Apple vs. Microsoft: The winner is...

Coke (KO) vs. Pepsi (PEP) was the battle royale in the 1980s. Before that, auto nuts joked they’d rather push a Ford (F) than drive a Chevy (or vice versa). But today, the corporate battle that’s heating up is Apple (AAPL) vs. Microsoft (MSFT).

Apple’s runaway success is cooling along with innovation, while Microsoft is making changes to get its mojo back. But Apple’s success over the past five years has put it far enough ahead that Microsoft will need to keep putting up some big numbers to catch up.

It’s easy to let biases creep into the debate. Microsoft fans laugh at Apple users who actually try to work on an iPad, and Apple users scoff at Windows Phone’s small market share. So, let’s check the opinions and biases at the door and just compare these two tech giants with cold, hard facts.

Many assume Apple is the runaway winner in most quantitative measures between the companies. But it’s a much closer race, in many areas, than is popularly believed. Starting with the stocks. This is a close one. Shares of Microsoft and Apple are in a dead heat this year, with shares of Apple rising 21.5% and Microsoft right behind with a 20.3% gain.

During the intermediate term, it’s a close battle, too. Shares of Apple are up 69.8% over the past three years, just marginally ahead of the 63.6% rise by Microsoft.

Longer term, the edge goes to Apple. Over the past five years, Apple is up 314%, which easily tops the 91% gain by Microsoft.

But enough about stocks. How about the underlying businesses? On an absolute basis, Apple indeed outstrips the size of Microsoft. But when it comes to growth, it’s a closer match than you might think.

During the second quarter, Apple’s revenue was 60% greater than Microsoft’s at $37.4 billion. And Apple made 68% more money than Microsoft, hitting profit of $7.7 billion during the quarter. But fans of Microsoft can counter that Microsoft has been growing more rapidly than Apple over the past 12 months. Revenue growth of Microsoft over the past 12 months is 11.5% higher than the previous 12-month period, topping the 5.2% growth of Apple during the same time. Thanks to growth of its products in their earlier days, though, Apple holds the growth record over the past five years at 32.5% a year on average, topping the 8.2% revenue growth at Microsoft.

Both of the companies are rock solid. Apple is carrying more long-term debt than Microsoft, at $29 billion, topping the $20 billion at Microsoft. And Microsoft has a higher credit rating, it’sone of just three companies with the highest AAA credit rating from Standard & Poor’s.

Also contrary to popular belief, Microsoft sold more phones than Apple did in the second quarter. Microsoft sold 36.1 million phone devices during the quarter, topping the 35.2 million phones sold by Apple, says Neowin. The trouble for Microsoft, though, is that just 5.8 million of those phones were smartphones.

And analysts like both stocks, but the average price target on Apple implies more upside: 6.4% vs. 2.2%. That might be connected with the fact Apple is cheaper with a P-E of 16, based on its adjusted earnings over the past twelve months, than Microsoft is at 17.

So there you have it Appleheads and Microsoft fanatics. Now that you have the data, you can at least fight over facts, not just opinions.

Metric	Apple	Microsoft
Net income Q2 ’14	$7,748	$4,612
Net income 2013	$37,031	$22,822
Rev. Q2 ’14	$37,432	$23,382
Revenue 2013	$173,992	$83,433
Phones sold, Q2 2014	35.2 million	36.1 million
5-year ave. rev. growth	32.5%	8.2%
1-year ave. rev. growth	5.2%	11.5%
Cash & ST inv.	$37,805	$85,709
Average price target	$103.61	$46.00
Today’s price	$97.41	$45.01
Upside to target	6.4%	2.2%
L-T Debt	$29,030	$20,645
P-E ratio (based on TTM earnings)	15.3	17

Sources: S&P Capital IQ, USA TODAY research, smartphone sales data from Neowin.com
* Dollar figures in $ millions

References

America's Markets