For A Few Minutes, Microsoft Is World's Most Valuable Company

Microsoft has always worked at being a market leader. For a few minutes yesterday, it was the market leader.

The value of the Redmond software giant's stock briefly passed the value of General Electric stock, making Microsoft the world's most valuable company based on its stock price.

General Electric gave ground to Microsoft at about noon, when its stock sank $4.25 to $73.50, valuing the company's total shares at $239.3 billion. Microsoft shares were off only $2 at the time, hitting $97.25 and valuing the company at $239.5 billion.

Microsoft and General Electric leapfrogged each other several times in the closing hour before GE shares rallied. At the end, General Electric regained the lead, closing at $75.50, giving it a market value of $245.7 billion. Microsoft closed at $96.625, ending the day with a value of $238.1 billion.

It's striking, because Microsoft's annual sales, $14.5 billion in the fiscal year ended June 30, pale next to General Electric's $88.5 billion in 1997. If Microsoft were a General Electric unit, it would be only slightly larger than GE's biggest division, its Industrial Products and Systems unit.

It took Microsoft only 23 years to become the world's market leader. Bill Gates and his friend Paul Allen founded Microsoft in 1975. When they took the company public 11 years later, it was valued at $519 million. General Electric, on the other hand, was incorporated in 1892.

Microsoft shrugged off the news.

"While growing shareholder value is important, we don't view market capitalization as a particularly critical measurement," spokesman Tom Pilla said.

The company is particularly sensitive to being thought of as huge and rich as is battles with the U.S. Justice Department over questions of leveraging its dominant computer operating system.

Becoming market-cap king, albeit briefly, highlights a year in which Microsoft's stock has jumped about 50 percent, despite the recent stock-market turmoil that has wiped out a year's worth of gains for many companies.

Much of the increase in Microsoft's market capitalization comes from its success in seizing the computer-operating-systems business, where nine out of every 10 personal computers run on Microsoft's Windows software.

Another reason for the increase is the changing strategies of investors, who have grown to favor not size but earnings potential.

Microsoft posts the largest profit margins of any company its size. That also has lured investors over the years.

Jay Greene's phone message number is 206-464-3287. His e-mail address is: jgreene@seattletimes.com