IBM yields top slot to Microsoft

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The Independent Online
THE FALL from grace of IBM is complete. Two days after reporting the biggest annual loss in corporate history - almost dollars 5bn - 'Big Blue' has lost its once unassailable ranking as the world's largest computer company, at least in the eyes of investors.

In a striking demonstration of the shifting fortunes of hi-tech rivals, Microsoft overtook IBM in total market capitalisation late on Thursday afternoon in New York as the software maker's share price jumped more than a dollar to dollars 89.50 while the stricken computer hardware manufacturer slipped another 50 cents to dollars 46.375.

At the end of the day Microsoft was worth dollars 26.8bn, the former computer colossus - worth dollars 107bn in 1987 - dollars 26.5bn. Yesterday the gap widened despite a slight recovery in IBM's price, with Microsoft's market valuation broaching the dollars 27bn level.

'The king is dead. Long live the king,' one Wall Street computer analyst remarked, noting that the deposing of IBM was hardly surprising given its steady decline over the past year. 'It was only a matter of time.'

Now Intel, another Silicon Valley upstart nurtured by IBM in the early 1980s, is not far behind, with a market capitalisation of about dollars 24bn. It should surpass IBM some time this year, market strategists predict.

One measure of how fast things have changed is how recently it was - October - that IBM was bigger than its two suppliers combined.

IBM's collapse, the result of its inability to adapt quickly enough to a changing market, has been spectacular. But almost as impressive has been the steady rise in the fortunes of Microsoft and Intel, which have established near- monopolies in computer operating systems and microprocessors respectively.

Microsoft still has some way to go to being world's highest-valued public company, a ranking that changed hands for many years between General Motors, Exxon and more recently the US General Electric Company.

The same day that Microsoft surpassed IBM, AT&T - the US telecoms giant that merged with NCR Computer last year - took that honour away from Exxon, closing the session with a stock valuation of dollars 73.3bn.

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