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IBM Now Officially Worth More Than Microsoft

Soulskill posted more than 3 years ago | from the cough-i'm-sure-windows-phone-will-fix-that-cough dept.

IBM 295

liqs8143 writes with news that IBM's market cap has surpassed Microsoft's, making it the second most valuable tech company. When the market closed on Friday, IBM was valued at $207.52B, while Microsoft was valued at $206.52B. "At one point during the PC era, Microsoft's value climbed three times higher than IBM's. Apparently, this has been a long two decades in Armonk, N.Y., but Microsoft also is no longer the beast it once was. The guard is changing. Besides Apple, there is also Google. While Google is valued at about $170.59 billion, less than the other three, its $31 billion in annual revenue is half of Microsoft's $69 billion and less than a third of IBM's $101 billion. Waiting in the wings is Facebook, which has been valued in the private market for as much as $50 billion, on negligible revenue."

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First post (0)

Anonymous Coward | more than 3 years ago | (#36206620)

First post - IBM ahead of MS? Big suprise considering OS/2 was such a flop in later years :p

Re:First post (-1)

Anonymous Coward | more than 3 years ago | (#36206634)

A supposedly intelligent person claimed that blacks are at least as intelligent as whites because they are so "innovative." His example was that
blacks would take an old steel oil-drum (which whites considered to be rubbish) and turn it into something useful-- a steel drum. Leaving aside
whether or not a steel-drum band of muds is, in any way, shape or form, "useful," let's look at his argument.

The white man had made the steel oil-drum as a means of transporting oil around the world. This involved creating an industrial technology, and
developing mining industry to a point where oil wells could be sunk in the North Sea (or Gulf of Mexico), and crude oil successfully removed. Then a
world-wide trading network had to be established. Let us gloss over the need for international economic transactions, international credit and
banking, electronic money transfers, telephonic and satellite communications, and the stable economies and governments needed to make this possible.

Instead, let's look at the need to produce oil tankers to transport the oil. The need for computers to navigate the ships, the level of technology
needed to produce the ships, the schools needed to educate those who will serve on the ships, the engineering skills and training for those making
them.

Let us now think about the products kept going by the oil. The plastics, the chemicals, the cars, and so on. And all this on a world-wide scale,
over
generations. And we haven't even touched on road and rail systems, intensive farming and refrigeration to feed those in the industrialised cities,
the factories, the building trade, power generation, written and computerised record keeping, or a thousand and one other things, all associated
with
the world oil production and trade.

And of all this, the oil drum is a minor by-product, a practical but simple and fairly primitive form of storage whilst in temporary transit.

And if, by some chance or accident, one of these oil drums washes up on the shore of dusky Africa, what do the native inhabitants do? Use it in
their own oil industry? No. Use it as a spring-board towards future development? No. They turn it upside-down and hit it with sticks! Call me pedantic,
but that doesn't make them my equal. Not one of the dozens of items I listed above has appeared in Africa, ever. Not even writing. A continent
surrounded by ocean, watered by massive lakes and rivers, and the black natives never dreamt a sail. Thousands of miles of flat grasslands, and they never
fashioned a wheel, nor domesticated animals. Surrounded by stone, they never constructed a building better than a hut. Acres of diamonds and the
world's largest gold fields, and they never glanced at them until shown their beauty by white men. And all this for tens of thousands of years,
thousands of generations living with no change, no progress.

But they are our "equal" or so the brainwashed politically correct morons would have you believe.

Re:First post (4, Interesting)

BitterOak (537666) | more than 3 years ago | (#36206636)

First post - IBM ahead of MS? Big suprise considering OS/2 was such a flop in later years :p

Which is too bad, since OS/2 was vastly superior to Windows at the time. So much so, that OS/2 was the OS of choice in many applications where stability and security was important, such as ATMs.

Re:First post (2)

phantomfive (622387) | more than 3 years ago | (#36206670)

Not really, it's a good thing.....it forced IBM to reconsider their place in the world, and start a new direction. Their new direction fortunately included open source. IBM spent a lot of money on Linux and other such products, which they likely wouldn't have if OS/2 had taken off.

Re:First post (2)

dougmc (70836) | more than 3 years ago | (#36206640)

Yet OS/2 was quite superior to the versions of Windows that Microsoft had out at the time.

In any event, IBM and Microsoft generally work in different areas now -- considering how IBM has their fingers in everything there's considerable overlap, but for the most part they're very different.

Re:First post (0)

1u3hr (530656) | more than 3 years ago | (#36206734)

Yet OS/2 was quite superior to the versions of Windows that Microsoft had out at the time.

Apple OS was superior to Windows at the time. It was superior marketing, cheaper hardware and sneaky and unscrupulous business tactics that gave MS the lead.

Re:First post (5, Insightful)

Hamsterdan (815291) | more than 3 years ago | (#36206776)

MacOS 7.x to 9.x was *not* superior to NT. Macs didn't offer multitasking, memory protection and modern stuff until OS X. Better than 3.x, on some points, but not NT (or even 9x)...

Re:First post (1)

1u3hr (530656) | more than 3 years ago | (#36207418)

MacOS 7.x to 9.x was *not* superior to NT.

Possibly, in features and power, not in usability. In any case, NT was pretty much only used on servers and hardcore geeks, not average desktops. (And I use Win2k, which is just an upgrade of NT, so I like it myself.)

Re:First post (1)

MrHanky (141717) | more than 3 years ago | (#36207526)

Untrue. The technical inferiority of classic MacOS was a real, quantifiable usability problem at times, and the UI never really was all that much better than the one found in Windows 95. Hell, even Steve Jobs knew it had to be replaced.

Re:First post (2)

MarkRose (820682) | more than 3 years ago | (#36207632)

Macs offered multitasking since 1987, with the introduction of MultiFinder [wikipedia.org] . You are correct about memory protection though.

I'd have to say 7 was superior to NT 3.5, but once 4.0 came out, NT/2k lead the way until OS X.

Re:First post (1)

improfane (855034) | more than 3 years ago | (#36206766)

I think IBM software is generally crappy and rushed, look at Lotus Notes. How can anyone pay for that monstrosity? Hardware, that's a different story.

I think IBM has a ridiculously large sales and marketing department so they can trick IT managers into getting insane contracts and deals. They do produce nice guides on developer works though.

Re:First post (2)

IrquiM (471313) | more than 3 years ago | (#36206914)

If you use Lotus Notes the way it should be used, it's far superior to Outlook and Sharepoint alternatives. As just an e-mail client - sure, outlook is probably better.

Re:First post (1)

Nursie (632944) | more than 3 years ago | (#36207268)

I find it hard to believe it's superior to anything, ever.

It's slow, heavyweight and awkward, at everything it does. As a client it's far, far too thick. It pains me to say it but the modern world of browser-based applications, Lotus Notes is a dinosaur. And not a cool one like a raptor.

Re:First post (0)

Anonymous Coward | more than 3 years ago | (#36207286)

HAHAHAHAHAHA BULLSHIT

Notes is a dogs breakfast of utter shyte with exotic commands to do what should be simple functions.

Re:First post (1)

Anonymous Coward | more than 3 years ago | (#36207448)

Lotus Notes as an email client has it's quirks, but has traditionally been hated because it works differently to Outlook.

Now imagine if I fork Apache, tightly integrate a NoSQL database, add a powerful ACL framework, and integrate a server-side scripting engine. Cool tech project for 2011? No... Lotus Domino circa 1996.

Re:First post (1)

the linux geek (799780) | more than 3 years ago | (#36207186)

OS/2 was a miniscule part of IBM's total strategy. IBM plays in high-end UNIX servers, mainframes, software, and services (maintenance, outsourcing, support.) This is big money, despite being largely invisible to consumers.

BOO YAAH (1)

Anonymous Coward | more than 3 years ago | (#36206644)

So i did well into put my assets on IBM back in 1994?, take that carl!

Name for DotCom bubble 2.0? (0)

Anonymous Coward | more than 3 years ago | (#36206648)

"Facebook, which has been valued in the private market for as much as $50 billion, on negligible revenue"

have we came up with a name for the new bubble?

Re:Name for DotCom bubble 2.0? (5, Interesting)

Lennie (16154) | more than 3 years ago | (#36206836)

How about 'Social Bubble', it sounds friendly too :-)

capitalism fail (5, Insightful)

Lehk228 (705449) | more than 3 years ago | (#36206650)

and this is why the current implementation of capitalism is fatally flawed, it is founded on fraud, deception, and innuendo. facebook is valued at $50 billion dollars even though it makes very little money and will wither and die just like every other hit social network when something else comes out.

First, there were farmers (0)

Compaqt (1758360) | more than 3 years ago | (#36206676)

Or hunter-gatherers.

Anyway, they actually made something which is the basic necessity for life.

Then there were middlemen, wholesalers, and retailers of grain. They made more than farmers.

Then there were big industries and steel. They also made more than farmers, but at least they were making something.

Then came companies like Apple made something with that steel (and plastic). They earn a lot. And IBM earns a lot for, basically, consulting.

But, most mind-blowing of all is Facebook, which is set to be huge for nothing other than letting people update their statuses.

Meanwhile, there are people unemployed.

If you've got the modern economy figured out, feel free to respond.

Re:First, there were farmers (2)

maxwell demon (590494) | more than 3 years ago | (#36206946)

If you've got the modern economy figured out, feel free to respond.

It's actually quite easy: The modern economy is a big game, and the score is measured in dollars. Anything else doesn't matter. Unemployed people only matter as far as they are a cost factor. As long as the extra win is larger than the extra cost they cause, they are acceptable. Oh, someone starves from our decisions? Does it cost us something? No? Well, then, don't worry. Our score is not affected. What, morality? Oh, I guess we can make a nice campaign from it. Good for our score. What, we should follow moral rules? That would harm our score! Impossible! No, moral rules are only to be used against others, to reduce their score!

Re:capitalism fail (3, Insightful)

Anonymous Coward | more than 3 years ago | (#36206702)

The question is not whether Facebook is worth $50 bn. Whether it fails or not doesn't matter if none of that $50 bn is yours (and if it is, it's your own fault). The question is whether someone will force you to invest -- i.e. whether the taxpayers will be made to bail somebody out for $50 bn. That has nothing to do with capitalism, and is just bad government. So in actuality, it's not the current implementation of capitalism that is flawed, but the implementation of government.

Re:capitalism fail (1)

luke923 (778953) | more than 3 years ago | (#36206708)

You beat me to it.

Re:capitalism fail (0)

Anonymous Coward | more than 3 years ago | (#36207128)

Speculative mania, even if it is rooted in individually made choices, leads to over investment, and to a degree, malinvestement. Real money is spent on doing things that aren't worth it, that won't pay for themselves and quite possibly are not even needed. Some of this money comes from savings, but some is borrowed. The excess money floods into conspicuous consumption. Some people call it the wealth effect, but it really is just sloppy money handling and excess spending, and every dollar borrowed is borrowed from current and future savings (more likely future, because of ever-lower reserve requirements), that is, deferred spending.
Speculative manias increase consumption today at the expense of the future.

Re:capitalism fail (5, Interesting)

dkf (304284) | more than 3 years ago | (#36207396)

The question is whether someone will force you to invest -- i.e. whether the taxpayers will be made to bail somebody out for $50 bn. That has nothing to do with capitalism, and is just bad government.

There are other ways in which you can end up "forced to invest". An example is where you've got a company (or sector) that is so over-valued that pension funds feel they have to invest in it, otherwise they lag the overall market index. While the fund managers might know that the company is overvalued, there's no way that they're going to say it for fear of getting hounded out of their jobs. (This was one of the engines of the credit bubble.) Do you monitor every trade that your pension fund is doing? I know I don't; I have a real job to do. But what this does mean is that things can go badly wrong with your money.

The basic premise, that things can go wrong which you can do next to nothing about, remains the same. I just don't see that the conclusion you draw from it — that government is the problem — is sustainable. Nor would I say that government is the solution either; that would be foolish. Hanging 10% of all senior financial types on Wall Street from the lampposts of Manhattan to encourage the rest... I'm having problems seeing the down-side of that idea.

Re:capitalism fail (1)

captain_sweatpants (1997280) | more than 3 years ago | (#36207460)

Hanging 10% of all senior financial types on Wall Street from the lampposts of Manhattan to encourage the rest... I'm having problems seeing the down-side of that idea.

Seconded!

Re:capitalism fail (1)

MrHanky (141717) | more than 3 years ago | (#36207566)

Back here in reality, that's not the question at all.

Facebook won't be bailed out by government when people have drifted to another social networking site, just like Myspace wasn't bailed out, and just like AOL wasn't.

LOL WAT? (5, Insightful)

FatSean (18753) | more than 3 years ago | (#36207694)

The government is going to bail out facebook? Me thinks we've got someone upset with recent elections who wants to inject his anti-government rants into this thread. Government does need some fixing...better regulation of financial markets for one. But your screed comes across as someone who wants to tear it all down.

Re:capitalism fail (5, Insightful)

Opportunist (166417) | more than 3 years ago | (#36206712)

The flaw is rooted much deeper. We're not comparing the revenue and industrial strength of companies anymore, we're comparing our expectations. Quite literally. The stock value of a company is tied to the analyst's expectations, not the money they earn. More bluntly, we're comparing whether we will find another idiot to sell those toilet papers to before someone notices their lack of value.

I guess it's obvious that a "honest" company that actually produces and sells goods cannot compete with this.

Re:capitalism fail (4, Interesting)

blind biker (1066130) | more than 3 years ago | (#36206906)

The flaw is rooted much deeper. We're not comparing the revenue and industrial strength of companies anymore, we're comparing our expectations. Quite literally. The stock value of a company is tied to the analyst's expectations, not the money they earn. More bluntly, we're comparing whether we will find another idiot to sell those toilet papers to before someone notices their lack of value.

I guess it's obvious that a "honest" company that actually produces and sells goods cannot compete with this.

A couple of years ago I invested in a portfolio of alternative energy companies (top 1 or 2 in solar, wind etc.). ALL of these brought in tons of cash, consistently, quarter after quarter! Since then we had the GUlf of Mexico disaster and Fukushima, and the total amount of extracted oil has certainly not increased. And yet, I am down about 30% on my portfolio value.

After this experience, I learned that there's no point in investing based on fundamentals.

Re:capitalism fail (0)

Anonymous Coward | more than 3 years ago | (#36207076)

After this experience, I learned that there's no point in investing based on fundamentals.

No, keep doing that. You just need to use the fundamentals slightly different. Spot good papers, but don't buy them until their price drops for stupid reasons.

Re:capitalism fail (4, Insightful)

Confusador (1783468) | more than 3 years ago | (#36207122)

If you're investing based on fundamentals and looking at portfolio value after 2 years, you're absolutely right that you're doing it wrong. The question for such an investor should be not about the value but whether the income of those investments is what you thought it will be. If the income is still there, then they will continue to post returns for the forseeable future, hence Buffet's comment that "my preferred holding period is 'forever'."

Yeah, the market will do stupid things in the short term (here meaning periods less than about 10 years), and you can make money based on those movements. Those aren't based on fundamentals, though, so if you're in it for the long haul then a market downturn which isn't based on that data just means it's an opportunity to buy more.

Re:capitalism fail (1)

alexander_686 (957440) | more than 3 years ago | (#36207850)

First, find some books by Benjamin Graham. Their a good read. He had a famous student you might of heard of - Warren Buffett.

Second, realize that in the short term the stock market is a voting machine - or a beauty pageant. In the long run [5+ years] it is a weighing machine.

Third, realize that the past is gone and that you are buying a company on it's future performance. Or, as Yogi Berra said "Prediction is very hard, especially about the future".

Re:capitalism fail (1)

rathaven (1253420) | more than 3 years ago | (#36207178)


We aren't comparing expectations we are comparing belief! Analysts are turning surveys and trend data and multiple pieces of other esoteric information regards product, people and economies into those figures based on what we would buy from them. They are measuring our fervour for the companies involved..

I'm not surprised by the figures for Apple, Facebook and Google. We're flawed and some Companies have followers that treat them like a religion.

My surprise is simply, what makes anyone believe in IBM?

Re:capitalism fail (1)

Opportunist (166417) | more than 3 years ago | (#36207348)

My surprise is simply, what makes anyone believe in IBM?

Stability. It's like Coca Cola or Procter&Gamble. No matter how bad the economy may be, no matter what businesses rise or fall, they'll still exist. These companies will survive virtually everything, they are big enough and diverse enough that a sudden shift in the economy might make them lose a few bucks, but it will never break them. Unlike a company that has a single product like, say, Facebook which is worthless should the social networking fad fizzle overnight.

And while, yes, MS is pretty big as well, they're mostly relying on software and most of that leans heavily on their market position in the OS market. If that should for some odd reason flounder, they will quickly crumble. IBM is quite diverse, also only in the "computer" sector, but offering pretty much anything in this segment, from consumer hard- and software to industry machines.

Re:capitalism fail (1)

Alef (605149) | more than 3 years ago | (#36207540)

The stock value of a company is tied to the analyst's expectations, not the money they earn.

The money a company earns is just a proxy for expected future earnings. Investments have always been based on expectations. And what else should it be based on? It doesn't matter if a company has made lots of money before -- the whole point of investing is that you think it will make money some time after you invest.

Re:capitalism fail (4, Informative)

swillden (191260) | more than 3 years ago | (#36206730)

and this is why the current implementation of capitalism is fatally flawed, it is founded on fraud, deception, and innuendo. facebook is valued at $50 billion dollars even though it makes very little money and will wither and die just like every other hit social network when something else comes out.

I don't see the fail.

The "proper" value of a stock is the net present value of its future dividend stream. Even for stocks that don't pay dividends, you can adjust the idea for increase in book value due to retained earnings. In either case, the value isn't just based on the most recent net revenue figures, it's based on profits, and on the anticipated future profits.

If you dig into these numbers a little more, they don't look all that unreasonable to me. Yeah, okay, IBM and Microsoft are neck-and-neck in market cap even though IBM has total revenues almost 50% higher than Microsoft, but Microsoft actually has greater profits ($19B vs $15B) which should send the cap the other way... except that IBM also has much greater assets. As far as their futures go, both companies are going to be productive and profitable both short-term and long-term, but it's unlikely that either of them is going to experience tremendous growth. So... they really are worth about the same.

Throwing Google into the mix, Google is worth almost as much as the other two, but has smaller revenues and profits ($8B)... so maybe that's the fail? Google also has tremendous opportunity for growth. It's currently raking in the lion's share of on-line advertising revenues in the industry, but those are still just a tiny piece of total advertising expenditures -- and online advertising continues to grow really quickly. Even if Google loses market share (and there isn't really any reason to think they will), the pie they're taking a share of is growing so fast that they have lots of growth ahead of them. And that assumes that none of Google's non-advertising ventures are successful. So, while Google currently has smaller revenues and profits, it also has much better prospects for growth than IBM or Microsoft. Again, I think the market capitalization isn't at all unreasonable.

But what about LinkedIn? Yeah, they may well represent a fail. But Lots of people said that about Google when their IPO went crazy. Investors in LinkedIn are gambling but it's not an entirely unreasonable gamble. LinkedIn doesn't have a lot of revenue, but they have demonstrated that they can generate income from their social network, and it's not unreasonable to believe that they'll find ways to generate a lot more. The bottom line with LinkedIn is that they currently have 100 million account holders. If they can find a way to extract $50 from each of them, on average, over the next 10-15 years they'll have justified their current market cap. That doesn't seem so far-fetched to me. It doesn't seem likely enough that I would buy their stock... but I also refused to buy Google for the same reasons.

Does the market mis-price companies at times? Absolutely. Especially when speculators start inflating bubbles. But I don't really see anything so insane here.

Re:capitalism fail (0, Troll)

Psychotria (953670) | more than 3 years ago | (#36206746)

It's insane because it's imaginary. It's an imaginary market and it's imaginary value. It's imaginary income. They are also imaginary dollars; imaginary worth imaginary costs. The WHOLE system is imaginary.

Re:capitalism fail (1)

phantomfive (622387) | more than 3 years ago | (#36206774)

lol I had an economics teacher in High School who tried to teach how worthless a dollar was by tearing it up right in class. My friend managed to grab the pieces, tape them together, and buy something that most certainly wasn't imaginary.

Later in life I tried to tell myself that money isn't important, and blah blah blah. Then I got hungry. The hunger reminds me that something is real, and I can buy it with money.

Money will be real as long as people are willing to give you something for it.

Re:capitalism fail (1)

Psychotria (953670) | more than 3 years ago | (#36206996)

I wasn't exactly talking about money...

Re:capitalism fail (1)

BasilBrush (643681) | more than 3 years ago | (#36207370)

A shared delusion isn't the same thing as something that's real. Millions of people believe in ghosts, souls, homeopathy etc. It doesn't make any of them real.

Re:capitalism fail (1)

Psychotria (953670) | more than 3 years ago | (#36207642)

Well at least someone seems to understand what I was getting at ;)

Re:capitalism fail (1)

NoSig (1919688) | more than 3 years ago | (#36206860)

It could be future earnings. It could also be the expectation that other investors are going to be willing to buy the stock for a higher price in future. I think most investing is based more on the latter and less on the former.

Re:capitalism fail (0)

Anonymous Coward | more than 3 years ago | (#36206894)

It *should* be possible future earnings. Because that should be the reason for the next investor to buy. The difference in opinion determines how many people want to buy or sell. Currently, many investors seem to think that LinkedIn could start making a lot of money.

Re:capitalism fail (1)

Archtech (159117) | more than 3 years ago | (#36207094)

The "proper" value of a stock is the net present value of its future dividend stream...

... which no one can possibly know, because of the "future" bit.

Re:capitalism fail (1)

Confusador (1783468) | more than 3 years ago | (#36207100)

Which no one can possibly know now, so they make bets with other people as to what it will be. Once the future comes, you can look back and see if your predictions were accurate.

Re:capitalism fail (1)

JAlexoi (1085785) | more than 3 years ago | (#36206944)

And I think that Facebook is the right way for seeking investments. I wish all investors would be committed to their investment when investing into a company. I think that those 3 second investors are "playing the market" yet bring nothing to the table.
Some will say that those players bring liquidity to the market, but I believe that liquidity in the market results in shareholders that care about "the quarter" and don't care about the future.

Re:capitalism fail (1)

ALeader71 (687693) | more than 3 years ago | (#36207228)

That's not a flaw. That is the second rule of capitalism.

1. Eventually, everything becomes a commodity.
2. You can only sell an item for what someone else is willing to pay (hence marketing, emotions, etc).

You wouldn't pay much for Facebook, but others will pay more for Facebook. That follows rule 2.
The fact that another social network will eventually come along and topple Facebook follows Rule 1 and Rule 2. Its how the marketplace destroys the weak and the over grown companies.

Re:capitalism fail (1)

StripedCow (776465) | more than 3 years ago | (#36207250)

Capitalism sucks because consumer protection sucks. Why is facebook worth so much? Because they've locked in all their users. Same with linkedin and twitter.

Imagine a telecom company locking in their users, so users would not be able to call eachother on different networks, or switch between networks. Now that would be an outrage.

Consider also a telecom company that sniffs the calls of its users and sells this information to other companies. That would be an even bigger outrage.

Why does it still work differently with social networks? Well, because consumer protection is too many steps behind. And once it is far behind and interests have been established, it is very difficult to fix the situation.

Re:capitalism fail (1)

BasilBrush (643681) | more than 3 years ago | (#36207344)

And once it is far behind and interests have been established, it is very difficult to fix the situation.

Not really. Many countries have gone from a monopoly telephone company to a plurality of telephone companies which allow users to call each other.

There's no reason why a social network can't be split up. It would require a standard to be established for interchange of status information etc. And legislation to make it happen.

Re:capitalism fail (1)

StripedCow (776465) | more than 3 years ago | (#36207390)

The point was that with telephone companies, consumer protection did not lag too much. Also, the technical obstacles were much lower.

Can you imagine facebook or twitter being forced to open up their API's so they can interoperate with other similar companies? I think they are too big already for that to happen. They have already acquired too much lobbying power. And they will use arguments of the kind "our API's are much too complicted to open up". Just like microsoft did with IE, saying that they could not isolate the browser from the operating system. Yes, IE is losing ground, but that's because they could not lock in their users completely.

After IBM sold off ... (1)

geekthecat (546223) | more than 3 years ago | (#36207384)

IBM sold off all of these components and its still biger than microsoft Hard drive division Printer division. Embedded division Federal division Personal computer division Network division Slashdot need to use IBM's POWER servers so they will stop getting slashdoted... POWER servers can process at least 3 times the amount of information as any intel server. All of those cell towers across the country, they have PowerPC in them. All the routers sifting through your communications, they have PowerPC in them. All the military weapons, yes PowerPC. why buy three INTEL servers, when i can buy just one POWER7 server. If you need masive amounts of processing power, you'll use POWER/PowerPC {xBox360/Play stations 3/Wii}

Re:capitalism fail (1)

MadeInUSA (2028028) | more than 3 years ago | (#36207580)

and this is why the current implementation of capitalism is fatally flawed, it is founded on fraud, deception, and innuendo. facebook is valued at $50 billion dollars even though it makes very little money and will wither and die just like every other hit social network when something else comes out.

Wow, and this was modded "Insightful"? Capitalism is flawed because it allows people to try to anticipate the future? The reason facebook is worth 50bn is because there is a large number of people (or a small number of people with large means and beliefs) that think that it either produces lots of good and services (not the case) or WILL produce lots of goods and services (it does produce services and looks like it will produce more in the future).

Capitalism is also about trying to anticipate the future and allocating resources to more productive venues or potentially more productive venues. 30 years ago, many people would also doubt that MS would amount to anything - and, for good and for bad, it produced the infrastructure that allowed hundreds of millions, if not more than a billion, people to be productive with computers. And today, not many people think that MS will keep producing more and more products that will be useful to people so its valuation reflects that.

People can frequently wrong, so it's possible that facebook will amount to nothing. But giving the opportunity for people to invest on businesses they believe on is what is right with capitalism.

Re:capitalism fail (0)

Anonymous Coward | more than 3 years ago | (#36207608)

Facebook makes billions, sorry to break it to you. They make

Re:capitalism fail (0)

Anonymous Coward | more than 3 years ago | (#36207746)

Keep in mind that these "values" are largely theoretical. The fact that you can sell 1000 shares at $100 a piece does not mean you can sell 1,000,000,000 shares at that same price. There are many people/institutions that can raise $100,000. There are very few that can raise $100,000,000,000.

Re:capitalism fail (1)

stewbacca (1033764) | more than 3 years ago | (#36207862)

it is founded on fraud, deception, and innuendo

Which is why the best stuff is rarely the most popular. Applies equally throughout life (music, for example).

Facebook Revenue (4, Informative)

phantomfive (622387) | more than 3 years ago | (#36206658)

In case anyone was wondering, Facebook's 'negligible revenue' is approximately $1billion, with profits of around $300million. Sources at this point seem to be mainly rumor [gigaom.com] , and vary, but are in the same range.

Re:Facebook Revenue (1)

Kjella (173770) | more than 3 years ago | (#36206684)

It might be negligible for their market cap, but I'll gladly take the small change off their hands ;)

Re:Facebook Revenue (1)

Anonymous Coward | more than 3 years ago | (#36207148)

And that means what, then - that if Facebook continues to profit at its current rate, it'll take them 160 years to actually make as much money as they're supposedly worth?

50 billion for a company that makes 300 million per year still seems overvalued to me.

Re:Facebook Revenue (1)

Alef (605149) | more than 3 years ago | (#36207562)

I do think Facebook is overvalued, but that said, I'd say most of their value is in the fact that they own a pretty extensive database with very detailed information on a fair percentage of the worlds population. And that's gotta be worth something to someone.

$50 billion for Facebook? (1)

MrEricSir (398214) | more than 3 years ago | (#36206662)

Facebook claims they have 500 million users. That's $10 per user.

If I paid you $10, would you sign up for my new social networking site? We could do away with Facebook.

Re:$50 billion for Facebook? (0)

Anonymous Coward | more than 3 years ago | (#36206688)

Don't forget over 1/3rd of those are stalker or spam accounts. The next 1/3rd are probably inactive. Leaving the last 1/3rd people I don't want to talk to >_>

Re:$50 billion for Facebook? (0)

Anonymous Coward | more than 3 years ago | (#36206754)

YES

Re:$50 billion for Facebook? (1)

gabebear (251933) | more than 3 years ago | (#36206896)

Hell, I'd sign up at least several thousand times!!!

Re:$50 billion for Facebook? (0)

Anonymous Coward | more than 3 years ago | (#36206910)

$50 billion/500 million = $100 not $10

If you think $10 is too much, what about $100 ?

Re:$50 billion for Facebook? (1)

BasilBrush (643681) | more than 3 years ago | (#36207388)

Sign up, sure. But $10 wouldn't make me stop using Facebook in favour of your network. My family and friends and my photos are already on Facebook.

Re:$50 billion for Facebook? (0)

Anonymous Coward | more than 3 years ago | (#36207500)

And before that they were on myspace, and before myspace they were on another social network.

Oh us too? (1)

JoeThoughtful (1945502) | more than 3 years ago | (#36206674)

Now IBM can afford by buy back OS/2 and make a smartphone version that features Watson running on CIGS solar cells.

Paul Thurrott weighs in (1)

Anonymous Coward | more than 3 years ago | (#36206714)

Longtime Microsoft watcher Paul Thurrott just blogged his ideas [winsupersite.com] for fixing Microsoft and getting it back into the game against Apple, Google, and Facebook. Start by spinning off Xbox, he opines. Then delayer the idea-killing corporate bureaucracy, starting with Ballmer...

Re:Paul Thurrott weighs in (1)

Lennie (16154) | more than 3 years ago | (#36206852)

Why would anyone wanna fix Microsoft ?

Re:Paul Thurrott weighs in (1)

MrHanky (141717) | more than 3 years ago | (#36207582)

Fix as in neuter, I suppose.

Re:Paul Thurrott weighs in (1)

antifoidulus (807088) | more than 3 years ago | (#36207002)

Yeah, I am still shocked that Microsoft shareholders have not revolted against Ballmer. The man has shown he has 0 technological vision and about as much business acumen it seems. Microsoft as of late has been a pretty directionless company. It has no idea about "where it wants to go today", let alone tomorrow. Ballmer is good at only one thing, pulling childish pranks, but I can go to any university in the country and find a frat boy who would be more than willing and able to do that at 1% of Ballmer's salary.

Ballmer's only "talent" was being at the right place at the right time. He may have been able to help Microsoft out a bit when it was first getting started, but the man has shown 0 interest in learning anything about technology, what it can do, and where it will go. If Microsoft wants to survive against companies whose leaders actually give 2 shits about technology then they better give Ballmer the boot and fast.

Re:Paul Thurrott weighs in (0)

Anonymous Coward | more than 3 years ago | (#36207320)

Yeah - because with a signature like that, you're the king of rational thinking.

Perhaps Microsoft's and Balmer's success can be attributed to things outside your naively simplistic and emotional view?

Re:Paul Thurrott weighs in (1)

antifoidulus (807088) | more than 3 years ago | (#36207450)

What "success"? Microsoft has failed at almost every new market it has even attempted to enter into, they are one of the few US based tech companies whose stock price has been falling the past couple years. Windows market share is at an all time low, Windows server is falling even faster. All of this in a couple years time, all of this since Gates retired and Ballmer was put in place. But yeah, I guess all of those facts are just my "naively simplistic and emotional view". Face it, Ballmer is a failure and that's all there is to it. He has no interest in technology, he cannot even control his own staff.

Negligible revenue (3, Insightful)

Arancaytar (966377) | more than 3 years ago | (#36206724)

valued in the private market for as much as $50 billion, on negligible revenue

1995 called; they want their bubble back.

Re:Negligible revenue (0)

Anonymous Coward | more than 3 years ago | (#36207026)

1995 called

Did you warn them?

Re:Negligible revenue (0)

Anonymous Coward | more than 3 years ago | (#36207174)

1995 called!!!

Did you warn them?

Re:Negligible revenue (1)

fragfoo (2018548) | more than 3 years ago | (#36207446)

valued in the private market for as much as $50 billion, on negligible revenue

1995 called; they want their bubble back.

Slight sign that we are in the presence of another bubble: LinkedIn beeing valued $9 billion.

No doubt all the OS/2 users... (1)

avatar139 (918375) | more than 3 years ago | (#36206752)

...who seem to be omnipresent on /. will be thrilled at this news!

[DucksFlyingChair] To be fair though, I suspect it's more due to Ballmer's incompetence than any real indication of success on IBM's part! [/DucksFlyingChair] ;)

It's all funny money. (4, Insightful)

VortexCortex (1117377) | more than 3 years ago | (#36206770)

There is a bit of belly button lint that is valued at over $900 nonillion dollars! That's more money than there is in the world, many times over! I would say her naval lint is priceless, but I may consider letting someone else farm my girlfriend's belly button, If they transfered the world's wealth to me, many times over (to have destroyed -- that shit's evil, and the world would just make more money).

Remember when Yahoo's stock value jumped because MS tried to buy them? Did you notice how much better Yahoo's service was during this time? Remember how their stock price fell drastically after the MS buy-out fell through? Remember how Yahoo's service just turned to utter shit at the same time? No? Right, because it stayed the same. These companies stock prices and Market Caps mean jack shit... it's all decimal numbers attached to feelings -- if more people feel good about having a larger number of a company's stock, then it's "worth" more, irregardless of the actual value of the products and services the companies make... It's all based on emotions! Feelings!!!

Now, say you're AT&T. Your stock price is worth X because of your profit and loss statement. If you spend some profit to make your company worth more -- improved speeds and reliability -- then your stock price will fall because the investors see that you are not bringing in as much profit.

Yes yes, there are Analysts, this is an over-simplification, the actual value does weigh in somewhat, but the feelings do more so -- This really does hold true in most cases. Ergo, one reason the US has shitty Internet is because of the funny-money market.

Granted, I feel that MS should be worth less than IBM, even though I haven't seen a single IBM brand device anywhere in my house for years... Even though I don't like or own Apple products, I feel that they should be worth more than MS because their fanbois are loud.

Is it any wonder that the feeling based values relate directly to the public's feelings and thus directly are reflected in the stock market?

How are you feeling about the banking/mortgage industry? About as well as they are doing, eh? Wonder why that is... It's a shame we didn't learn our lesson about the funny-money market the first time... I once showed that my neighbor has spent enough money playing the lottery to have purchased things they talk about buying if they win -- C'est la vie, people are dumb.

Re:It's all funny money. (2)

JAlexoi (1085785) | more than 3 years ago | (#36207008)

Here are some hints. There's a TLA corp behind the scenes when :
- you swipe your CC at a store
- you reserve/buy an airline ticket (online or at the travel agent's)
- you look at a lot of airport departure boards
- you check in your baggage
- you wait for the traffic light(in densely populated areas)
- you turn on your XBox360, PlayStation or Nintendo console
- you do the most mundane things that you don't even think about

Re:It's all funny money. (1)

Confusador (1783468) | more than 3 years ago | (#36207138)

It's as if they finally remembered that their name is International Business Machines!

Enquiring minds want to know... (0)

Anonymous Coward | more than 3 years ago | (#36206816)

IBM Now Officially Worth More Than Microsoft

But is it worth more than LinkedIn?

Apple? (0)

Anonymous Coward | more than 3 years ago | (#36206832)

Wut? Why and since when is Apple first? The only thing they make that's popular is the iPhone (and nowadays to a lesser extent, the iPod), no?

Re:Apple? (0)

Anonymous Coward | more than 3 years ago | (#36207440)

Welcome to the .com bubble 2.0. We would like to assure you this bubble will not burst at this time and you should continue investing in Apple until his holiness St. Jobs dies at which point all bets are off.

Quality v. Content (1)

JJJJust (908929) | more than 3 years ago | (#36206858)

Graphics aside, it's no secret that there's been a big change from a mantra of "quality, quality, quality" to "content, content, content"... and non-related content at that. A PlayStation did one thing - it played video games. The PS3 can do nearly everything... even function as a computer if you don't upgrade the firmware.

In prior years, it would take you at LEAST a week to finish a campaign on any respectable video game. These days, you can finish a video game completely in two days. Then spend five more days fiddling with the "bonus content". If they spent more time developing a good story as opposed to unlockables, that race may accelerate again. Developers aren't struggling to use the processing power they have at their disposal. There's no reason for innovation at this particular time.

We need to get back to a time where developing solid and expansive CORE content -- not extras -- was what mattered.

Re:Quality v. Content (1)

maxwell demon (590494) | more than 3 years ago | (#36206972)

I think you posted to the wrong story. Did you actually want to post to that one? [slashdot.org]

Back in the old days... (2)

trawg (308495) | more than 3 years ago | (#36206952)

I remember when I was a retail software sales goon, going to an IBM presentation for their voice recognition software back in 1995. At the time there was a lot of big Windows 95 stuff going on and the IBM guy was really keen to make sure that people knew IBM was a "real" computer company, and one thing that has always stuck with me was him saying that IBM was the biggest company in that market, and if was so big that if you took the next three companies and added their value together - IBM was still worth more.

Never found out of that was exactly true, but at the time I remember it put IBM in a new perspective for me - I just knew them as a company that made a bunch of weeny boring unpopular PC software packages and did some stuff in the hardware space. The reality seems to be that they're this big, massively entrenched company that has hooks freakin' everywhere.

Re:Back in the old days... (1)

JAlexoi (1085785) | more than 3 years ago | (#36207140)

I believe that in a case of real national emergency in US, something cataclysmic, for the US gov't to continue to function the company they would save is IBM. I mean, they are so heavily entrenched in everything. If anything, IBM could be the predecessor of Umbrella Corporation.

Re: IBM Now Officially Worth More Than Microsoft (1)

hcs_$reboot (1536101) | more than 3 years ago | (#36207056)

IBM Now Officially Worth More Than Microsoft

Wasn't that true all the time?
Oh, we are talking about money...

Re: IBM Now Officially Worth More Than Microsoft (2)

JAlexoi (1085785) | more than 3 years ago | (#36207120)

No... Stock price is not money, it's perception.

IBM (1)

Peter656 (886166) | more than 3 years ago | (#36207114)

Not hardware, nor proprietary software. Indicates where the real value is over time.

Do you have to be REALLY old... (4, Interesting)

Archtech (159117) | more than 3 years ago | (#36207116)

... to read the headline as "...IBM's market cap has once again surpassed Microsoft's..."?

Don't forget that IBM was a $70 billion turnover company (back when that was worth quite a lot) whose chairman regularly appeared at the shareholders' meeting and apologized for any inadvertent growth during the past year? That was because everyone knew if IBM grew any bigger the DoJ was committed to dismembering it as a monopoly.

At that point, there was no Microsoft.

IBM basically created Microsoft as a defence against the mortal strategic threat posed to it by the Apple Lisa. Yes, that's right: to protect itself against an utterly imaginary threat, IBM itself created the only serious competitor it would have for the next 30 years. Hmmm, maybe not as dumb as you might think... at least it got the DoJ off its back and onto Microsoft's...

Re:Do you have to be REALLY old... (1)

FatSean (18753) | more than 3 years ago | (#36207736)

IBM created Microsoft? Ha! I guess you don't know many IBMers from back in the day.

Facebook? (2)

Burnhard (1031106) | more than 3 years ago | (#36207210)

Yes. It was valued at $50 billion by Goldman Sachs and as we know Goldman Sachs are experts at running little pump & dump schemes. Coincidentally, Goldman are managing the floatation. What a shock their valuation was!

Official? (1)

wellwellwelloh (2037802) | more than 3 years ago | (#36207214)

Official? Who declared it official? Since when have market valuations been "official"?

IBM has always been worth more than microsoft. (1)

Anonymous Coward | more than 3 years ago | (#36207220)

Always. They have the worlds largest patent portfolio. They own a good chunk of modern computing in one way or another.

Oh you mean as valued by the fake made up market stats they are now valued more? Big deal... Those numbers don't mean shit.

What Wolfram|Alfa says about those companies (1)

Anonymous Coward | more than 3 years ago | (#36207464)

It's quite interesting to compare other numbers, Wolfram qives a quick glimpse - http://www.wolframalpha.com/input/?i=apple+ibm+microsoft+google+

I think the most interesting is that the market capitalization isn't correlated with the net revenue of the company - where logically it should be. This may be because of the expectations about a company future earnings, and higher capitalization is a bubble created by investors believing that given company will earn more in future. If this is true, then Apple is now very overpriced, as it's worth 300b with net income 20b. The IBM and Microsoft are worth about 200b, but IBM has net income 15b, and Microsoft 20b - I think this reflects investors' beliefs/analyses about the future growth of the companies.

This thoughts may be very trivial to someone with economic backround, but I'm just a computer science student, and it's interesting for me (and I suppose it may be to others without such background) to analyse market indexes about tech companies that way.

Another thing that I've just 'discovered' is that the 'P/E rato' row on the Wolfram table means the market capitalization divided by annual net income - so this number reflects how many years investors would have to wait until the company would pay back what it's currently worth. E.g. in case of Apple P/E is 15, so if you buy a share worth 15$, then you could get 1$ per year max (in case where company pays all net income to market owners, instead of e.g. more investments).

I'm wondering what more those inices can tell about the expected future of companies. For example, if the P/E index is twice higher for Google than for Microsoft, does it mean that market believes (or analyses shows) Google's net revenue will grow twice faster than Microsoft's? If so, are we able to tell how many year have to pass for the Google to surpass Microsoft in net revenue/ market cap.

Wow, amazing... (1)

HerculesMO (693085) | more than 3 years ago | (#36207480)

A company who makes billions in hardware devices and the supporting facilities now is worth more than just a software company.

News at 11.

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