Carl,
Please keep us informed as the next quarter rolls around. I think you are onto something here: the truth is MSFT is not an innovator. If they were they would, as you say, be using their billions to increase their net worth. Heck, if they would just stop with all of their initiatives outside of Vista/XP and their Office suite, they would be making money like there's no tomorrow. But they choose to try to be the answer to all things technological. And they fail.
Apple on the other hand has great innovation, and they only get into markets where they know they can make a handsome profit. I would love to see all of the things they didn't bring to market because they felt they couldn't make a lot of money at them!
I thought the MSFT shareholders knew this, as their stock price has been stagnant for two years. I guess they were duped by the latest earnings report.
MSFT is in a slow decline and the numbers prove it. The emperor is losing his clothes.
It's actually a great opportunity for the Microsoft loyalists to smell the coffee and start unloading all those shares they've been holding.
Disclosure: I have no MSFT as an individual stock, though it shows up in some of the funds I own.
This blog is sure of anti-Microsoft.
The obvious reason Microsoft is shrinking is because they make a dozen or so acquistions a year, just like Google and Yahoo. As for aQuative's price, seems the going rate for big Internet advertisement companies is around 10 times revenue, which is about what Google paid for Double-Click and Microsoft paid for aQuantive.
The not so obvious reason, is that Microsoft has announced several large stock buybacks in the $20-$40 Billion range over the last couple of years. They also did a one-time $75 Billion dividend back in 2004. So if you are looking at the balance sheet, the assets are shrinking, because Microsoft is using their cash to buy back Microsoft stock.
Super interesting post - Thanks Carl.
"The not so obvious reason, is that Microsoft has announced several large stock buybacks in the $20-$40 Billion range over the last couple of years."
That's quite a burn for a rudderless company.
On page 38 of Microsoft's 10Q balance sheet, it has a table with stock repurchases or "buybacks". It says Microsoft bought about 80 million shares back between July-September 2007 which comes to about $2 Billion. So stock buybacks is one reason Microsoft's assets are shrinking.
When I bought my MS stock, I noticed that there was a lot of profit from the cash holdings one year, so it makes sense what beanie is stating.
I calculate that for the last 15 months Microsoft did about $30.5 billion in stock buybacks.
For the year ending June 30, 2007, Microsoft did stock repurchases of $27.575 billion. For the quarter ending September 30, 2007, they repurchased $2.930 billion of stock. So for the last 15 months stock buybacks amount to about $30.5 billion.
So all this talk of Microsoft shrinking is full of hot air and FUD.
Stock buybacks are a sign of confidence by management in a company. With Ballmer driving that dinosaur and NO modern products, that confidence is reckless.
Commenting by HaloScan
