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The Ballmer Days Are Over

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Re: The Ballmer Days Are Over

#21

Post by j2d2j2d2 »

ChuckMcM wrote: post #18

So this is just shareholder activism at its finest. A lot of M$ share holders are upset at the Skype deal and with the returns on the stock since Ballmer took over. Nothing new here, just that Microsoft lead by Ballmer has underperformed the market. I keep waiting for these folks to say who they think should be running Microsoft but that doesn't come up a lot.

I'd like to see a return of Gates. Microsoft will continue being unvisionary if they bring anyone else to the table.

You just can't fake the magic of the founders.

Re: The Ballmer Days Are Over

#22

Post by T_S_ »

roadnottaken wrote: post #15
ghshephard wrote: post #7

Earlier quoted context omitted.

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.

Can you (or someone else) please explain this in a little more detail? I understand the concept that a stock that pays dividends won't rise the same way as one that doesn't, but how does one "correct" for this effect to calculate market caps? Are you implying that all those stories about Apple surpassing MSFT's market-cap were misleading due to this fact? Thanks

One way to correct for dividends: assume the dividends are used to buy shares immediately after it goes ex-dividend.

Re: The Ballmer Days Are Over

#23

Post by pkteison »

macrael wrote: post #14
axiom wrote: post #6

Microsoft issues dividends. Google and Apple don't.

Can you expand on that comment? I have no idea what this is supposed to mean. Should this change how we interpret the stock price growth comparison between Microsoft, Apple, and Google? 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…

You can make money by buying a stock, having the business get more valuable so the stock goes up, and selling the stock at a higher value. Or you can make money by buying a stock, having the business make money and pay it out to you in dividends.

At the end of the day, what matters here is how much money you make and how long it took you to get it, which is a function of sell price - buy price + dividends received - transaction costs and taxes paid. This chart ignores the dividends received part, and thus misrepresents the value of the stock. I don't know how big the dividend is so I don't know by how much. I doubt it would really make -50whatever% a whole lot better, but it would certainly be something better.

Traditionally dividends are generally paid out by businesses that can't reasonably expect to use their cash to grow - reinvesting all your cash to grow may not make sense if your growth is limited by geography or by completely owning an entire market. The textbook example is a utility company.

Re: The Ballmer Days Are Over

#24

Post by thematt »

macrael wrote: post #14
axiom wrote: post #6

Microsoft issues dividends. Google and Apple don't.

Can you expand on that comment? I have no idea what this is supposed to mean. Should this change how we interpret the stock price growth comparison between Microsoft, Apple, and Google? 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…

It shouldn't change how you interpret the stock price growth, but it should change how you interpret the total return of the company.

The graph that was shown is misleading because it only represents the share price growth over the last ten years, which was down (or flat). For much of that time Microsoft was paying quarterly dividends, which means shareholders were yielding some return from their Microsoft stock even if the share price wasn't appreciating.

Re: The Ballmer Days Are Over

#25

Post by thematt »

ghshephard wrote: post #7
axiom wrote: post #6

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.

Why should the market cap be adjusted to reflect dividends? Those have been paid out to shareholders and no longer represent assets of the company.

Re: The Ballmer Days Are Over

#26

Post by afterburner »

roadnottaken wrote: post #15
ghshephard wrote: post #7

Earlier quoted context omitted.

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.

Can you (or someone else) please explain this in a little more detail? I understand the concept that a stock that pays dividends won't rise the same way as one that doesn't, but how does one "correct" for this effect to calculate market caps? Are you implying that all those stories about Apple surpassing MSFT's market-cap were misleading due to this fact? Thanks

I'd imagine you could just subtract the value of the dividend from the stock price. Someone correct me if I'm wrong.

If you buy a stock as a dividend stock, you might not really want it to rise much, or at all, since you want those dividends giving out the increased value rather than seeing it reflected in the market cap; ie. you want the company paying out the results of expansion.

Re: The Ballmer Days Are Over

#27

Post by reedlaw »

alecco wrote: post #12
jakarta wrote: post #8

Earlier quoted context omitted.

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…

Not only a commodity business, a declining one. A specialized desktop application to chat. Hello, it's 2011, people do web-based peer-to-peer video chat for free. Just, ask the Chatroulette users. Free. I bet this will go down as one of the most stupid buyouts in history. http://en.wikipedia.org/wiki/Real_Time_Media_Flow_Protocol

Skype is free for video chat too. And I must say it's worth every penny for its phone line in service when compared to free offerings like Google Voice.

Re: The Ballmer Days Are Over

#28

Post by T_S_ »

macrael wrote: post #14
axiom wrote: post #6

Microsoft issues dividends. Google and Apple don't.

Can you expand on that comment? I have no idea what this is supposed to mean. Should this change how we interpret the stock price growth comparison between Microsoft, Apple, and Google? 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…

One way to look at this is to track the market value of a company less its cash horde. It is a safe bet to assume that none of these companies is earning much beyond money market rates, except when it is adding (or subtracting!) value by investing in its own projects. Of course in this world of financial opacity, you can't easily estimate cash more often than quarterly. The cash-less value chart would be pretty interesting.

Re: The Ballmer Days Are Over

#29

Post by thematt »

jmvoodoo wrote: post #4

Microsoft is entering what Jim Collins would call the 4th stage of decline: Grasping for salvation. Unless something changes dramatically very soon, I wouldn't be placing my bets on Redmond.

That's an overstatement to say the least. Microsoft still mints money at an incredible rate. They may be doing terrible in the mobile and web space, but Windows and Office will continue to live for a long time, particularly in corporate environments.

Re: The Ballmer Days Are Over

#30

Post by mortenjorck »

ChuckMcM wrote: post #18

So this is just shareholder activism at its finest. A lot of M$ share holders are upset at the Skype deal and with the returns on the stock since Ballmer took over. Nothing new here, just that Microsoft lead by Ballmer has underperformed the market. I keep waiting for these folks to say who they think should be running Microsoft but that doesn't come up a lot.

I had always secretly hoped Allard was being groomed for the role eventually, but of course, that hope went the way of the Courier.
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