5 ms·

IBM passes Microsoft’s market cap

51 points by rickdale 15y ago

bane 15y ago
The move marks another unhappy milestone for Microsoft, which has failed to persuade investors that it can dominate the future of technology as it did in the past, and has seen its share price stagnate over the past decade. I'm sure much of that has to do with not just failed products, but a lack of fortitude in sticking behind products, advertising them effectively (building the brand) and growing them into the "next big thing".
- thomasgerbe 15y ago
  This guy also has something to do with it. Maybe. http://www.youtube.com/watch?v=lVMy0PFr8no http://www.youtube.com/watch?v=lVMy0PFr8no
  - bane 15y ago
    Well, he's definitely the root cause I'd wager. Perhaps not a bad CEO, but the wrong CEO for this company right now. He'd probably do better at a place like GE.
raganwald 15y ago
These types of articles are a serious problem. Stock prices reflect confidence in a company. The underlying "fundamentals" are only relevant insofar as they drive investors to buy and hold the stock. Negative articles about a company's business performance depress the stock by convincing investors that other investors will sell the stock. But articles like this are a kind of gut-shot: They directly state that investors don't like the stock. This kind of thing can accelerate a stock's fall from grace, leading to more negative articles, more bearish sentiment, and the whole thing becomes a vicious cycle. This is very different from an article being bearish about the company's management or products. You can hire new managers. You can fix broken product, buy new products, or develop new products. But you can't buy investor confidence (as Microsoft has proven with their dividends).
- aheilbut 15y ago
  Apparently those dividends and the underlying "fundamentals" do buy something, because the company is still worth $200B.
  - raganwald 15y ago
    I guess they do. How much of that stock do you own? I made the mistake of selling mine in the late nineties.
    - aheilbut 15y ago
      No position, and I don't like the stock, but my point is that the fundamentals do matter. MSFT remains a very large and profitable company, and it is at a stage where that influences valuation much more than sentiment does.
      - dstein 15y ago
        Except all of Microsoft's profitable business lines are in a dying industry, the personal computing industry. It's kind of an ironic role-reversal for IBM and Microsoft given their history and the way MS became the behemoth it is.
      - raganwald 15y ago
        And my point is that the fundamentals matter insofar as they drive investor beliefs about other investors. I think what you are saying and what I am saying are compatible. As to whether their "fundamentals" will outweigh a decline in confidence brought about by this kind of negative press coverage... If I knew what would happen for sure, I could make a comfortable living as an investor.
- Symmetry 15y ago
  Do vicious downward cycles actually happen? I'd expect that as soon as the stock price dipped below the value of the expected discounted dividend stream the smart money would swoop in, and could profit even without having to care about the future stock price. EDIT: I should point out that this doesn't happen with vicious circles or rising stock prices in any reliable way. Well, people shorting the stock can have sort of the same effect but not as well. Some companies manage to get by on investor's hope for future huge dividends someday without ever having to issue any right now, like Apple, but I don't think its a loss for society is investors lose their confidence in "someday" and start forming their expectation based on past performance. So I guess I'm saying that to the extent that negative articles can and do drive down a company's stock price those of us who haven't invested in them should be happy.
pnathan 15y ago
This is a very bad point for Microsoft. They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that.
- stcredzero 15y ago
  They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that. Two interesting questions: Are there big tech companies that you wouldn't say that about? Why doesn't it matter for those companies?
  - Duff 15y ago
    The difference between other tech companies and Microsoft is that Microsoft is no longer a growth company. That isn't necessarily bad. IMO, it's reasonable to have a slow-growth company in a mature market that pays a nice dividend (Microsoft's should be higher though). The danger is that Microsoft's utter dominance is getting chipped at from the margins. Are small companies or individuals buying Office like they once did? Is Apple's growth in the tablet space eventually going to put a bullet in the traditional PC?
    - hugh3 15y ago
      Microsoft is no longer a growth company Ah, but it could be. There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too (see Zune, Xbox). If they're worried about the tablet market, why not create their own tablet? Why did they make one attempt at the iPod market and then give up? Why aren't they pushing their Windows Mobile harder? Why aren't they doing more to go toe-to-toe with Apple? They have fifty billion dollars in cash, why not do something with it?
      - stcredzero 15y ago
        There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too. There are tons of connectivity issues they can solve, or help solve through 3rd parties. This is also what Near Field comms are about.
tybris 15y ago
Time to buy MSFT then.
what-to-do 15y ago
"Facebook passes Microsoft's market cap" - Thats 3-5 yrs down the road. FB will go up, MS down, and walla. Nobody lasts forever. Apple won't, FB won't, and MS isn't.
smackfu 15y ago
These are such lazy articles to write.
brudgers 15y ago
Those once again predicting Microsoft's doom might keep in mind that Microsoft remains highly profitable and that 20 years ago pre-internet pundits were greatly exaggerating rumors of IBM's death in the wake of multibillion dollar losses.

51 points by rickdale 15y ago

bane 15y ago

The move marks another unhappy milestone for Microsoft, which has failed to persuade investors that it can dominate the future of technology as it did in the past, and has seen its share price stagnate over the past decade. I'm sure much of that has to do with not just failed products, but a lack of fortitude in sticking behind products, advertising them effectively (building the brand) and growing them into the "next big thing".

thomasgerbe 15y ago
This guy also has something to do with it. Maybe. http://www.youtube.com/watch?v=lVMy0PFr8no http://www.youtube.com/watch?v=lVMy0PFr8no
- bane 15y ago
  Well, he's definitely the root cause I'd wager. Perhaps not a bad CEO, but the wrong CEO for this company right now. He'd probably do better at a place like GE.

raganwald 15y ago

These types of articles are a serious problem. Stock prices reflect confidence in a company. The underlying "fundamentals" are only relevant insofar as they drive investors to buy and hold the stock. Negative articles about a company's business performance depress the stock by convincing investors that other investors will sell the stock. But articles like this are a kind of gut-shot: They directly state that investors don't like the stock. This kind of thing can accelerate a stock's fall from grace, leading to more negative articles, more bearish sentiment, and the whole thing becomes a vicious cycle. This is very different from an article being bearish about the company's management or products. You can hire new managers. You can fix broken product, buy new products, or develop new products. But you can't buy investor confidence (as Microsoft has proven with their dividends).

aheilbut 15y ago
Apparently those dividends and the underlying "fundamentals" do buy something, because the company is still worth $200B.
- raganwald 15y ago
  I guess they do. How much of that stock do you own? I made the mistake of selling mine in the late nineties.
  - aheilbut 15y ago
    No position, and I don't like the stock, but my point is that the fundamentals do matter. MSFT remains a very large and profitable company, and it is at a stage where that influences valuation much more than sentiment does.
    - dstein 15y ago
      Except all of Microsoft's profitable business lines are in a dying industry, the personal computing industry. It's kind of an ironic role-reversal for IBM and Microsoft given their history and the way MS became the behemoth it is.
    - raganwald 15y ago
      And my point is that the fundamentals matter insofar as they drive investor beliefs about other investors. I think what you are saying and what I am saying are compatible. As to whether their "fundamentals" will outweigh a decline in confidence brought about by this kind of negative press coverage... If I knew what would happen for sure, I could make a comfortable living as an investor.
Symmetry 15y ago
Do vicious downward cycles actually happen? I'd expect that as soon as the stock price dipped below the value of the expected discounted dividend stream the smart money would swoop in, and could profit even without having to care about the future stock price. EDIT: I should point out that this doesn't happen with vicious circles or rising stock prices in any reliable way. Well, people shorting the stock can have sort of the same effect but not as well. Some companies manage to get by on investor's hope for future huge dividends someday without ever having to issue any right now, like Apple, but I don't think its a loss for society is investors lose their confidence in "someday" and start forming their expectation based on past performance. So I guess I'm saying that to the extent that negative articles can and do drive down a company's stock price those of us who haven't invested in them should be happy.

pnathan 15y ago

This is a very bad point for Microsoft. They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that.

stcredzero 15y ago
They have a tremendous stable of researchers, tremendous market dominance, fairly solid software, and they seem to be unable to capitalize on that. Two interesting questions: Are there big tech companies that you wouldn't say that about? Why doesn't it matter for those companies?
- Duff 15y ago
  The difference between other tech companies and Microsoft is that Microsoft is no longer a growth company. That isn't necessarily bad. IMO, it's reasonable to have a slow-growth company in a mature market that pays a nice dividend (Microsoft's should be higher though). The danger is that Microsoft's utter dominance is getting chipped at from the margins. Are small companies or individuals buying Office like they once did? Is Apple's growth in the tablet space eventually going to put a bullet in the traditional PC?
  - hugh3 15y ago
    Microsoft is no longer a growth company Ah, but it could be. There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too (see Zune, Xbox). If they're worried about the tablet market, why not create their own tablet? Why did they make one attempt at the iPod market and then give up? Why aren't they pushing their Windows Mobile harder? Why aren't they doing more to go toe-to-toe with Apple? They have fifty billion dollars in cash, why not do something with it?
    - stcredzero 15y ago
      There are plenty of other markets left to dominate under Microsoft's general heading of "we make software for stuff", especially if they don't mind making hardware too. There are tons of connectivity issues they can solve, or help solve through 3rd parties. This is also what Near Field comms are about.

tybris 15y ago

Time to buy MSFT then.

what-to-do 15y ago

"Facebook passes Microsoft's market cap" - Thats 3-5 yrs down the road. FB will go up, MS down, and walla. Nobody lasts forever. Apple won't, FB won't, and MS isn't.

smackfu 15y ago

These are such lazy articles to write.

brudgers 15y ago

Those once again predicting Microsoft's doom might keep in mind that Microsoft remains highly profitable and that 20 years ago pre-internet pundits were greatly exaggerating rumors of IBM's death in the wake of multibillion dollar losses.