5 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 tr

by 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.
    - btilly 15y ago
      You're right. I made the list out of MSFT, ORCL, and SAP, then every company that it suggested as being related to those which I remembered being fairly large a decade ago. I don't think it was his list didn't include Sun. Or AOL. Or Compaq. Or Dell. Or Sony. But the comparison list was not generated with an eye towards being unfair, and I think that the point made is still valid. Microsoft could have done better than it did.
wonnage 15y ago
The graph starts around the height of the internet bubble. It's a dishonest comparison. You can't blame Ballmer for not driving the stock back up to unrealistic levels. 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.
- alexqgb 15y ago
  There's a big difference between "driving the stock back up to unrealistic levels" and totally flatlining - which is what MS has actually done. Yes, the former is ridiculous. But so is the latter.
  - wonnage 15y ago
    If you factor in dividends the return would be something around 20% over the past 7 years. Crappy, but definitely not "flatlining". Microsoft makes twice as much as Oracle, pays a dividend, and yet has half the P/E multiplier. It's just not a sexy stock right now, but you can't deny the underlying profitability. Personally I think it's just that they've made some really embarrassing mistakes (Bing?). None of the failures have really dented the bottom line...they still had 8.5B lying around to buy Skype.
    - alexqgb 15y ago
      Good point about the dividends. I didn't consider that. And you're right about spare cash and the bottom line. From what I understand, the twin cash cows provided by Windows and Office hide a LOT of sins. In that sense, Microsoft is like some hopelessly corrupt petrostate. Sure, the place is a shambles in every way imaginable, but as long as the oil keeps flowing, nothing matters enough to dislodge the ruling class.

by bonch 15y ago

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.
  - btilly 15y ago
    You're right. I made the list out of MSFT, ORCL, and SAP, then every company that it suggested as being related to those which I remembered being fairly large a decade ago. I don't think it was his list didn't include Sun. Or AOL. Or Compaq. Or Dell. Or Sony. But the comparison list was not generated with an eye towards being unfair, and I think that the point made is still valid. Microsoft could have done better than it did.

wonnage 15y ago

The graph starts around the height of the internet bubble. It's a dishonest comparison. You can't blame Ballmer for not driving the stock back up to unrealistic levels. 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.

alexqgb 15y ago
There's a big difference between "driving the stock back up to unrealistic levels" and totally flatlining - which is what MS has actually done. Yes, the former is ridiculous. But so is the latter.
- wonnage 15y ago
  If you factor in dividends the return would be something around 20% over the past 7 years. Crappy, but definitely not "flatlining". Microsoft makes twice as much as Oracle, pays a dividend, and yet has half the P/E multiplier. It's just not a sexy stock right now, but you can't deny the underlying profitability. Personally I think it's just that they've made some really embarrassing mistakes (Bing?). None of the failures have really dented the bottom line...they still had 8.5B lying around to buy Skype.
  - alexqgb 15y ago
    Good point about the dividends. I didn't consider that. And you're right about spare cash and the bottom line. From what I understand, the twin cash cows provided by Windows and Office hide a LOT of sins. In that sense, Microsoft is like some hopelessly corrupt petrostate. Sure, the place is a shambles in every way imaginable, but as long as the oil keeps flowing, nothing matters enough to dislodge the ruling class.