8 ms·

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 trad

by asr 15y ago

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.

peterb 15y ago
If he had started his graph at 1986, when MSFT first went public, it would be more of a fair comparison.
- alexqgb 15y ago
  Except that it would no longer be about Ballmer, and that's who we're discussing.
brg 15y ago
You are correct in that perspective, but Microsoft is supposed to be the smartest kid in the class. They've said so. And taking them on their word, analysts are supposed to compare it against the other brilliant companies in the sector. Even so, look at the comparison this way. Google and Apple both created and captured new markets; Google with online advertising and Apple with mobile devices. This proves that there was a huge amount of room for innovation and growth in the last ten years. But comparatively, MS has done nothing. It hasn't grown in any direction. And what makes the comparison even more relevant is that MS has actively attempted, and failed, to copy both of the other leaders--Ad center is a failure, MS online strategy is balkanized and schizophrenic, the zune is dead, and WP7 is not gaining traction. That failure is reflected in the chart.
- contextfree 15y ago
  Over the last decade they broke into the enterprise and built the server & tools business into something with income that exceeds the Windows client business in some quarters. They also appear to have built Xbox/Kinect into a $2 billion/year business. I don't think that's nothing.
- kenjackson 15y ago
  Even so, look at the comparison this way. Google and Apple both created and captured new markets; The test isn't how a company does when its taking over a new market. It's what it does when its losing its old market. The real comparison isn't is MS better than Google or Apple. MS has already had their climb. The real question is "is MS IBM or DEC?"
- enjo 15y ago
  Is adcenter a failure? I have no idea what their data looks like, but I do know that bids have gotten quite competitive (much more Google like) since the Yahoo partnership.
  - brg 15y ago
    As the revenue generating end of Microsoft's online services division, the popular bar chart showing quarterly losses exceeding 600M says that it is a failure. This may turn around if Bing hits its magic number in terms of market share. But one would think that the division will have to have start stemming its tide of losses if it is to be given a chance.
    - contextfree 15y ago
      I remember reading somewhere that Microsoft is targeting 2014 as the year that Bing is supposed to stop losing money. I can't seem to find it again though.
nickgeiger 15y ago
It might be unfair to compare the stock price to Google and Apple, but if you compare Gates to Ballmer, you can see that the stock has completely flattened since he took over. The rest of the article does point out some moves by him that sound really embarrassing. Having seen some videos of him doing interviews and presentations, I've had a very negative view of him and these points just reinforce that. Microsoft definitely seems on its way to irrelevance. Source: http://www.zdnet.com/blog/btl/chart-microsofts-performance-under-gates-vs-ballmer/35415 http://www.zdnet.com/blog/btl/chart-microsofts-performance-u...
ikono 15y ago
He started with the Nasdaq comparison, which is fair, and they don't look great in that comparison either. I don't agree with everything in the article but tuning out at the Apple/Google comparison isn't "fair"
bonch 15y ago
> 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?
- philwelch 15y ago
  Judging by source of revenue, Microsoft's an enterprise software vendor, Apple is a consumer electronics company, and Google is an advertising company. They're Microsoft's biggest rivals in terms of media hype, and they all make mutually competing products, but they're not a fair basis of comparison in terms of stock value. How have Oracle and SAP done?
  - btilly 15y ago
    ...but they're not a fair basis of comparison in terms of stock value. How have Oracle and SAP done? Let's compare with a whole platoon of major tech companies that were big a decade ago: ADBE: +73.40% HPQ: +47.36% IBM: +48.65% MSFT: -27.03% ORCL: +109.06% SAP: +70.15% YHOO: +70.57% You'll note that MSFT sticks out like a sore thumb. In their defense, MSFT also has been paying dividends, which some of the comparison companies have not. When a company pays a dividend, the stock price theoretically should fall by almost exactly the dividend paid. As http://ycharts.com/companies/MSFT/dividend_yield http://ycharts.com/companies/MSFT/dividend_yield shows, they had a particularly big payment in 2005. When I put those dividends back in to MSFT, their stock has been utterly flat over a decade. This makes them a lot better than they otherwise appear, but their poor performance still sticks out like a sore thumb compared to the rest of the tech industry.
    - lukeschlather 15y ago
      You forgot Sun. And probably a few other dead behemoths.
      - 15y ago
alexqgb 15y ago
@asr - I think the OP's point is a bit more subtle than that. He's not suggesting that MS - a large and mature company - should still be growing like companies that only hit their stride recently. Rather, he's noting the degree to which Apple and Google have dramatically outperformed the NASDAQ, citing this as an indicator of how much room to grow the tech sector has had in general. 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.
Spyro7 15y ago
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 25,019.04% 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...
- ars 15y ago
  Link for the lazy: http://www.google.com//finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Logarithmic&chdeh=0&chfdeh=0&chdet=1305264708932&chddm=2541109&chls=IntervalBasedLine&cmpto=NASDAQ:GOOG;NASDAQ:AAPL&cmptdms=0;0&q=NASDAQ:MSFT&ntsp=0 http://www.google.com//finance?chdnp=1&chdd=1&chds=1...
- amorphid 15y ago
  MSFT was the overpriced darling of the Dotcom era. Ballmer inherited an insane valuation. Meanwhile, in the last ten years, net income has gone from under 8 billion to over 18 billion. This is not a failure and will eventually be reflected in the stick price. Source -- http://www.microsoft.com/presspass/inside_ms.mspx http://www.microsoft.com/presspass/inside_ms.mspx

by asr 15y ago

peterb 15y ago

If he had started his graph at 1986, when MSFT first went public, it would be more of a fair comparison.

alexqgb 15y ago
Except that it would no longer be about Ballmer, and that's who we're discussing.

brg 15y ago

You are correct in that perspective, but Microsoft is supposed to be the smartest kid in the class. They've said so. And taking them on their word, analysts are supposed to compare it against the other brilliant companies in the sector. Even so, look at the comparison this way. Google and Apple both created and captured new markets; Google with online advertising and Apple with mobile devices. This proves that there was a huge amount of room for innovation and growth in the last ten years. But comparatively, MS has done nothing. It hasn't grown in any direction. And what makes the comparison even more relevant is that MS has actively attempted, and failed, to copy both of the other leaders--Ad center is a failure, MS online strategy is balkanized and schizophrenic, the zune is dead, and WP7 is not gaining traction. That failure is reflected in the chart.

contextfree 15y ago
Over the last decade they broke into the enterprise and built the server & tools business into something with income that exceeds the Windows client business in some quarters. They also appear to have built Xbox/Kinect into a $2 billion/year business. I don't think that's nothing.
kenjackson 15y ago
Even so, look at the comparison this way. Google and Apple both created and captured new markets; The test isn't how a company does when its taking over a new market. It's what it does when its losing its old market. The real comparison isn't is MS better than Google or Apple. MS has already had their climb. The real question is "is MS IBM or DEC?"
enjo 15y ago
Is adcenter a failure? I have no idea what their data looks like, but I do know that bids have gotten quite competitive (much more Google like) since the Yahoo partnership.
- brg 15y ago
  As the revenue generating end of Microsoft's online services division, the popular bar chart showing quarterly losses exceeding 600M says that it is a failure. This may turn around if Bing hits its magic number in terms of market share. But one would think that the division will have to have start stemming its tide of losses if it is to be given a chance.
  - contextfree 15y ago
    I remember reading somewhere that Microsoft is targeting 2014 as the year that Bing is supposed to stop losing money. I can't seem to find it again though.

nickgeiger 15y ago

It might be unfair to compare the stock price to Google and Apple, but if you compare Gates to Ballmer, you can see that the stock has completely flattened since he took over. The rest of the article does point out some moves by him that sound really embarrassing. Having seen some videos of him doing interviews and presentations, I've had a very negative view of him and these points just reinforce that. Microsoft definitely seems on its way to irrelevance. Source: http://www.zdnet.com/blog/btl/chart-microsofts-performance-under-gates-vs-ballmer/35415 http://www.zdnet.com/blog/btl/chart-microsofts-performance-u...

ikono 15y ago

He started with the Nasdaq comparison, which is fair, and they don't look great in that comparison either. I don't agree with everything in the article but tuning out at the Apple/Google comparison isn't "fair"

bonch 15y ago

> 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?

philwelch 15y ago
Judging by source of revenue, Microsoft's an enterprise software vendor, Apple is a consumer electronics company, and Google is an advertising company. They're Microsoft's biggest rivals in terms of media hype, and they all make mutually competing products, but they're not a fair basis of comparison in terms of stock value. How have Oracle and SAP done?
- btilly 15y ago
  ...but they're not a fair basis of comparison in terms of stock value. How have Oracle and SAP done? Let's compare with a whole platoon of major tech companies that were big a decade ago: ADBE: +73.40% HPQ: +47.36% IBM: +48.65% MSFT: -27.03% ORCL: +109.06% SAP: +70.15% YHOO: +70.57% You'll note that MSFT sticks out like a sore thumb. In their defense, MSFT also has been paying dividends, which some of the comparison companies have not. When a company pays a dividend, the stock price theoretically should fall by almost exactly the dividend paid. As http://ycharts.com/companies/MSFT/dividend_yield http://ycharts.com/companies/MSFT/dividend_yield shows, they had a particularly big payment in 2005. When I put those dividends back in to MSFT, their stock has been utterly flat over a decade. This makes them a lot better than they otherwise appear, but their poor performance still sticks out like a sore thumb compared to the rest of the tech industry.
  - lukeschlather 15y ago
    You forgot Sun. And probably a few other dead behemoths.
    - 15y ago

alexqgb 15y ago

@asr - I think the OP's point is a bit more subtle than that. He's not suggesting that MS - a large and mature company - should still be growing like companies that only hit their stride recently. Rather, he's noting the degree to which Apple and Google have dramatically outperformed the NASDAQ, citing this as an indicator of how much room to grow the tech sector has had in general. 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.

Spyro7 15y ago

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 25,019.04% 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...

ars 15y ago
Link for the lazy: http://www.google.com//finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Logarithmic&chdeh=0&chfdeh=0&chdet=1305264708932&chddm=2541109&chls=IntervalBasedLine&cmpto=NASDAQ:GOOG;NASDAQ:AAPL&cmptdms=0;0&q=NASDAQ:MSFT&ntsp=0 http://www.google.com//finance?chdnp=1&chdd=1&chds=1...
amorphid 15y ago
MSFT was the overpriced darling of the Dotcom era. Ballmer inherited an insane valuation. Meanwhile, in the last ten years, net income has gone from under 8 billion to over 18 billion. This is not a failure and will eventually be reflected in the stick price. Source -- http://www.microsoft.com/presspass/inside_ms.mspx http://www.microsoft.com/presspass/inside_ms.mspx