101–110 of 218 posts
Microsoft issues dividends. Google and Apple don't.
“I think the day Berkshire declares a dividend is a day when the stock goes down,” he says. “As it should.” -Warren Buffett http://dealbook.nytimes.com/2011/04/30/live-blogging-the-ber...
Earlier quoted context omitted.
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 -…
Correct me if I am wrong, but I believe an additional benefit is that the tax rate on dividends is substantially lower than that of capital gains.
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.…
The real point is that MS has realized none of this potential. Forget lead, it hasn't even followed. Instead of swiftly copying the wildly successful iPhone, they just mocked it, telling everyone that it was a hopelessly niche product. Likewise, the iPad was being written-off by Ballmer as a pointless device with no appreciable market. In reality, it was busy becoming the most successful consumer electronic product of all time.
This goes well beyond a failure of vision. A remark like that indicates total ignorance of present reality. It's a bit like calling Avatar "a flaming fiasco seen by nobody" on the same weekend it breaks a billion dollars at the box office. Coming from the head of a major studio, an assessment that poor would be career-ending.
If your model is imitating others, fine. But you HAVE to be fundamentally aware of what others are doing if you're going to make it work. So if you're demonstrably clueless about what "two of the most successful publicly traded tech companies of the period" are really up to, or why their products are selling so well, you're simply the wrong man for the job.
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.…
> 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. Apple and Google are Microsoft's biggest competitors. Is he not supposed to compare Microsoft to its direct rivals?
Meanwhile, Google is basically starting from zero - of course it's going to show faster growth than the lumbering behemoth that is MS. Keep in mind that few people outside of the bank underwriting the IPO and Google employees actually got the awesome starting price.
So yes, he should compare them, but no, he's doing it wrong.
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.
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.
Having an execution problem, long term, kills companies. No matter how great their advantage may be.
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.…
Apple and Google were in their heydays during this time period. If anyone is interested in seeing a really interesting comparison then go to finance.google.com and do the following:
1. Look up MSFT
2. Click "All" for your zoom option, this should give you from 1986 to present
3. Add GOOG and AAPL using the compare box
Now look at the chart. MSFT is up 25,019.04% since it was publicly listed. AAPL is up 11102.07% since it was publicly listed. GOOG is up 394% since it was publicly listed.
If we want to truly assess Ballmer's performance as a CEO using stock performance as a metric then I strongly suggest we look at the past ten and five years of performance of Microsoft and compare it to similar tech companies.
Offhand, I think that IBM and Oracle make suitable comparison points. Looking at the past ten years of performance, we can see that MSFT is down about 27%, while IBM is up 49% and ORCL is up 109%. Now we can more clearly see that Ballmer has more than likely missed some opportunities along the way. When you narrow to the last five years, the picture doesn't change.
I agree with the author of the blog piece - Ballmer has proven to be a mediocre CEO of Microsoft. However, we need to make sensible comparisons to get the point across.
Frankly, I don't understand how MSFT could sit on 40 billion dollars in cash and short term investments without increasing its dividend to something more in line with what one should expect from a mature cash-rich business.
Increasing shareholder value should be the goal of all publicly listed companies. Purchasing Skype for $8.5 Billion dollars flies straight into the face of this - it is a crazy move. Any shareholders that are not screaming about this should wake and smell the sinking share price.
Edited: Formatting in the step-by-step portion of this post was messed up initially...
So this is just shareholder activism at its finest. A lot of M$ 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.
Inside Microsoft, many hope it will be Steven Sinofsky.
Earlier quoted context omitted.
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.
As for the basic point here though. Yes, an investor cares about total returns so dividends can't just be ignored.