NEW YORK  - Two of America’s fabled technology giants have traded places, with Tim Cook’s Apple playing tortoise to the hare that is Satya Nadella’s Microsoft. This new drama could be on for an extended run.

Apple on Tuesday reported that revenue in the three months to the end of June 29 rose 1% year-over-year to $54 billion. Sales of the company’s iconic iPhone dropped 12%. Service revenue, the money Apple collects from licensing and sales on its app store, grew 13% percent. It’s a bright spot but not enough to offset the bigger drag given it represents only a fifth of the overall pie. The results exceeded analysts’ estimates, and Apple’s stock rose more than 3% in after-hours trading.

Yet compared to its Redmond, Washington rival, Apple looks like a laggard. Earlier in July, Microsoft said its revenue for the same quarter rose 12% to $34 billion as more businesses used its Azure cloud service and subscriptions for its suite of Office products rose.

Microsoft has also overtaken Apple in market worth. A 39% rise in its stock price this year has made it the world’s most-valuable listed company at nearly $1.1 trillion. Add in dividends and Nadella’s company has delivered shareholders a total return of 36% over the past 12 months, three times Apple’s. It has beat Apple on that metric over the past five years, too.

The rivalry between the two tech giants goes back decades. Under founder Bill Gates, Microsoft was so dominant in personal computing operating systems that U.S. regulators tried to break it up. He prevailed but paid a price as Microsoft missed the mobile revolution. A string of costly, questionable acquisitions followed, including $10 billion for Nokia and $6 billion for digital-advertising agency aQuantive.

Cook hasn’t shown signs of retracing Microsoft’s past missteps. Even though Apple is sitting on $102 billion in cash, it rarely makes acquisitions. When it does, like last week’s $1 billion purchase of Intel’s smartphone modem business or a potential investment in SoftBank’s Vision Fund 2, they’re small. Apple is more likely to continue with a slow methodical approach. That could leave it in Microsoft’s shadow for some time to come.

CONTEXT NEWS

- Apple said on July 30 revenue for quarter ending June 29 rose 1% year-over-year to $53.8 billion. The company earned $10 billion, or $2.18 per share compared with $11.5 billion, or $2.34 per share in the same period last year. That exceeded the mean analyst estimate for revenue of $53.4 billion and earnings of $2.10 a share, according to data from Refinitiv.

- Sales of the company’s iPhones were $26 billion in the quarter, an 11% decrease from the same period last year. Services revenue rose 13% to $11.5 billion.

- Microsoft reported on July 18 that revenue for the three months ended June rose 12% year-over-year to $34 billion. Net income increased 49% to $13.2 billion.

(Editing by Tom Buerkle and Amanda Gomez)

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