11–20 of 218 posts
Sure, Microsoft could have built a skype clone in-house for far less than $8bn. But would people actually sign up and use it - to the tune of 124 million people per month? My guess is no, at least not for several quarters.
Agreed, Microsoft didn't over pay for the software, they over paid for the user-base. The user base is what you want.
"just for the sake of others not owning it." Perhaps this is why it's worth $8.5 billion to MSFT and not to others. It's pretty silly to say someone got a bad deal a week after they bought it. If Ballmer has some awesome plan for it that will require a year or two to implement it would behoove him to disclose this so that others could move competitively to destroy the value from such a purpose.
Why's it silly? He's buying a commodity business (thats what VOIP is) for 32x earnings. There's a reason M&A is often referred to as a winner's curse -- because winning the bidding typically means overpaying. The synergies execs often talk about almost -always- fail to be realized. Shareholders of Microsoft would have been much better off if the company just bought back $8.5bn in stock. A dividend would have been out…
I bet this will go down as one of the most stupid buyouts in history.
"just for the sake of others not owning it." Perhaps this is why it's worth $8.5 billion to MSFT and not to others. It's pretty silly to say someone got a bad deal a week after they bought it. If Ballmer has some awesome plan for it that will require a year or two to implement it would behoove him to disclose this so that others could move competitively to destroy the value from such a purpose.
Why's it silly? He's buying a commodity business (thats what VOIP is) for 32x earnings. There's a reason M&A is often referred to as a winner's curse -- because winning the bidding typically means overpaying. The synergies execs often talk about almost -always- fail to be realized. Shareholders of Microsoft would have been much better off if the company just bought back $8.5bn in stock. A dividend would have been out…
Microsoft issues dividends. Google and Apple don't.
Just thinking about it, I only see two ways in which that would change the stocks valuation. On the one hand, it must reduce the capital that Microsoft has on hand, which might reduce the price of the stock. On the other hand, I would imagine that the fact that owning Microsoft gives you real value in the form of an (quarterly?) payout might increase the stock's price. One can still buy and sell the stock just like a stock that doesn't pay a dividend, betting on the future success of the company, plus you get money on a regular basis. Is there some other way it relates? I really don't know much about this.
Microsoft issues dividends. Google and Apple don't.
Thank you. It never ceases to amaze me how many people fail to realize that you need to correct for dividends (One time, and otherwise) when calculating market cap.
Are you implying that all those stories about Apple surpassing MSFT's market-cap were misleading due to this fact?
Thanks
They could have bought up a lot of innovative, smaller companies for $8.5B... some that might rebuild their character.
I keep waiting for these folks to say who they think should be running Microsoft but that doesn't come up a lot.
Earlier quoted context omitted.
Agreed, Microsoft didn't over pay for the software, they over paid for the user-base. The user base is what you want.
Perhaps, but I thought Windows Live Messenger have a bigger user base already. Maybe I'm wrong though.
$8.5B influential? Honestly, I don't see what $8.5B gets you that investing $500M in a Skype partnership wouldn't have.
I'd like to think they have some grand plan, but honestly I don't think so.
I think they're just sitting on a stack of cash and getting pressure from investors to spend the cash and grow.
Sure, Microsoft could have built a skype clone in-house for far less than $8bn. But would people actually sign up and use it - to the tune of 124 million people per month? My guess is no, at least not for several quarters.