Exxon topped by Microsoft as second biggest company on oil drop
Exxon Mobil Corp. ceded its title as the world's second-largest company to Microsoft Corp. after the five-month oil rout cut almost $50 billion from its market value.
Exxon, based in Irving, Texas, slipped 1.1 percent to $94.25 as of 1:33 p.m. in New York, dropping for the third time in four days and reducing its overall value to $399.0 billion. Microsoft, in Redmond, Washington, climbed 1.1 percent, extending an advance from Oct. 16 to 15 percent, pushing its capitalization to $406.7 billion.
The flip-flop follows a 30 percent plunge in crude spurred by rising U.S. supplies and a refusal by OPEC to reduce output. Computer and software makers in the Standard & Poor's 500 Index have posted the third-largest gains among industries this year besides health-care and utilities, rising 16 percent.
"Nothing stays the same forever, and the stronger dollar with weaker oil prices has been the catalyst for this," Quincy Krosby, a market strategist at Prudential Financial Inc. in Newark, New Jersey, said by phone. The firm oversees more than $1 trillion. "Larger-cap tech stocks have become a place that investors are going to as a source for dividends and buybacks, and in some cases, safety."
Apple Shares
Apple Inc., the Cupertino, California-based iPhone maker, retains its rank as the world's biggest company. Its shares have rallied 40 percent in 2014, the 33rd biggest gain in the S&P 500, as the company bought back shares and extended a streak of beating analyst earnings estimates to eight quarters.
It isn't the first time Exxon has been superseded by a technology company in the No. 2 slot. Google Inc., operator of the world's most popular search engine, surpassed its market value for four days in February and two in March, rising as high as $410 billion. Its 1 percent retreat in 2014 has pushed it down to about $373 billion as of today.
Microsoft has climbed 32 percent this year, adding almost $100 billion to its equity value, as its new chief executive officer, Satya Nadella, began his effort to revive the company. The world's largest software maker last month reported quarterly sales that topped analysts' estimates, driven by cloud-computing growth and recovering personal-computer sales.
Web Services
The results bolstered Nadella's view that the world's largest software maker needs to focus on Web-based services and mobile devices. The CEO, who took over in February, is cutting 18,000 jobs and lowering costs as it seeks to streamline operations.
Exxon has fallen 6.9 percent in 2014 amid a 5 percent decline for energy companies in the S&P 500. Better-than- forecast earnings have been unable to stem the decline spurred by falling oil. Even after beating analyst profit estimates in the third quarter, the company has fallen 2.6 percent.
"We're seeing a precipitous slide in oil, and Exxon has suffered," Drew Wilson, an investment analyst with Fenimore Asset Management in Cobleskill, New York, said in a phone interview. "At the same time Microsoft is gaining more credibility than it's had in the past with a change at the top and some relative successes. The confluence of those things is what's causing the shake-up."