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The Ballmer Days Are Over

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Re: The Ballmer Days Are Over

#171

Post by AlisdairO »

Spyro7 wrote: post #108
asr wrote: post #31

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.…

Note: I do not hold shares in any of the below companies. 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 25,019.0…

Fantastic post - thank you.

I don't believe Ballmer is a good CEO, but directly comparing to Apple and Google is nutty. Your comparisons are much more relevant.

Re: The Ballmer Days Are Over

#172

Post by adw »

wonnage wrote: post #166
akronim wrote: post #112

Earlier quoted context omitted.

Dividends are basically saying "we're returning earnings because you can probably invest them better than we can". It's up to the investor balance their portfolio and decide how much money they have invested in the company, dividends are supposed to be that mechanism.

Sure, and as a shareholder I can say that I always know better. In reality I probably don't, but it's a matter of principle. We own this company, and they're telling us that they'd rather use all the profits they generated (out of the money we provided) for themselves. It's not that I think every company should always pay out a dividend. It doesn't make sense if you're growing fast, or losing money. Berkshire doesn't…

No, not for themselves; for their shareholders – ie for you. They're saying that there's an illiquid opportunity they can access which you can't.

You might disagree with them; if you do, sell the stock.

Re: The Ballmer Days Are Over

#173

Post by adw »

nandemo wrote: post #89
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…

Do you have a source for "32x earnings"? I suspect it's even worse than that. In other HN thread someone mentioned the price was about 300x earnings, and via google I could find this: Skype's revenues for the first six months of 2010 were $406 million, with a net income of only $13 million.

32x EBITDA (the net income is artifically low thanks to one-off writedowns).

Re: The Ballmer Days Are Over

#174

Post by eftpotrm »

wonnage wrote: post #163
Spyro7 wrote: post #153

Earlier quoted context omitted.

It is a fantastically profitable company. A fantastically profitable company with the P/E ratio and historical growth rates of a public utility. Why invest in Microsoft when you could invest in Exxon Mobile, Johnson & Johnson, The Coca-Cola Company, Novartis - all companies with better long term growth rates and beefy dividends. Look, I am not trying to be discouraging, but I find it grating how little progress Micro…

Microsoft's had better earnings growth than any of the companies you listed. In the past 5 years Novartis grows its revenue from 30B to 45, MSFT does it from 51 to 62. Keep in mind that it gets harder the bigger you are - if you're already sucking 51B from your customers, how the hell do you find another 11? The flaw with speculating about the future is that anything that's certain will be priced into the stock immed…

If Novartis has put on 50% or 15B, how is Microsoft doing better by putting on 22% or 11B?

Now, I'm not fully convinced that companies on that scale are really delivering the best market value to either shareholders or wider society compared to their functions being split across a network of smaller organisations that can stand or fall on their own merits, but still... other large companies exist and have done better.

Re: The Ballmer Days Are Over

#175

Post by j2d2j2d2 »

redthrowaway wrote: post #120
j2d2j2d2 wrote: post #40

Earlier quoted context omitted.

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.

The Page example is far too recent to tell whether or not it will be successful.

Agreed. Mentioned primarily so interested people know to pay attention to changes in Googles behavior as a result.

Re: The Ballmer Days Are Over

#176

Post by count »

chrisbolt wrote: post #148
stevenj wrote: post #111

Earlier quoted context omitted.

That's true. Though he also said this (it was paraphrased by a reporter, so it's not a direct quote): Shareholders benefit more from leaving their money with him and reaping a handsome return than by getting a regular payout and depleting the Berkshire war chest. *Same source as above

Interesting. If a company pays dividends, does that mean it doesn't have confidence that it can make as much money as its investors could make by investing their money elsewhere?

Isn't that sort of the definition of a dividend?

Re: The Ballmer Days Are Over

#177

Post by kklimonda »

teyc wrote: post #150
ry0ohki wrote: post #60

Earlier quoted context omitted.

I think this is a key point. Ballmer has been hogtied with the fallout of the anti-trust stuff. Microsoft can't use it's "installed base" advantage in the same way it once could. We'll see how great Google does once it inevitably faces the same issue.

Actually, I think it is that whether bad memories can get institutionalised. If Balmer leaves, that body of bad memories will be gone, and people more willing to take risks again. We need to remember the software landscape has changed considerably. What might not be permissible of Microsoft in the 90s may now be fair game.

Hmm.. haven't Microsoft been forced to introduce the browser ballot not so long ago?

Re: The Ballmer Days Are Over

#178

Post by artsrc »

kitsune_ wrote: post #167
larrik wrote: post #68

Earlier quoted context omitted.

If you look at Microsoft's words and actions in regards to their competitors, they are clearly completely clueless. In fact, "Microsoft people" are often completely blind to everything not made by Microsoft. Reading HN you may never know, but if you've met actual .NET stack developers, or MSCE's or anyone else similar, and you'll find people who make websites and don't know what apache is. Or they'll dismiss open sou…

Thank you. I'm a .NET developer by trade. (ASP.NET MVC). Yes, I know Haskell. Yes I know python. Yes, I've used django. Yes I've programmed in PROLOG and EIFFEL. Yes I can use a shell and succesfully configured a linux server countless of times. Fuck me, totally unrelated, but I even know MATLAB. Yes, I had my hands on SOLARIS servers. Yes, I programmed a SPH solver with CUDA. Yes I know javascript, not just jQuery.…

I am doing some work with C# right now, and I would agree with "are often ..." in my workplace.

Re: The Ballmer Days Are Over

#179

Post by michaelcampbell »

sunchild wrote: post #81
melling wrote: post #5

The world will be a little better off with a decline of Microsoft. 90% desktop market share is too much. More diversity will be healthier. Chromebooks should take some market share. Microsoft can own 50-70% market share and still be very profitable. They might even be more innovative in other areas.

Enterprise IT is being slowly but surely replaced by online services. The desktop OS ecosystem lock-in that Microsoft enjoyed for so long is definitely on its way out. It will take a long time, since every big company painted itself into a corner with vendor lock-in solutions like Windows, Blackberry, SAP, Oracle, etc, and there are a LOT of people whose job is entirely devoted to maintaining that lock-in. I think we…

> unless you're the CIO, you'll be the last to know.

Maybe I've been unfortunate, but I haven't found people at the CIO level to be particularly forward-looking.

Re: The Ballmer Days Are Over

#180

Post by simpleTruth »

InclinedPlane wrote: post #151
kevin_morrill wrote: post #147

Earlier quoted context omitted.

In fact the company issued a special $30 billion dividend early in Ballmer's tenure. The Federal Reserve had to correct for this in their quarterly report, because it was an economic event felt across the entire country.

Even so, it wasn't enough. Shareholders of MS stock realized a 25% return due to dividends over the last 6 years, nearly half of it due to that one $3 per share dividend. In contrast, Google shareholders realized a 177% investment gain, Amazon shareholders a 370% gain, and Apple shareholders a 900% gain. This would be fine if Microsoft were in a different industry than these guys, but they're not. If anything Microso…

Past performance is no indication of future performance. Looking back, buying Microsoft in 2000 with a P/E of 60 was a stupid thing to do. But, that says nothing about buying it today with a P/E of 10. IMO, Microsoft is a great value play and but nothing to write home about, however Apple (16x) is slightly over priced and Google (20x) is stupidly overpriced.
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