8 ms·

First: A stock can rise for reasons having zero to do with the reality of the business behind the stock, for example mispricing, availability or the lack there

First: A stock can rise for reasons having zero to do with the reality of the business behind the stock, for example mispricing, availability or the lack thereof of alternative investments, inflation, currency devaluation etc. Second: To me it always leaves a very foul aftertaste when the achievements of a team are ascribed to whoever the visible front-person is. I find it hard to believe that among the other 149999 employees that Microsoft has, there aren't some that deserve to be mentioned in relation to this achievement as much or even more than Satya Nadella does.

yodon 7y ago
Bill Gates built an amazing airplane. Steve Ballmer crashed it in the desert. Satya Nadella rallied the survivors, put it back together, and got it flying again. Yes, he absolutely deserves the credit just as Ballmer absolutely deserves the blame.
- saagarjha 7y ago
  This is a very simplistic view, as the comment you're replying to has been trying to point out.
- manigandham 7y ago
  If you’re only looking at stock price then Ballmer did exceptionally well.
  - bjg 7y ago
    Go look at the stock history, the moment Ballmer became CEO in 2000 the price stopped growing, lulled back down into the ~20-30's and stayed there until he stepped down in 2014. He did "exceptionally well" at keeping it where it was...
    - Dolores12 7y ago
      Correlation does not imply causation
    - mattrp 7y ago
      If you looked at historical p/e, the low for msft was the last year of ballmer. I think their p/e was 8... it was never a dog stock but an 8 is kind of like what you get if your p&g or coke. It’s not a growth stock anymore. That was about the time we started seeing the precursors to office365. So good things had started back then, but to assume a the role it has today where it’s equally a peer to Apple and google and not just relegated to be a waning player with a solid book in the enterprise (ie, sap, Oracle, etc) is quite an accomplishment. It’s as if msft finally did what gates and ballmer both failed to do: Become cool and strategic to an emerging / now dominant tech paradigm. It’s hard to give credit to one person ... credit goes to everyone there who not just went along with the pivot to cloud but took it to a whole new level.
    - tracker1 7y ago
      Doesn't MS pay dividends? Stock price alone isn't the whole story.
    - ThrowawayR2 7y ago
      > Go look at the stock history, the moment Ballmer became CEO in 2000 the price stopped growing Nah, not really. 2000 was the dot-com bust (which was the start of the death spiral for a lot of formerly high-flyers, including Sun Microsystems) and 2001 was the DoJ consent decree, which brought a lot of MS's attempts to expand to a screeching halt. Ballmer, while being thoroughly mediocre in a lot of ways, deserves at least some credit for not tanking MS in that era.
  - phamilton 7y ago
    He did very well the day he stepped down. IIRC his personal net worth jumped like $700M as Microsoft rose 9% on the news of his retirement.
- hylaride 7y ago
  Actually, Ballmer did quite well at MS. He consistently increased earnings via Windows and Office during his tenure as CEO. He was a very good businessman. He was not, however, a product guy. Witness their failures with the Zune, mobile, early cloud computing. His problem was that he always tried to do what would be best for Microsoft and not the customer. You can get away with this if you already have an install base (windows/office), but with net new products people will look at what's best for them first. Even with developers developers developers he tried too hard to get people to use pure MS tech and made developing for the web on MS ugly if you using anything other than .NET. The result is a generation of developers on Macs and to a lesser extent linux. Funny enough, thinking of the customer is what MS did with the xbox and it worked out well enough.
  - darkmighty 7y ago
    I feel that reflects quite well Steve Jobs vs Tim Cook as well. Jobs just wanted to make 'insanely great' products [for their users], with the side effect of profit, while Tim Cook is probably fixated on efficiency and Shareholder value. Apple has had record profits and performance, but most will tell it's not the same and its future is not so certain. It seems paradoxical that trying to maximize shareholder value at all costs could have the opposite effect long term; but think of it this way: almost every company in the world is fixated on profit -- that's not a differentiator. What makes the company is amazing products that people need, even depend upon -- once you have that, it is very hard to fail. Profit singlemindedness can definitely lead you astray, be fragile (of course, the 'user-oriented' robust strategy can be thought as ultimately also a form of profit seeking). What Nadella seems very competent at doing is also pleasing his workforce as an additional important stakeholder.
    - javajosh 7y ago
      Product development, especially in brand-new markets, requires a visionary with excellent taste, and the trust and respect of his team to revise with confidence. I can imagine what happened with Zune, cloud, etc is that (an enormously successful) MS assigned senior engineers to head up potentially prestigious new projects as professional rewards, but what they should have done was acquire-hire startup founders with fire in their belly (and strong vision) about the space. Ironically anyone with that much belly fire probably would have left MS to pursue it, basically disqualifying everyone left. :)
- throwawaysea 7y ago
  Actually Ballmer did many things correctly. There was an incorrect call / arrogance in approaching the mobile phone market a certain way, and delay in building something like their hardware organization. But I don't think this means Ballmer was a complete failure. Microsoft delivered stellar results in many dimensions during Ballmer's years as well.
- statusquoantefa 7y ago
  Ballmer built the amazing airplane that Bill Gates owned. Ballmer was there from close to the beginning, knew much more about business than Gates, and was intrumental.
stopadvertising 7y ago
Interesting how everyone idolizes Steve Jobs and Warren Buffett and Richard Branson and Elon Musk and Jeff Bezos and even Bill Gates for their prolific genius and the amazing, visionary choices they made to grow their companies, but we should bend over backwards to make sure that Satya is NOT the only person recognized here. Also stock movements are suddenly meaningless so this guy shouldn't get any credit for creating nearly a trillion dollars. Make sure we just talk about the other 14999 employees at the company instead, they are all more important in this one case than the CEO. Hmmm... I wonder what is different about this guy?
cheschire 7y ago
Take him away then. Imagine he just vanished. Took a sabbatical, didn't say where he was going, and just disappeared for a year. What would happen? Things would function. They'd probably be fine for the first couple months, and they might even pass their first quarterly earnings without anyone noticing he's gone. If the department heads all were quiet and didn't notify the shareholders, things would seem completely fine. But then the next quarter comes up. Money shifts around a little bit creating a small deficiency here, and a surplus over there. Department heads start to assist each other towards shared goals which may be detrimental to other departments. Tribalism starts to take hold. Each department head is now their own top dog, and some will start to breed a culture within their areas where they believe they are absolutely more critical than other areas. Some individuals may start to actively sabotage the other departments if they feel it serves to benefit their own dept. Without a CEO, you no longer have a company, you have a community of companies that are in direct competition with each other. This doesn't mean the individuals within a company are unimportant. They get plenty of recognition within their own circles, but when you're talking about money, there's a reason the CEO is the focal point.
- stakhanov 7y ago
  A country doesn't need a king to protect it from falling into tribalism. And a CEO is not the king of a company. The Board of Directors is the CEO's boss, and if the CEO did his job right, he is replaceable. If the Board of Directors did their jobs right, the CEO is replaceable. What you are saying seems to me to be completely groundless in every dimension. Also: I did not state the antithesis "Satya Nadella had nothing to do with MSFT adding $850b to their market cap". I'm just stating "It's not true that MSFT adding $850b to their market cap is attributable solely to Nadella".
  - cheschire 7y ago
    The king analogy feels like a straw man, and tribalism is a generic social construct used well beyond the concepts of nations. I didn't state the CEO is irreplaceable. What I'm saying isn't groundless, you just either disagree or don't share my perspective. I like your point about the board though, and I wonder how the MSFT board specifically feels about Nadella.
belltaco 7y ago
Interesting that similar comments don't appear on the top when blaming Ballmar or some top exec for failures. Don't you find it hard to believe that things going badly are not the fault of the other 149999 employees that Microsoft has, as much or even more than Ballmer?
m_alexgr 7y ago
Another reason for a stock to rise these days is stock buybacks. Great work if you're in upper management and can compensate yourself via corporate buybacks using "free money".(with interest rates being near zero and artificially suppressed)
Jagat 7y ago
Here's what I propose we should do to figure out the causality 1. Split Microsoft into three parts, each with its own exactly equivalent market. 2. Have Satya Nadella as the CEO of one of them, Steve Ballmer as the CEO of the other, and a control group with no CEO in the third. The lift obtained from the first may be because of Satya Nadella. It's possible that Steve Ballmer may be getting worse over time, which is why you have a third control buckets to compare against.
supercanuck 7y ago
Microsoft has also been steadily buying back its own stock https://www.wsj.com/articles/microsoft-to-buy-back-up-to-40-billion-in-stock-11568845113 https://www.wsj.com/articles/microsoft-to-buy-back-up-to-40-... https://ycharts.com/companies/MSFT/stock_buyback https://ycharts.com/companies/MSFT/stock_buyback
- DataGata 7y ago
  Shouldn't stock buy backs actually lower the valuation of the company (as cash leaves)?

yodon 7y ago

Bill Gates built an amazing airplane. Steve Ballmer crashed it in the desert. Satya Nadella rallied the survivors, put it back together, and got it flying again. Yes, he absolutely deserves the credit just as Ballmer absolutely deserves the blame.

saagarjha 7y ago
This is a very simplistic view, as the comment you're replying to has been trying to point out.
manigandham 7y ago
If you’re only looking at stock price then Ballmer did exceptionally well.
- bjg 7y ago
  Go look at the stock history, the moment Ballmer became CEO in 2000 the price stopped growing, lulled back down into the ~20-30's and stayed there until he stepped down in 2014. He did "exceptionally well" at keeping it where it was...
  - Dolores12 7y ago
    Correlation does not imply causation
  - mattrp 7y ago
    If you looked at historical p/e, the low for msft was the last year of ballmer. I think their p/e was 8... it was never a dog stock but an 8 is kind of like what you get if your p&g or coke. It’s not a growth stock anymore. That was about the time we started seeing the precursors to office365. So good things had started back then, but to assume a the role it has today where it’s equally a peer to Apple and google and not just relegated to be a waning player with a solid book in the enterprise (ie, sap, Oracle, etc) is quite an accomplishment. It’s as if msft finally did what gates and ballmer both failed to do: Become cool and strategic to an emerging / now dominant tech paradigm. It’s hard to give credit to one person ... credit goes to everyone there who not just went along with the pivot to cloud but took it to a whole new level.
  - tracker1 7y ago
    Doesn't MS pay dividends? Stock price alone isn't the whole story.
  - ThrowawayR2 7y ago
    > Go look at the stock history, the moment Ballmer became CEO in 2000 the price stopped growing Nah, not really. 2000 was the dot-com bust (which was the start of the death spiral for a lot of formerly high-flyers, including Sun Microsystems) and 2001 was the DoJ consent decree, which brought a lot of MS's attempts to expand to a screeching halt. Ballmer, while being thoroughly mediocre in a lot of ways, deserves at least some credit for not tanking MS in that era.
- phamilton 7y ago
  He did very well the day he stepped down. IIRC his personal net worth jumped like $700M as Microsoft rose 9% on the news of his retirement.
hylaride 7y ago
Actually, Ballmer did quite well at MS. He consistently increased earnings via Windows and Office during his tenure as CEO. He was a very good businessman. He was not, however, a product guy. Witness their failures with the Zune, mobile, early cloud computing. His problem was that he always tried to do what would be best for Microsoft and not the customer. You can get away with this if you already have an install base (windows/office), but with net new products people will look at what's best for them first. Even with developers developers developers he tried too hard to get people to use pure MS tech and made developing for the web on MS ugly if you using anything other than .NET. The result is a generation of developers on Macs and to a lesser extent linux. Funny enough, thinking of the customer is what MS did with the xbox and it worked out well enough.
- darkmighty 7y ago
  I feel that reflects quite well Steve Jobs vs Tim Cook as well. Jobs just wanted to make 'insanely great' products [for their users], with the side effect of profit, while Tim Cook is probably fixated on efficiency and Shareholder value. Apple has had record profits and performance, but most will tell it's not the same and its future is not so certain. It seems paradoxical that trying to maximize shareholder value at all costs could have the opposite effect long term; but think of it this way: almost every company in the world is fixated on profit -- that's not a differentiator. What makes the company is amazing products that people need, even depend upon -- once you have that, it is very hard to fail. Profit singlemindedness can definitely lead you astray, be fragile (of course, the 'user-oriented' robust strategy can be thought as ultimately also a form of profit seeking). What Nadella seems very competent at doing is also pleasing his workforce as an additional important stakeholder.
  - javajosh 7y ago
    Product development, especially in brand-new markets, requires a visionary with excellent taste, and the trust and respect of his team to revise with confidence. I can imagine what happened with Zune, cloud, etc is that (an enormously successful) MS assigned senior engineers to head up potentially prestigious new projects as professional rewards, but what they should have done was acquire-hire startup founders with fire in their belly (and strong vision) about the space. Ironically anyone with that much belly fire probably would have left MS to pursue it, basically disqualifying everyone left. :)
throwawaysea 7y ago
Actually Ballmer did many things correctly. There was an incorrect call / arrogance in approaching the mobile phone market a certain way, and delay in building something like their hardware organization. But I don't think this means Ballmer was a complete failure. Microsoft delivered stellar results in many dimensions during Ballmer's years as well.
statusquoantefa 7y ago
Ballmer built the amazing airplane that Bill Gates owned. Ballmer was there from close to the beginning, knew much more about business than Gates, and was intrumental.

stopadvertising 7y ago

Interesting how everyone idolizes Steve Jobs and Warren Buffett and Richard Branson and Elon Musk and Jeff Bezos and even Bill Gates for their prolific genius and the amazing, visionary choices they made to grow their companies, but we should bend over backwards to make sure that Satya is NOT the only person recognized here. Also stock movements are suddenly meaningless so this guy shouldn't get any credit for creating nearly a trillion dollars. Make sure we just talk about the other 14999 employees at the company instead, they are all more important in this one case than the CEO. Hmmm... I wonder what is different about this guy?

cheschire 7y ago

Take him away then. Imagine he just vanished. Took a sabbatical, didn't say where he was going, and just disappeared for a year. What would happen? Things would function. They'd probably be fine for the first couple months, and they might even pass their first quarterly earnings without anyone noticing he's gone. If the department heads all were quiet and didn't notify the shareholders, things would seem completely fine. But then the next quarter comes up. Money shifts around a little bit creating a small deficiency here, and a surplus over there. Department heads start to assist each other towards shared goals which may be detrimental to other departments. Tribalism starts to take hold. Each department head is now their own top dog, and some will start to breed a culture within their areas where they believe they are absolutely more critical than other areas. Some individuals may start to actively sabotage the other departments if they feel it serves to benefit their own dept. Without a CEO, you no longer have a company, you have a community of companies that are in direct competition with each other. This doesn't mean the individuals within a company are unimportant. They get plenty of recognition within their own circles, but when you're talking about money, there's a reason the CEO is the focal point.

stakhanov 7y ago
A country doesn't need a king to protect it from falling into tribalism. And a CEO is not the king of a company. The Board of Directors is the CEO's boss, and if the CEO did his job right, he is replaceable. If the Board of Directors did their jobs right, the CEO is replaceable. What you are saying seems to me to be completely groundless in every dimension. Also: I did not state the antithesis "Satya Nadella had nothing to do with MSFT adding $850b to their market cap". I'm just stating "It's not true that MSFT adding $850b to their market cap is attributable solely to Nadella".
- cheschire 7y ago
  The king analogy feels like a straw man, and tribalism is a generic social construct used well beyond the concepts of nations. I didn't state the CEO is irreplaceable. What I'm saying isn't groundless, you just either disagree or don't share my perspective. I like your point about the board though, and I wonder how the MSFT board specifically feels about Nadella.

belltaco 7y ago

Interesting that similar comments don't appear on the top when blaming Ballmar or some top exec for failures. Don't you find it hard to believe that things going badly are not the fault of the other 149999 employees that Microsoft has, as much or even more than Ballmer?

m_alexgr 7y ago

Another reason for a stock to rise these days is stock buybacks. Great work if you're in upper management and can compensate yourself via corporate buybacks using "free money".(with interest rates being near zero and artificially suppressed)

Jagat 7y ago

Here's what I propose we should do to figure out the causality 1. Split Microsoft into three parts, each with its own exactly equivalent market. 2. Have Satya Nadella as the CEO of one of them, Steve Ballmer as the CEO of the other, and a control group with no CEO in the third. The lift obtained from the first may be because of Satya Nadella. It's possible that Steve Ballmer may be getting worse over time, which is why you have a third control buckets to compare against.

supercanuck 7y ago

Microsoft has also been steadily buying back its own stock https://www.wsj.com/articles/microsoft-to-buy-back-up-to-40-billion-in-stock-11568845113 https://www.wsj.com/articles/microsoft-to-buy-back-up-to-40-... https://ycharts.com/companies/MSFT/stock_buyback https://ycharts.com/companies/MSFT/stock_buyback

DataGata 7y ago
Shouldn't stock buy backs actually lower the valuation of the company (as cash leaves)?