A rather interesting — but somewhat misleading — blog entry has been floating across the Internet this week. The “news” notes that Red Hat shares are now trading above Microsoft’s stock price. Some pundits therefore think Red Hat is more valuable than Microsoft. Um, check your math. Nothing could be further from the truth. Here’s why.
First, a little background: The VAR Guy respects both Red Hat and Microsoft. But our resident blogger does, indeed, own a handful of Red Hat shares because the open source company seems to be on the rise.
That said, anyone who suggests Red Hat is more highly valued than Microsoft because of current share prices doesn’t know how to read a balance sheet. Sure, Red Hat’s stock has been trading at a higher dollar figure than Microsoft’s stock for much of this week.
Now, for the reality check:
- Red Hat is trying to march toward $1 billion in annual sales and the company’s market cap (shares outstanding X share price) is a respectable $5.17 billion. Not bad.
- Now let’s take a look at Microsoft. Annual sales at the software giant: $58.44 billion. And Microsoft’s market cap: $236 billion.
Ummm… Microsoft is roughly 60 times larger than Red Hat. Open source is a hot topic. But the king of software still lives in Redmond.
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Doesn’t matter how big or small the company is. To a potential investor like you or me, a dollar is still a dollar. A dollar may buy you a bigger share of Red Hat than of Microsoft, but right now and for the foreseeable future, the former is by far the better bet, and that’s what counts.
Microsoft has the better technology too. Windows 2008 R2 is far ahead, and Windows 7 is unmatched as an enterprise or consumer desktop. For the foreseeable future.
Nick: Are you a Microsoft customer or partner? Would love to hear why you’re so upbeat about Windows Server 2008 R2. Tell us more, and thanks for providing your perspectives. The VAR Guy appreciates your time.
-TVG
Hi, sorry I did not see your comment earlier. Yes, we are a Microsoft Gold Partner. We develop a product on the Windows Platform – 3CX VoIP Phone System for Windows.
Well we think its a very stable release, it has inbuilt virtualization (for example we have a server here which we use as file server but the phone system runs as a virtual instance using Hyper V) and its easy to install and manage.
Licensing options are flexible too with Windows Foundation Server as a low cost yet powerful server option..
Happy to provide more info if you want in a call or email…
Nick: You can always reach The VAR Guy with blog ideas, news tips and customer case studies … TheVARguy [at] NineLivesMediaInc.com.
Your experience with HyperV and VoIP phone systems is of great interest. Keep the tips and perspectives coming.