How the Mighty Have Fallen: Apple Surpasses Microsoft in Market Cap

There were raised eyebrows across the business world as hedge fund bad-boy

David Einhorn called for Steve Ballmer to step down as CEO of Microsoft. Was this just typical 'talkin' my book' bluster from another puffed up Wall Street ego looking to make a quick killing on stock price movement or was there actually some substance behind the demand?

Well, you can always count on a healthy dollop of self-interest whenever a latter-day financial whiz jumps into the ring, but as the accompanying chart suggests, Microsoft has some 'splainin' to do. Apple, the 'boutique' arbiter of cool tech has surpassed both Microsoft AND IBM (IBM!) in market capitalization. Market cap is basically calculated by multiplying stock price times the number of equity shares outstanding. It is one of the fundamental measures of wealth and power in the corporate world. This confirms fears that Microsoft's growth days are over and that it is the closest thing to the tech world equivalent of an electric utility: a safe, utterly boring, low-risk, low-return investment your grandma should own.

Will Microsoft now follow IBM into the ranks of gargantuan business stalwarts, gobbling up lesser beings, consulting on various matters and churning out predictable financial results? Or will it even contemplate throwing in the towel and being acquired by some emerging Chinese powerhouse? Bill Gates is nothing if not an uber-rational business calculator. The betting here says Gates and Ballmer still have enough pride to want to go out on top, to not surrender the insurrectionist innovator status that counts for street cred among the now very wealthy establishmentarian tech glitterati. They will look for ways to rethink and then revive the company's fortunes - as IBM did under Lou Gerstner a generation ago. As for Apple, the big question mark is whether the edgy brilliance for which it is justifiably known is baked into its DNA or whether it disappears with Steve Jobs. As the childrens' ditty says, 'and the wheels on the bus go round and round.' Pay attention. JL

Chart by Thompson Reuters via Barry Ritholtz's Big Picture blog:

"Today’s WTF data point is related to David Einhorn’s call for Steve Ballmer’s resignation.

Earlier this week, Microsoft was — briefly — overtaken by IBM in market value for the first time in 15 years. (They are now $206B to $204B). As we discussed last year, Apple blew past Mister Softee to become the world’s most valuable tech company