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The Ballmer Days Are Over

brooksreview.net

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Re: The Ballmer Days Are Over

#31

Post by asr »

I'm sorry, he lost me at comparing Microsoft stock to Apple and Google over the past 10 years. In retrospect, those are two of the most successful publicly traded tech companies of the period--not a fair comparison.

Not to mention those were small companies in 2000. For Microsoft stock to have increased 1200% (as Google's did) it would have probably had to grow into some very significant portion of the world economy.

Obviously Microsoft hasn't outperformed over the past 10 years, and it looks like the rest of the article gets into actual substantive critique, but it's hard for me to trust substance from someone who starts out with such an unfair introduction.

Re: The Ballmer Days Are Over

#32

Post by InclinedPlane »

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

As the article mentions the job of a CEO is to increase shareholder value, dividends are part of that value. MSFT has issued quarterly and sometimes annual dividends which are currently at 16 cents a share. In total, MS has issued $6.35 in dividends since 2005, this is fully 25% of the current stock price.

Re: The Ballmer Days Are Over

#33

Post by fvryan »

thematt wrote: post #29
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.

and at least they aren't myspace.

Re: The Ballmer Days Are Over

#34

Post by InclinedPlane »

thematt wrote: post #25
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.

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.

People invest in stocks in order to get a return. They pay the price of the stock because they believe the current and future value of the company is such that they will receive a higher amount of money when they sell the stock. Stocks that issue dividends modify that arrangement because one doesn't need to sell the stock at a higher price to receive a return, since the dividend is providing a return all the time.

Re: The Ballmer Days Are Over

#35

Post by cabalamat »

jaz wrote: post #3

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.

> Microsoft could have built a skype clone in-house for far less than $8bn. But would people actually sign up and use it

Yes. MS has a massive installed base. If they can't leverage that to get people to use it, they are clearly incompetent.

Re: The Ballmer Days Are Over

#36

Post by turar »

CEO doesn't control the price of his company's stock. It's silly to use stock price, which is set by the market as a performance indicator. It's makes more sense to compare metrics like net income, free cash flow, etc.

And Microsoft isn't doing that badly on those: http://ycharts.com/companies/MSFT/net_income#compCos=AAPL,GO...

Re: The Ballmer Days Are Over

#37

Post by callmevlad »

j2d2j2d2 wrote: post #21
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.

Are there any great examples of this besides Steve Jobs and Apple? Didn't seem to work too well for Yahoo.

Re: The Ballmer Days Are Over

#38

Post by teyc »

cabalamat wrote: post #35
jaz wrote: post #3

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.

> Microsoft could have built a skype clone in-house for far less than $8bn. But would people actually sign up and use it Yes. MS has a massive installed base. If they can't leverage that to get people to use it, they are clearly incompetent.

Pre-antitrust days, that would be exactly what MS would have done. But it has been battered and bruised by the investigations and must have sworn to themselves "never again" will they ever devote managerial time to do what could have been solved by an outright purchase.

Re: The Ballmer Days Are Over

#39

Post by biot »

thematt wrote: post #25
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.

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.

When comparing a dividend-paying stock to non-dividend paying stocks, the dividend-paying stock's price per share should be adjusted to incorporate the dividends paid (for comparative purposes only). As someone else pointed out, even if Microsoft's stock didn't gain a cent you would have made over $6 since 2005 from the dividends paid.

Since the comparative price of the stock would get adjusted to reflect this and market cap is a simple product of the price and shares outstanding, it does tangentially impact market cap (again, only for comparative purposes). Though a more direct way of stating this is that the value of the stock should be adjusted to reflect the returns from dividends.

Re: The Ballmer Days Are Over

#40

Post by j2d2j2d2 »

callmevlad wrote: post #37
j2d2j2d2 wrote: post #21

Earlier quoted context omitted.

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.

Are there any great examples of this besides Steve Jobs and Apple? Didn't seem to work too well for Yahoo.

Howard Schultz and Michael Dell come to mind first. Larry Page is the most recent.

Yahoo is a good counterpoint, though I'd suggest externalities like a lack of visionary leadership or a lack of intellectual capital, compared to their rivals, are more to blame.

Edit: Schultz wasn't a founder, but I believe he was their first visionary leader.

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