6 ms·

What do you mean unable to capitalize? They have a 32% profit margin (for comparison, Apple has 22%) and their dividends are considerably higher than the intere

by tybris 15y ago

What do you mean unable to capitalize? They have a 32% profit margin (for comparison, Apple has 22%) and their dividends are considerably higher than the interest on your savings account. Why should they care about their stock price? It's not like they're in dire need of a stock emission. They have a cool $20 billion in annual profit flowing in. Their employees won't mind that much either, since a low stock price means they get more shares and with a P/E ratio of under 10 they're likely to go up eventually.

hugh3 15y ago
Why should they care about their stock price? Ultimately, they should care about the stock price because raising the stock price (or, more directly, the value of the company) is what we (the shareholders) pay them (the management) for. "Here you go" say the shareholders (via the board) to the management. "Here's a freaking huge salary. Now go find ways to make my company bigger." That doesn't mean they should care about day-to-day fluctuations in the share price, but certainly ensuring long-term growth in the share price is exactly what we're paying 'em to do. (And I don't know why I used "we" all through there, because I'm not actually a MSFT shareholder.)
- code_duck 15y ago
  Microsoft pays dividends, at least.
  - hugh3 15y ago
    True, but only 2.65%, which isn't enough to justify zero growth. Actually I'm looking at the historical MSFT price right now, and it's interesting. Of course they had huge growth in the 90s, hitting twice its present value at the end of '99, before rapidly crashing back down to its present value by 2001. It's been flat ever since. In 2003 the company said "Screw it, we might as well pay dividends" and they've been putting out a slowly-increasing dividend ever since. Other than that, the lack of change over the last decade has been remarkable. Interestingly, 2000 was also the year that Ballmer replaced Gates as CEO. Maybe what Microsoft really needs is a CEO with some vision.
    - nolok 15y ago
      2000/2001 was also the years of the dot com bubble where every tech company tanked in some way. I think this has more to do with it than Ballmer's arrival (it was the time of the hugely successful and popular windows 2000 and XP, ballmer's damage if any would only be seen years later).
      - hugh3 15y ago
        Oh, for sure every tech company tanked in 2000, but the interesting thing about MSFT is that they never recovered. The stock price graph is astounding -- twenty years of huge exponential growth followed by a 50% dip and ten years of completely static prices (and yes, a steady but relatively small dividend).
      - code_duck 15y ago
        That was a lousy time to take over as CEO, true. However, the next decade has had plenty of opportunity - Google went from not much to a $500 billion company, and Apple went from dying to dominant. With a CEO who had a full vision, they could have added huge amounts of value to the company since then. Instead they've been coasting along and taking wrong turns.
- nolok 15y ago
  The thing though is that microsoft actually pays dividend to its shareholder, and a good amount at that. If you have apple stock then yes you better hope they rise because that's the only way they will make you money, but it is not so for microsoft's.
- smackfu 15y ago
  It is incredible how common the fallacy is that stock price is all there is. You see people spouting numbers based on stock price changes and ignoring dividends and it's a pretty obvious sign they don't know what they are talking about. If you give return values without including dividends, you are giving junk numbers.
pnathan 15y ago
I mean that they have stabilized, and the biggest and most creaky company (historically speaking), has passed them up. The old saying was, "No one got fired for buying IBM". It is a signal that MS is not using its dominance to get into new markets, grow products, and generally be an competetively active business.

by tybris 15y ago

hugh3 15y ago

Why should they care about their stock price? Ultimately, they should care about the stock price because raising the stock price (or, more directly, the value of the company) is what we (the shareholders) pay them (the management) for. "Here you go" say the shareholders (via the board) to the management. "Here's a freaking huge salary. Now go find ways to make my company bigger." That doesn't mean they should care about day-to-day fluctuations in the share price, but certainly ensuring long-term growth in the share price is exactly what we're paying 'em to do. (And I don't know why I used "we" all through there, because I'm not actually a MSFT shareholder.)

code_duck 15y ago
Microsoft pays dividends, at least.
- hugh3 15y ago
  True, but only 2.65%, which isn't enough to justify zero growth. Actually I'm looking at the historical MSFT price right now, and it's interesting. Of course they had huge growth in the 90s, hitting twice its present value at the end of '99, before rapidly crashing back down to its present value by 2001. It's been flat ever since. In 2003 the company said "Screw it, we might as well pay dividends" and they've been putting out a slowly-increasing dividend ever since. Other than that, the lack of change over the last decade has been remarkable. Interestingly, 2000 was also the year that Ballmer replaced Gates as CEO. Maybe what Microsoft really needs is a CEO with some vision.
  - nolok 15y ago
    2000/2001 was also the years of the dot com bubble where every tech company tanked in some way. I think this has more to do with it than Ballmer's arrival (it was the time of the hugely successful and popular windows 2000 and XP, ballmer's damage if any would only be seen years later).
    - hugh3 15y ago
      Oh, for sure every tech company tanked in 2000, but the interesting thing about MSFT is that they never recovered. The stock price graph is astounding -- twenty years of huge exponential growth followed by a 50% dip and ten years of completely static prices (and yes, a steady but relatively small dividend).
    - code_duck 15y ago
      That was a lousy time to take over as CEO, true. However, the next decade has had plenty of opportunity - Google went from not much to a $500 billion company, and Apple went from dying to dominant. With a CEO who had a full vision, they could have added huge amounts of value to the company since then. Instead they've been coasting along and taking wrong turns.
nolok 15y ago
The thing though is that microsoft actually pays dividend to its shareholder, and a good amount at that. If you have apple stock then yes you better hope they rise because that's the only way they will make you money, but it is not so for microsoft's.
smackfu 15y ago
It is incredible how common the fallacy is that stock price is all there is. You see people spouting numbers based on stock price changes and ignoring dividends and it's a pretty obvious sign they don't know what they are talking about. If you give return values without including dividends, you are giving junk numbers.

pnathan 15y ago

I mean that they have stabilized, and the biggest and most creaky company (historically speaking), has passed them up. The old saying was, "No one got fired for buying IBM". It is a signal that MS is not using its dominance to get into new markets, grow products, and generally be an competetively active business.