WSJ: Microsoft stock may be better in long-term than Apple stock


Office on tablets may be a new income opportunity for Microsoft, The Wall Street Journal says.

A new article from the Wall Street Journal begins with an interesting fact: if someone had invested $10,000 in Microsoft 10 years ago and reinvested the dividends from that stock, he or she would only have $13,000 today. By comparison, a person who did the same with Apple's stock would have $700,000.

Clearly the last decade has been good to Apple. While Microsoft hasn't exactly suffered, it has seen the value of its closest competitor skyrocket to previously unknown highs. According to that same Wall Street Journal article, however, that may change soon.

That's because Microsoft has several major products that are "sticky" products – products that users are hesitant to switch from, article author Brett Arends writes. One of those products is Microsoft's flagship productivity suite, Office. Microsoft is now attempting to expand Office's dominance by including it in Windows RT products, Arends says, which "makes the tablets credible replacements for laptops for businesses, allowing users to work on robust spreadsheets and data presentations."

At least one major investor agreed with Arends' theory. Steve Russell, chief investment officer of London's Ruffer & Co. investment firm, said Microsoft's prospects are looking better than Apple's.

"[Microsoft is] a so-so company making OK profits with nothing expected to change," Russel said. "But they are currently launching a key set of new products that might just change all this."

Apple, by comparison, doesn't have a broad range of products that contribute to its success. Instead, iPhone and iPad sales are estimated to account for 80 percent of Apple's gross profits this year. Much of that income comes from the large profit margins of Apple devices. As the smartphone and tablet market becomes more crowded, it's also becoming increasingly more necessary to either innovate or compete on price, Arends writes.

Little has changed with Apple's two key products in recent years, however, and the company also doesn't appear to be changing its high profit margins anytime soon. In fact, Apple's shares have fallen from an all-time high of $705 to $515 in recent weeks, Arends notes.

Source: The Wall Street Journal | Image via Microsoft

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