By May 1998, Microsoft (Nasdaq: MSFT) had grown so powerful that the federal government determined it was a monopoly that couldn't be checked by capitalistic means. It had to be broken up, said Judge Thomas Penfield Jackson in a ruling that was later limited by an appellate court and then limited again by a settlement.

For all the drama and silliness that surrounded the case, there's no disputing the truth that competitors and partners feared Microsoft. That company was nothing like the unfocused Mr. Softy value investors have come to appreciate in recent years. That company was a terror, tearing into enemies like a pit bull to raw meat.

And yet compared to today's Apple (Nasdaq: AAPL), the Microsoft of old looks slow, poor, and generally unremarkable. Have a look for yourself:


March 1998**

March 1997**


Revenue $13,664 $10,438 30.9%
Gross margin 91.8% 89.6% 220 basis pts.
Return on capital 32.3% 33.1% (80 basis pts.)
Free cash flow $5,928 $4,048 46.4%
Cash and investments $16,444 $9,905 66%

Source: Capital IQ, a division of Standard & Poor's.
* All metrics calculated over the trailing 12 months.
** Numbers in millions.

Impressive, right? Microsoft's massive Windows, Office, and Internet Explorer franchises had rendered the Mac OS all but irrelevant, destroyed Netscape, gutted Novell (Nasdaq: NOVL), and had set its sights on Sun Microsystems, which today exists only as a memory after being subsumed by Oracle (Nasdaq: ORCL). Consider all that and then look at what Apple has done over the past 12 months.


March 2011**

March 2010**


Revenue $87,451 $51,123 71.1%
Gross margin 39.1% 41.3% (220 basis pts.)
Return on capital 31.5% 29.5% 200 basis pts.
Free cash flow $23,283 $12,136 91.9%
Cash and investments $65,767 $41,704 57.7%

Source: Capital IQ, a division of Standard & Poor's.
* All metrics calculated over the trailing 12 months.
** Numbers in millions.

Apple is:

  • Growing revenue and cash flow twice as fast.
  • Blessed with nearly four times as much in cash and investments.
  • Producing near-equivalent returns on capital.

If that Microsoft was so dangerous that regulators had to act, what is this Apple? A robber baron? A potential bailout fund? A cult with cash? How about the heir apparent? The numbers speak for themselves. In the 1990s, Microsoft was the Greatest Company in the History of Tech. Today, it's Apple that deserves that title.

Do you agree? Disagree? Please let us know what you think about Apple's earnings report and place in history using the comments box below.

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