Is Google Inc (GOOG) About to Destroy Microsoft Corporation (MSFT)?

It’s also worth noting Microsoft’s formidable financial position. Microsoft is one of only four U.S.-based stocks to hold a triple-A rating from Standard and Poor’s. The company has more than $63 billion in cash, equivalents and short-term investments on the balance sheet.

Can’t they both just get along?

Further, I don’t see why Microsoft Corporation (NASDAQ:MSFT) and Google Inc (NASDAQ:GOOG) can’t continue to co-exist. While global growth in PC sales is probably near a peak, it’s still extremely difficult to perform word processing and other complex tasks on mobile devices and tablets. Microsoft’s Office software continues to be a cash machine, particularly at the enterprise level.

Google Inc (NASDAQ:GOOG), meanwhile, continues to grow strongly itself. Fiscal 2012 revenue soared more than 30% year-over-year, and has more than doubled since 2008. Diluted earnings per share clocked in at $32.31 per share. Google Inc (NASDAQ:GOOG) has a superb compound annual growth rate in earnings per share of 25% since 2008.

Google will also continue to be the king of search. Microsoft’s Online Services division, which includes the Bing search engine, continues to hemorrhage money. Microsoft lost $8 billion last year from its Online Services division alone.  If we’re in a rush to declare something dead, Microsoft’s search engine definitely fits the bill.

From an investing standpoint, Google and Microsoft are very different stocks. Google Inc (NASDAQ:GOOG) is still in high-growth mode, as evidenced both by its superb growth numbers as well as its valuation. Google trades for 25 times its trailing EPS and does not pay a dividend. Microsoft, on the other hand, trades for 10 times its adjusted earnings and pays a hefty 3.3% dividend. It seems that investors considering Google or Microsoft need to discern exactly what they’re looking for from their stock investments. Growth investors should clearly prefer Google, while value or income-oriented investors might lean towards Microsoft.

The article Is Google About to Destroy Microsoft? originally appeared on Fool.com is written by Robert Ciura.

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