Apple and Microsoft

October 24, 2009

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How Do You Like Them AAPLs?

If you had bought shares of Apple Computer (AAPL) in July of 1997, you would have paid $13 per share.  At the close of the trading day on Thursday, shares of Apple were worth more than $200.  Certainly, having an investment return fifteen times your original outlay twelve years later is a great return – it would be an annual rate of return of 25%!

That’s only a quarter of the story, though.  Apple’s stock has also had two splits (2:1 splits) during the timeframe – meaning that one share in 1997 is the equivalent of 4 shares in 2009.  Your original investment of $13 would actually be worth more than $800 today – a 40% annual rate of return.

Michael Dell, founder of the company that bears his name, when asked what he would do with Apple, once remarked “shut it down and give the money back to the shareholders.”  Apple’s market capitalization of $180 billion is now roughly six times that of Dell – and also more than that of IBM ($160B) and Cisco ($140B).  In fact, Apple’s market value is even approaching that of longtime rival Microsoft ($250B).

In 1997, Apple was on the brink of disaster.  The product matrix had become quite muddled, and the company appeared rudderless.  In the midst of the chaos, the company turned to co-founder Steve Jobs.

Jobs has co-founded Apple with Steve Wozniak (Woz).  Woz was the technical genius, while Jobs was the savvy salesman.  Jobs was forced out in a power struggle with CEO John Sculley in 1985.  Ironically, it was Jobs who had hired Sculley.  (So, what happened to Woz?  He left the company in 1986 and is heavily involved in philanthropy … when he’s not Dancing With the Stars).

When Jobs was booted out of Apple, he didn’t pout about it.  He took some cash and bought an animation studio from George Lucas for $10 million.  He took more cash and founded a technology company  – NeXT.  NeXT’s computers were technologically advanced – and very pricey.  NeXT eventually transitioned into a pure software company.  Apple bought NeXT in 1996 for $429 million.  Apple had been struggling with their next generation operating system, and NeXT’s NeXTSTEP technology served as the foundation for Mac OS X.

Shortly after Apple bought NeXT, the board of directors fired CEO Gil Amelio and hired Jobs as the new CEO.  The rest is history.  Jobs quickly discontinued many projects and supervised a new, more focused future strategy. 

Under the leadership of Jobs, Apple has launched wildly popular products such as the iMac, iPod, and iPhone as well as the cash cow iTunes Music Store.

While Jobs is a highly compensated CEO, it might be hard to find many investors who would complain about the cost of his leadership – clearly, the company has thrived during his tenure, and shareholders have reaped golden rewards.

And whatever happened to the animation studio that Jobs bought from George Lucas?  Disney bought that studio in 2006 for $7.4 worth of Disney stock.

The name of the studio?  Perhaps you’ve heard of it – Pixar.

Microsoft Windows 7

In an effort to confuse anyone who is trying to decode their product naming system, Microsoft launched Windows 7 on Thursday.  Old version, Vista.  New version, 7.  Yep, definitely a natural progression.

I’m also unclear on why this is Windows 7 when I can think of at least nine different versions (1, 2, 3, 95, 98, Millennium, XP, Vista, 7).

The strongest selling point of Windows 7 is that it is not Vista.

In Japan, Microsoft partnered with Burger King and introduced a product to help promote Windows 7.  I know what you’re thinking – a 7 patty Whopper.  You people have crazy imaginations – that would be just nutty.

I mean, yes.  That’s exactly it. A 7 patty, two thousand calorie burger.  And it doesn’t even come with cheese!

One Comment (+add yours?)

  1. Patti
    Oct 24, 2009 @ 12:53:42

    According to the link, the Windows 7 Whopper:
    “the burger stacks seven patties in an otherwise normal Whopper and measures 5.1 inches tall. It also has an appropriate 777 yen ($8.53) price.”

    Knowing the Japanese, they’ll pay $8.53 for this whopper. Americans would just shake their heads.


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