Greg Rayburn, the founder of Kobi Partners, and Bloomberg Contributing Editor, David Kirkpatrick, examined the current fortunes of Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) in relation to stocks, products and growth potential on Bloomberg TV’s “In The Loop.”
Apple Inc. (NASDAQ:AAPL) posted their second straight profit gain and it is estimated that the next quarter revenues could be as high as $40 billion.
“The iPhone is on a roll. You cannot deny that. Whether this is a growth company or a valued company is another matter. But I think many people are impressed by how much Apple Inc. (NASDAQ:AAPL) has revived the iPhone business. Even the fact that people are so excited about the next one is good news, even if it might be depressing sales a little bit of the current models,” said Kirkpatrick.
Apple Inc. (NASDAQ:AAPL) is doing well in the developing countries. Kirkpatrick said that this is really good for the company as the opportunity around the world is gigantic though Americans always underestimate the potential of these companies globally when they look at their prospects. In fact, even in markets like China, where pricing power is critical, Apple Inc. (NASDAQ:AAPL) is recognized as a strong brand that makes the best devices.
Rayburn had a different perspective. “I think it is a great company and it has great products. I do not know if it is a great stock,” he said. From his point of view, there are no new revolutionary products from Apple Inc. (NASDAQ:AAPL) and iWatch may not be a big game changer, so he felt that Apple Inc. (NASDAQ:AAPL) was a value stock and not a growth stock anymore.
However, Kirkpatrick felt that if Apple Inc. (NASDAQ:AAPL) could capitalize well on the new opportunity it is exploring with International Business Machines Corp. (NYSE:IBM) that would give them a lot of growth even with the products they have now.
Shifting focus to another company in a similar transitioning phase, Microsoft Corporation (NASDAQ:MSFT), he said that the company is closer to a growth stock now.
“They have a new leader who is a visionary. They have done this crazy thing of buying Nokia which is not financially advisable but probably strategically smart. They have to get global DNA into Microsoft in this landscape they are in,” he said.
Microsoft Corporation (NASDAQ:MSFT) has got enormous opportunities. He considered that while it is still as profitable as Apple Inc. (NASDAQ:AAPL), it is not as big, and that makes it a little easier to turn the levers.
Rayburn endorsed this view, adding that Microsoft Corporation (NASDAQ:MSFT) had made the right decisions. The huge 18,000 job cuts and cutting of 80,000 outside contractors were the things the new leader had to do to lean up and get the company pivoted for growth.