In Apple's latest quarterly results, the company showed that it had 24.5 billion in cash and short term marketable securities, 10% more than Microsoft's 20.7 Billion stash. Also, Apple reported adjusted net profit of $2.44 Billion, versus $4.37 Billion for Microsoft.
Adjusting for iPhone sales which are amortized according to GAAP accounting, "true" net profit is probably north of 3.5 Billion, almost three quarters of MSFT's net.
Apple's stock also appears very undervalued to us in and of itself and relative to Microsoft. At current price levels (94 for AAPL, 20 for MSFT), AAPL is valued at 85 Billion, while MSFT still has a 200 Billion dollar cap. This is even more remarkable considering that AAPL has grown its earnings from 2 Billion in 2006 to 3.5 Billion in 2007 to 4.6Billion for the trailing 4 quarters. Next year, its conceivable that Apple could earn
almost the same as Microsoft (15-20 Billion), 10 Billion. Apple is certain to roll out new products, including a new release of iPhone.
So here we have it, a company with 25 Billion in cash, growing at over 50% annually, priced at something on the order of 8 times next years earnings!