Apple market capitalization tops Microsoft

For weeks, pundits predicted what happened today: Apple's value exceeded Microsoft's. While writing post "The Windows era is over" early this afternoon, Apple's market capitalization was $227.95 billion and Microsoft's $228.47 billion, or just $520 million separating them. By the time I posted, at 2:56 pm, Apple's market cap was $225.98 billion and Microsoft's was $225.32 billion.

In the 20 minutes after, the two companies went on a roller coaster ride of sorts, with Microsoft failing to near $221 billion and Apple rising above $228 billion.

For Apple, there has been dramatic change since stock markets collapsed in autumn 2008. Apple's market cap was $88.68 billion on Oct. 2, 2008 and Microsoft's was $228.35 billion on Sept. 29, 2008. Mmmm, do you see a difference? Microsoft hasn't much changed, while Apple, boasted by surging share price, has rapidly gone up. About six weeks before the crash, on Aug. 13, 2008, Apple's market cap was $158.84 billion compared to $254.83 billion for Microsoft.

From one perspective, market valuation doesn't mean much. It's mitigated by several factors, including the number of shares publicly traded. But its symbolic significance cannot be understated, particularly considering the long rivalry between Apple and Microsoft and Apple's near-death experience during the mid 1990s.

Something else: Apple and Microsoft were founded about the same time and both companies played important roles launching the mainstream PC industry in the 1980s. But since 2000, Microsoft's stock has been moribund. Apple shares started a slow surge around 2003, which the September 2008 financial collapse reversed. But throughout 2009, Apple shares rose and rose and rose. Apple shares closed at $100.10 on Oct. 28, 2008. As I write, Apple is trading at $248.15.

A more meaningful comparison of the companies -- at least as rivals -- is revenue and profit. During first calendar quarter, Apple closed the revenue and profit gap with Microsoft to just $1 billion dollars. A year earlier, Apple revenue trailed Microsoft by $4.57 billion and net income by $1.36 billion. In the same quarter in 2005, the difference between the two: $7.01 billion by revenue and $3.6 billion by net income.

Update after 4 pm market close: In the closing half hour of trading, volumes for Apple and Microsoft were unusually high. Apple closed at $244.11 a share, down $1.11 from the previous close. The stock opened at $250.20 today. Microsoft closed at $25.01 a share, down $1.06 from the previous close. Microsoft opened at $26.24 a share. Despite the roller coaster trading, Apple ended trading with a market cap above Microsoft: $222.12 billion to $219.18 billion. But with market caps so close, Microsoft easily could top Apple in another day's trading.