Apple growth as slowing and think that Apple’s potential for future growth has diminished. Microsoft’s investors see potential increased growth because of the various different facets of Microsoft’s company.
Here’s the rub. While Apple’s iPhone has sold well this year, there are parts of the world where the iPhone is too expensive for the market. Cheaper Android and even Windows Phone smart phones will sell in greater quantities. For instance, Geek.com reports that Apple is in fifth place when it comes to the smartphone market in China, in part, because most people can’t afford an iPhone.
PCs and Macs are taking a drubbing as consumers drift away from computers to tablets. While the iPad still remains wildly popular, Microsoft tablets are just getting started and are expected to increase in market share.
Whether you agree with the prognosticators or not, you can’t argue with the disparity in revenue between the two companies. Of course, that’s just last quarter. We have whole new year of competition ahead of us. Let’s see how they finish next December.