It doesn’t seem so long ago that Dell was riding high amongst the hardware vendors, with both IBM and HP looking nervously over their shoulders. And it isn’t so long ago that a line-up of the major IT vendors would have excluded both Apple and Google. Not any longer.
The Illustration below shows two simple figures:

  1. The Market Cap of each vendor (i.e. how much the stock market thinks the company is worth) using yesterday’s stock prices.
  2. The 2007 revenues for each of the vendors. (Where the financial year wasn’t complete I took the total of the last 4 quarters).

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The IT Giants Compared

Some interesting features of this graph are:

  • On average, it’s better to be in software than hardware. You tend to trade at better multiples. This wasn’t always the case.
  • Google has the least revenue of any of the vendors at the moment and yet is valued higher than all but Microsoft. Google is the only vendor whose revenues are primarily from advertising. (More than 99% of Google’s revenues come from advertising.)
  • Microsoft had a good quarter recently, which added around $30billion to its market cap, but even if it hadn’t, it has consistently traded at a multiple of 6 over its revenues for years now. Microsoft is just very profitable, and it is still the “giant amongst giants”.
  • The biggest company by revenue is Hewlett-Packard, yet it is only 6th by value. The second largest, IBM, is only 5th by value.

This particular graph only constitutes a snapshot, but if you’ve not compared the relative positions of these companies for a while, then it presents an interesting picture.

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