• The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
Menu
  • The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
  • IT Vendor Market Cap Follies

    November 5, 2007 Timothy Prickett Morgan

    The world is a funny place. Funny in terms of “ha ha” as well as in funny as “downright strange.” Someone sent me an email last week, laughing because the market capitalization of Apple Computer had surpassed that of IBM.

    Market cap–the value of all of the shares outstanding in public companies as reckoned by the price of shares on Wall Street–is as good a measure as any about what the world thinks of that company. But considering the amount of flim-flam and nonsense in people’s reasons for valuing companies–well, at least some of the time–maybe market cap goes too far sometimes.

    To get a sense of reality, I like to gauge the market cap of any IT company against its annual earnings. If the company is healthy, growing, and profitable, the ratio should be well above one; if it falls below one, you are either a giant retailer hitting up against some limits (like Wal-Mart is), or you are a struggling manufacturer in the North American or European markets (as General Motors is). Check out this table below for your amusement.

    Market Annual
    Company Cap Revenue Ratio
    IBM $156.6 B $91.4 B 1.71
    HP $132.8 B $91.7 B 1.45
    Microsoft $346.7 B $51.1 B 6.78
    Intel $154.8 B $35.4 B 4.37
    Apple $163.5 B $24.0 B 6.81
    Sun Microsystems $18.6 B $13.9 B 1.34
    Dell $66.4 B $57.4 B 1.16
    Google $219.5 B $15.0 B 14.63
    Yahoo $40.5 B $6.4 B 6.33
    eBay $47.4 B $6.0 B 7.90
    Amazon $36.4 B $10.7 B 3.40
    General Motors $21.1 B $207.3 B 0.10
    Wal-Mart $179.1 B $348.7 B 0.51
    Berkshire Hathaway $203.1 B $98.5 B 2.06

    It just cracks me up that General Motors, with over $207.3 billion in sales in its last annual report, has a market cap of a mere $21.1 billion. That’s just crazy. And I also think it is perfectly insane that Google, with $15 billion in sales in its past 12 months, now has a market cap of $219.5 billion–a ratio of nearly 15 to 1 against revenues. All the profits generated by the S&P 500 for the past several decades does not justify such a multiple, but if you bought Google at $200 bucks a share and you are sitting at it at north of $700 a share, you are feeling pretty smug about right now. Microsoft‘s multiple is high, but that is because it has 1.5 monopolies–one on the desktop and half a one in the data center–which means it can profit as if it were a $200 billion company even though its latest annual sales are only just above $51 billion in its latest fiscal year. It also seems ridiculous as well as ironic that Google is now worth more than Berkshire Hathaway, the financial empire built by Warren Buffett, a friend of Bill (Gates that is, not Clinton) who is often vying with him as richest man in the world and who has donated his riches to the Bill and Melinda Gates Foundation to do some good in the world.

    That Apple has a multiple in the same range as Microsoft just goes to show that Steve Jobs is just as smart as Bill Gates, but he didn’t start with a monopoly. But, if the iPod is any indicator, he may end up with one. (My wife just got me an iPod Nano, which I have resisted plugging in until this newsletter is completely written.) Intel is under competitive pressure from Advanced Micro Devices, and even though its fortunes have recovered in recent quarters, its market cap to revenue ratio shows the pressure, since Intel used to be valued right up there with Microsoft only a few years ago. It also shows that hardware doesn’t drive profits the same way it used to, and software still does. Again, Gates got the better part of the Wintel duopoly. Which is no surprise, now is it?



                         Post this story to del.icio.us
                   Post this story to Digg
        Post this story to Slashdot

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Tags: Tags: mtfh_rc, Volume 16, Number 43 -- November 5, 2007

    Sponsored by
    WorksRight Software

    Do you need area code information?
    Do you need ZIP Code information?
    Do you need ZIP+4 information?
    Do you need city name information?
    Do you need county information?
    Do you need a nearest dealer locator system?

    We can HELP! We have affordable AS/400 software and data to do all of the above. Whether you need a simple city name retrieval system or a sophisticated CASS postal coding system, we have it for you!

    The ZIP/CITY system is based on 5-digit ZIP Codes. You can retrieve city names, state names, county names, area codes, time zones, latitude, longitude, and more just by knowing the ZIP Code. We supply information on all the latest area code changes. A nearest dealer locator function is also included. ZIP/CITY includes software, data, monthly updates, and unlimited support. The cost is $495 per year.

    PER/ZIP4 is a sophisticated CASS certified postal coding system for assigning ZIP Codes, ZIP+4, carrier route, and delivery point codes. PER/ZIP4 also provides county names and FIPS codes. PER/ZIP4 can be used interactively, in batch, and with callable programs. PER/ZIP4 includes software, data, monthly updates, and unlimited support. The cost is $3,900 for the first year, and $1,950 for renewal.

    Just call us and we’ll arrange for 30 days FREE use of either ZIP/CITY or PER/ZIP4.

    WorksRight Software, Inc.
    Phone: 601-856-8337
    Fax: 601-856-9432
    Email: software@worksright.com
    Website: www.worksright.com

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Admin Alert: Limiting System i User Sign-ons the Smart Way XAware Takes the Open Source Plunge

    Leave a Reply Cancel reply

TFH Volume: 16 Issue: 43

This Issue Sponsored By

    Table of Contents

    • The System i Still Owns the SAP BI Data Mart Benchmark
    • The Latest i5/OS V5R4 PTFs: What Is Going On?
    • BluePhoenix Rides Legacy Modernization to Another Successful Quarter
    • IT Vendor Market Cap Follies
    • IBM to Pump $1.5 Billion into Security Products, Services
    • The System i Still Owns the SAP BI Data Mart Benchmark
    • IBM to Recycle Silicon Wafers for Solar Cells
    • Project ECLipz Surfaces, But Not the Way You Think
    • Ask TPM: Enticing Users to Upgrade Their i5/OS Hardware
    • Neuwing, IBM to Quantify and Monetize IT Energy Savings

    Content archive

    • The Four Hundred
    • Four Hundred Stuff
    • Four Hundred Guru

    Recent Posts

    • Liam Allan Shares What’s Coming Next With Code For IBM i
    • From Stable To Scalable: Visual LANSA 16 Powers IBM i Growth – Launching July 8
    • VS Code Will Be The Heart Of The Modern IBM i Platform
    • The AS/400: A 37-Year-Old Dog That Loves To Learn New Tricks
    • IBM i PTF Guide, Volume 27, Number 25
    • Meet The Next Gen Of IBMers Helping To Build IBM i
    • Looks Like IBM Is Building A Linux-Like PASE For IBM i After All
    • Will Independent IBM i Clouds Survive PowerVS?
    • Now, IBM Is Jacking Up Hardware Maintenance Prices
    • IBM i PTF Guide, Volume 27, Number 24

    Subscribe

    To get news from IT Jungle sent to your inbox every week, subscribe to our newsletter.

    Pages

    • About Us
    • Contact
    • Contributors
    • Four Hundred Monitor
    • IBM i PTF Guide
    • Media Kit
    • Subscribe

    Search

    Copyright © 2025 IT Jungle