Apple loses shine as Microsoft is now the most valuable firm in the world

Apple lost its crown as the world's most valuable public company to Microsoft on Friday, as the iPhone maker's shares continued their downward slide.

Apple took a $6bn hit to its sales during the fiscal fourth quarter due to a nagging global supply-chain problem, leading to a miss on Wall Street expectations. Top boss Tim Cook said the effect would be even worse in the current holiday sales quarter.

“Compared to less hardware focused FAANG peers, Apple is also a lot more exposed to supply chain disruption,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Apple’s shares were down 3.6% at $147, implying a market capitalisation of $2.41-trillion. Microsoft’s shares were up 0.7% at $326.8 at a market valuation of $2.46-trillion. The Windows software maker’s shares were trading at a record high.

Apple, which has repurchased $421.7bn over the years, had announced a huge $90bn share buyback in April. As a result, the company’s outstanding stock pool keeps shrinking, ending its fiscal fourth quarter with 16.4-billion shares.

Microsoft’s stock has surged more than 45% in 2021, with pandemic-induced demand for its cloud-based services driving sales. Shares of Apple have climbed 15% so far in 2021.

Apple’s stock market value overtook Microsoft’s in 2010 as the iPhone made it the world's premier consumer technology company. The companies have taken turns as Wall Street's most valuable business in recent years, with Apple holding the title since mid-2020.

Analysts say Apple has managed the supply chain issue well, but with Cook warning of more pressure, the door is open to a hit to its performance as the holiday season kicks in.

In contrast, Microsoft on Tuesday forecast a strong end to the calendar year thanks to its booming cloud business, but it warned that supply-chain woes will continue to dog key units, such as those producing its Surface laptops and Xbox gaming consoles.

Reuters