Petrus Theron

Fresh Insights 10: Microsoft's R&D Spend Published Tue Jan 03 02:00:00 SAST 2012

After a long hiatus, here is the tenth micro-issue of Fresh Insights about a small, undervalued tech company in Redmond.

Microsoft's $9bn R&D Spend --

This live English to Mandarin voice translation just came out of Microsoft's R&D department:

Read the full article here.

Microsoft spends $9bn on R&D every year. That's 13.92% of revenue, compared to Apple's $1.8bn (2.76% of revenue). Let that sink in: Nine. Billion. Dollars.

Apple is a great company, but with predictaly growing profits at an all-time high, its value is fully accounted for in the stock price. AAPL stock is not about to double.

Microsoft, ont the other hand, is perpetually undervalued by consumers who do not hold a long-term view of the ridiculous amounts it invests every year in making technological breakthroughs.

Let's look at some of the majors' annual R&D spends (as of September 2012):

	<td valign="bottom">R&amp;D Budget in billion US$ </td>

	<td valign="bottom">R&amp;D Budget &nbsp;as % of Revenue </td>
</tr>

<tr>

	<td valign="bottom" width="90">62.5</td>

	<td valign="bottom">8.7</td>

	<td valign="bottom">13.92%</td>
</tr>

<tr>

	<td valign="bottom">35.6</td>

	<td valign="bottom">4.5</td>

	<td valign="bottom">12.64%</td>
</tr>

<tr>

	<td valign="bottom">29.3</td>

	<td valign="bottom">3.7</td>

	<td valign="bottom">12.63%</td>
</tr>

<tr>

	<td valign="bottom">99.9</td>

	<td valign="bottom">6.0</td>

	<td valign="bottom">6.01%</td>
</tr>

<tr>

	<td valign="bottom">65.2</td>

	<td valign="bottom">1.8</td>

	<td valign="bottom">2.76%</td>
</tr>

<tr>

	<td valign="bottom">126.0</td>

	<td valign="bottom">3.0</td>

	<td valign="bottom">2.38%</td>
</tr>
  Revenue in billion US$ Microsoft Oracle Google IBM Apple HP

Source

Keep a close eye on IBM with an annual R&D spend of $6bn and recent breakthroughs in machine learning and medical diagnosis (read: Watson).

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Best
Petrus
freshcode.co
@FreshCode

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