Apple Stock Is the New Microsoft — Good, But Not Good Enough

Microsoft s (NASDAQ: MSFT ) earnings, reported after the bell Thursday, were
good. But like Apple (NASDAQ: AAPL ), they just weren't good enough. Microsoft
reported a fiscal first-quarter profit of $5.74 billion, or 68 cents per share.
That's up 6% from last year's $5.4 billion, or 62 cents per share profit.
Revenue also was up to $17.4 billion from $16.2 billion, a 7% rise. But
"experts" had expected earnings of 68 cents per share, so MSFT stock started
to get hit after hours. Sound familiar? Apple (NASDAQ: AAPL ) missed the mark
earlier this week, and shares sold off Tuesday as a result. Apple earnings
remained strong as usual net income jumped to $6.62 billion from $4.31 billion,
and AAPL stock revenue surged nearly 39% to $28.3 billion. But as investors
should know by now, it's not the numbers that matter, but how those numbers
perform against Wall Street forecasts. In the wake of Microsoft and Apple
reporting earnings, it's worth examining how good companies continue to be
sold off because they aren't "good enough." Could Apple Be the Next
Microsoft? Once-dominant tech stock MSFT has been wildly unpopular in recent
years. Microsofts stock has been languishing in the high $20s for the better
part of a decade. And while no one expects Apple to crash from triple digits
anytime soon, there are some very real fears lately that AAPL stock could
desperately be in need of a second act to stay in favor with investors. It's
more than a little absurd, I know. The iPhone was Apple's second act. The iPad
was its third. And rumors of an Apple HD TV could very well hint at its fourth.
If not the TV, then consider that 93% of Fortune 500 companies are deploying or
testing the iPhone for business use which could be a stunning opportunity for
enterprise sales. But who cares? Apple earnings weren't as good as they should
have been. So the stock sold off. Microsoft stock watchers should be painfully
familiar with this trend. Consider the dead-money performance of Microsoft in
the past 10 years despite a strong business that includes: A virtual monopoly,
with an approximately 83% market share of computer operating systems. The
ascendance of the Xbox 360 video game console and related products like the
Kinect. An EPS forecast of almost $3 per share for this fiscal year vs. just
$1.62 in fiscal 2009. Some $43 billion in cash and equivalents on its balance
sheet, even while maintaining a nearly 3% dividend yield.