IBM Vs. Microsoft

Here’s a look at IBM’s ($IBM) stock compared with Microsoft’s ($MSFT). This is a race that hasn’t gone the way many people would have thought.

If you had asked most experts on December 31, 1999, which is a better buy—IBM or Microsoft, I’m pretty sure the majority would have sided with Microsoft. Instead, IBM has won the contest hands down with an 88% gain compared with a 47% loss for Microsoft.

If we were to measure from Microsoft’s IPO in March 1986 until the end of the century, that’s a very different story. Microsoft would have won with a 600-fold gain to IBM’s triple. Over most of the last ten years, Microsoft’s stock has been flat. IBM has been an especially strong stock in the last three years.

The lesson here is that companies left for dead can turn themselves around, while companies that have seemingly won the race can quickly lose their edge.

Posted by Eddy Elfenbein on April 16th, 2012 at 11:17 am

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Tickers: ibm, msft