But, I thought pg said Microsoft was dead.
There are two things that we know for sure: - Microsoft is not dead. - Paul Graham is a tedious windbag. (Look it up.)
I politically disagree with pg, but that man is a genius no ifs and buts.
Microsoft Shares Soar to Record on Earnings Boost From Cloud
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Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#72Even as a longtime Apple fan and inveterate Microsoft-hater, I have to hand it to Satya Nadella and Microsoft as a whole. Their success is deserved. I work with basically the full range of Microsoft products in my job and what I see is that everything has improved lately. Windows is better, Office is better, their cloud offerings are better, and even the Surface is better. Now, if they would only improve the licensin…
I disagree. Windows is more awkward than ever. VS is more bloated than ever. All[0] of their developer solutions are geared towards the Enterprisifacation[1] of everything. [0] I love generalizations. [1] IE: Overengineered for the sake of developer resumes everywhere.
"over engineered for the sake of developer resumes " ?
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#73But, I thought pg said Microsoft was dead.
pg's position was "No one is even afraid of Microsoft anymore. They still make a lot of money—so does IBM, for that matter. But they're not dangerous." Which I think remains largely true?
The only company that leaps to mind that acts like they are actively afraid of Microsoft is Valve. It's the only explanation for keeping the SteamOS alive I can think of (and developing it in the first place, for that matter), and the way it has neither been shut down, nor really given the push it needs to succeed. It's insurance, and as long as it's a half-viable insurance policy, it's doing its job.
Everywhere else, either Microsoft is still the underdog against some very strong incumbent or incumbents (Azure, mobile), or the competition is a decade-old corpse (Office).
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#74If you look at the numbers their cash over the past few years have been relatively stable about ~24 billion in FCF. Now if we model that as a Perpetuity with 10% rate which has been historical rate of the market we get 24/.1=240 (not including inflation) if we add Net Tang Assets and some tax benefits if we write down goodwill we we end up with 56billion. However MSFT is trading for 450 billion. Where is this extra 1…
Where do you get the 10% margin for the cloud ? Even simple Iaas is better than that , and the services on top have much better margin.
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#75Earlier quoted context omitted.
Maybe you are the unlucky one. I wouldn't trade windows 10 for anything else.
Windows 10 is 90% great for me. The 10% that annoys me is mostly around the way update works. If you have long running processes (like security camera DVR software, big render jobs, etc...) having the OS decide to reboot in the middle of the night is a bit of a headache. I know you can disable the update service, but it would be nice if they just put that in the windows update UI. The other part that bugs me are the…
I agree about the updates. Regarding the apps I think I developed app blindness - I just don't notice them, my brain ignores it completely.
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#76Would would ever have bet that Microsoft would kick Google's butt in the cloud? Not me.
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#77Earlier quoted context omitted.
You understand though that if MSFT had 100B USD in cash and spent it all in stock repurchase, then, in theory, its stock price wouldn't move but its market cap would go down by 100B. The market cap is not a perfect indicator of the value of a business either. If we start to nitpick, why not calculate share price in real dollar terms (take inflation into account), adjust for the average P/E ratio of US stocks, adjust…
> if MSFT had 100B USD in cash and spent it all in stock repurchase, then, in theory, its stock price wouldn't move but its market cap would go down by 100B ? In the process of buying shares back, the market capitalization would increase due to the increase in share price. The share price would absolutely move. This is why companies have stock buy-backs, in order to pump up the share price. The 'buyback ratio' is the…
> This is why companies have stock buy-backs, in order to pump up the share price.
Why does this matter to them?
Stocks are very strange to me.. when I think of owning a business, I'd hope to get some share of the profits, which as I understand it, is dividends for stocks. This being the case, I always thought stock buybacks were a long term investment in the sense that the company would pay more upfront so they'd have to pay less dividends.
This makes sense except that companies seem to barely pay dividends now, I'm guessing because it's unfavorable due to tax reasons. This makes it seem like there's a strange disconnect between owning a business and deriving income from it, because now most people only buy hoping to sell at a higher price to others. But why do other people buy it at a higher price if the company doesn't pay more dividends? I find it all very strange..
Why does a company care about its stock price? Is it just to please shareholders? Prevent buyouts? Make it easier to compensate employees?
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#78Earlier quoted context omitted.
Ah, to be young. Bad Desktops: Windows Vista, Windows 8, Windows ME, Windows 3.1, O/S 2 Warp Good Desktops: Windows 95, Windows XP, Windows 7, Windows NT
The difference is that those (well maybe not ME) got better as they aged due to bug fixes. 10, seems to create more bugs than it fixes with every update.
I have to assume that, with a codebase this large and entangled, when you fix one bug, you add a couple elsewhere. Plus, they are adding features, not only fixing stuff.
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#79Earlier quoted context omitted.
You understand though that if MSFT had 100B USD in cash and spent it all in stock repurchase, then, in theory, its stock price wouldn't move but its market cap would go down by 100B. The market cap is not a perfect indicator of the value of a business either. If we start to nitpick, why not calculate share price in real dollar terms (take inflation into account), adjust for the average P/E ratio of US stocks, adjust…
> if MSFT had 100B USD in cash and spent it all in stock repurchase, then, in theory, its stock price wouldn't move but its market cap would go down by 100B ? In the process of buying shares back, the market capitalization would increase due to the increase in share price. The share price would absolutely move. This is why companies have stock buy-backs, in order to pump up the share price. The 'buyback ratio' is the…
When a company like Microsoft or Apple buys back shares, they retire them. This in effect gives every remaining shareholder a larger ownership stake. Which is why shareholders love buy backs if they don't think the company can do something better with the cash internally (e.g. R&D on a new teleporter).
In a perfect information and consideration world the market cap would reduce by the amount spent for the buyback: Company is worth $300B of pure market valuation, and has $100B of cash and equities, so the capitalization is $400B in this hypothetical world, and if they bought back $100B of shares and retired them, it would conceivably drop to $300B.
The market doesn't do that, however. And if it did, the person you replied to would be arguing exactly the wrong thing, as in 1999 Microsoft had a cash pile of just $15B. Today they have a cash pile of $100B. So the differential in market caps would be even more substantial, not less.
In reality the capitalization is based almost entirely on anticipated earnings and prospects, and whether the company has $1B or $100B is immaterial, leading to the surreal situation where companies have more book value than market capitalization.
Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud
#80Earlier quoted context omitted.
You understand though that if MSFT had 100B USD in cash and spent it all in stock repurchase, then, in theory, its stock price wouldn't move but its market cap would go down by 100B. The market cap is not a perfect indicator of the value of a business either. If we start to nitpick, why not calculate share price in real dollar terms (take inflation into account), adjust for the average P/E ratio of US stocks, adjust…
> if MSFT had 100B USD in cash and spent it all in stock repurchase, then, in theory, its stock price wouldn't move but its market cap would go down by 100B ? In the process of buying shares back, the market capitalization would increase due to the increase in share price. The share price would absolutely move. This is why companies have stock buy-backs, in order to pump up the share price. The 'buyback ratio' is the…
> ? In the process of buying shares back, the market capitalization would increase due to the increase in share price. The share price would absolutely move. This is why companies have stock buy-backs, in order to pump up the share price.
Market cap is the multiple of shares outstanding vs share value. The number of shares would go down, but the market cap would also go down. You just spent a lot of money.
Also, the value of the company would go down because its cash equivalents would go down by the amount it spent on the buyback.
The buyback is the equivalent of a dividend. Every time a company gives a dividend, the stock price goes down by the amount of dividend it gives out.
> but even then I don't think it would be so simple, as that 100B in shares would now be listed as assets to the company and could be used as remuneration for the employees, among other things.
Incorrect. From: http://www.investopedia.com/articles/02/041702.asp
The idea is simple: because a company can't act as its own shareholder, repurchased shares are absorbed by the company, and the number of outstanding shares on the market is reduced