17 Years Later, Microsoft Corp. Is Worth $500 Billion Again (Business is good, but different)

Microsoft (NASDAQ: MSFT) is putting some pep back in its step these days. On Friday, Reuters pointed out that the software giant's market cap has risen above $500 billion for the first time since March 2000.

I'm all for celebrating neat milestones, including this 17-year benchmark. And it's no secret that Microsoft really is doing a lot of things right these days. Large-cap stocks don't post market-crushing 55% returns in two years for no reason.

That being said, I would like to argue that the Microsoft you see today is miles removed from the $500 billion beast you knew 17 years ago.

First, let me point out that $500 billion ain't what it used to be. The inexorable march of inflation hollows out the value of your dollar over time, and 17 years of that action can do a lot of damage. To wit:

Market cap is the easy way out. You simply multiply current share prices by the number of shares outstanding. Handy for discussion and popular at every cocktail party, market cap is one of those metrics you can lean on for quick comparisons.

But it's also an overly simplistic measurement in many ways. Let's say you actually wanted to buy all of Microsoft...

I know that there are many who would argue the point, but in the 40 years since it was founded, Microsoft is most likely responsible for more innovation in personal computers than any other corporation. We problem all owe the company a debt of gratitude.

My first contact with a Microsoft product was actually with a Spectravideo SV-328 which was released in June of 1983. It was a home computer that had a pre-MSX version of Microsoft Basic in ROM. MSX was a standard that Microsoft supplied to mostly Japanese manufacturers that was intended to make it possible to use software and peripherals from different companies on standardized home computers. The SV-328 was a sort of prototype that the standard was partially based on although it was not fully compatible

The SV-328... My First Computer with Microsoft Software in ROM.

By the time manufacturers began manufacturing MSX Computer Consoles, IBM PC Clones and components began becoming available at prices that were more and more competitive. They were also competing against inexpensive consoles from Commodore, Texas Instruments, Atari, and others, not to mention the Apple II line which was still selling well despite its relatively high price.

I remember vividly the day I brought home a box full of parts and put together my first IBM PC Clone. I had to order everything I needed separately... the case, the power supply, the monochrome monitor, the motherboard, the memory chips, the video card, the floppy disk controller card, the two 5 1/4" floppy disk drives and the I/O card that had a parallel printer port and serial port on it... and also the software. It seemed like a small miracle when it all worked without a hiccup after putting it together. We ran Word Perfect 3.0, Lotus 1-2-3 and of course Microsoft Basic. Lotus 1-2-3 was the answer to VisiCalc spreadsheet program that sold thousands and thousands of Apple IIs to businesses in the preceding years. Lotus 1-2-3 had an advanced Macro Language which allowed users to perform incredible feats of mathematical wizardry as compared to Visi-Calc. But the software glue that held the clone PC together was the Disk Operating System from Microsoft.

I am familiar with all the arguments, but I still do not like Windows 10 or the direction the company has been going for the past few years. I do know many Microsoft employees and have even come into contact with both Steve Ballmer and Paul Allen in non-computer related social situations.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.