5 ms·

The stock market is all about the future, not the past. A lot of people see Microsoft's future as being less profitable than its past. That's why people belittl

by dean 14y ago

The stock market is all about the future, not the past. A lot of people see Microsoft's future as being less profitable than its past. That's why people belittle it. Microsoft makes a ton of money, no one will deny that, but they make less money than they used to. It's funny how the OP shows the financial numbers for one quarter and says the "the trend here is clear". You can't determine a trend on one quarter, you have to compare to other quarters. Here are some numbers from Google Finance (http://www.google.com/finance?q=msft http://www.google.com/finance?q=msft) The first number is Q1 (Mar '12), the second is 2011 Net profit margin 29.34% 33.10% Operating margin 36.62% 38.83% Return on average assets 17.80% 23.77% Return on average equity 30.86% 44.84% Looks like the trend is down. Also, their stock price has been basically flat for 10 years. That tells you what the market thinks of Microsoft.

rvn1045 14y ago
"they make less money than they used to" That's incorrect, your looking at profit margins and not actual profits. Profits have actually been increasing every year in the last few years (except in 2009).
Steko 14y ago
People belittle Ballmer because: (1) they were the big villain for a long time and there's still a lot of unspent schadenfreude with their name on it. (2) they've always been juxtaposed with Apple which is in meteoric rise like nothing we've really ever seen. (3) because monkey boy Their stock price is flat only if you don't include the dividends they've paid out.
- lkrubner 14y ago
  "Their stock price is flat only if you don't include the dividends they've paid out." You have that backwards. If people think a company will pay out big dividends, then they bid up the price of the stock. That Microsoft's stock has remained mostly flat despite good dividend payments suggests that the stock would have plummeted without the dividend payments, and it will plummet if the dividend payments stop. A flat stock price despite good dividends suggests weakness, not strength.
  - Steko 14y ago
    "If people think a company will pay out big dividends, then they bid up the price of the stock." No not really and if they do then the price falls once the dividend is announced. This is basic math: Company is worth x dollars. Company gives away y dollars. Company is now worth x - y dollars. Felix Salmon explains it well here: http://blogs.reuters.com/felix-salmon/2012/03/19/apples-sensible-dividend/ http://blogs.reuters.com/felix-salmon/2012/03/19/apples-sens...
    - cma 14y ago
      It doesn't fall when a dividend is announced but rather after it is paid out.
  - 1123581321 14y ago
    Buyers will only bid up if they expect the dividends to increase without compromising the ability of the company to pay further dividends, or if the dividend is paid out with an asset that is currently worthless the way it's being used. It's really no different than growth stocks -- they are bid up with the idea that the last owner of the stock will ride it out in dividends until the final sale of assets.
kitsune_ 14y ago
The market does not think. It is neither efficient nor rational. If the stock market is about the future, then how do you interpret Goldman Sachs' share price of $235 in November 2007? 1 year later it fell to $53. A company's share price will tell you nothing about the actual financial stability or future of the company.
- crazygringo 14y ago
  Neither is it entirely non-efficient nor non-rational. Obviously, the stock market isn't about the actual future -- nobody knows that. It's about the expected future, calculated in a pure informational way. The price = the market's overall evaluation of all currently available information. Obviously it's not perfect, but the point is that if you know better, then you ought to be in investing, not programming, because you'll make a lot more money.
- mrb 14y ago
  This man is absolutely right. The stock market is rarely rational. This is exploited by value investors, like myself, who invest in companies that are undervalued for no reason.
  - dean 14y ago
    "The stock market is rarely rational. This is exploited by value investors, like myself, who invest in companies that are undervalued for no reason." Which tends to make the market more rational again. But I agree that the market is not always rational, else there would never be a bubble.
  - bgilroy26 14y ago
    >value investors Just following your logic here, value investors bank on the market's eventual rationality? Or is it rather that a company who is undervalued for no real reason today might be overvalued for no real reason tomorrow?
    - MartinCron 14y ago
hkmurakami 14y ago
>Also, their stock price has been basically flat for 10 years. That tells you what the market thinks of Microsoft. If you consider MSFT stock price to have been flat over the last 10 years, then the market itself has essentially been flat over the last 10 years. MSFT stock is up 20% over the last 10 years. The S&P 500 is up 26% over the last 10 years. That's not that big of a difference when considering (1) the immense volatility that we gone through over the last two boom and bust cycles and (2) some large portion of that 26% S&P 500 gain is Apple's 100x increase in split adjusted stock price.
brudgers 14y ago
>"The stock market" Microsoft isn't beholden to the stock market in the way Google or Apple are. The two largest shareholders are Gates and Balmer. They have about 9% of the company between them - that's more than the three largest institutional investors. As part of Dow Jones Industrial Average, many index funds have to hold Microsoft stock and have a strong disincentive to create turmoil which might drive the price down. Unlike the tech stocks to which they are often compared, Microsoft pays dividends which keeps the stock price lower. As for the stock market being the future, that future is based on speculation about the next quarter not long term innovation.
- ehutch79 14y ago
  9%... sooo the stock market holds 91%, sounds like it's beholden to me.
- deleted 14y ago
  [deleted]
- Drbble 14y ago
  Page Brin and Schmidt own over half of GOOG voting shares, and intend to never sell off their majority stake. I expect Jobs was similar, but what happened with his estate?
  - seanmcdirmid 14y ago
    Jobs sold his founder Apple stock in the 80s (except for exactly one share), and I don't think he ever amassed very much of it after he came back, definitely not enough to be considered a major holder.
recoiledsnake 14y ago
>The stock market is all about the future, not the past. A lot of people see Microsoft's future as being less profitable than its past. That's why people belittle it. Google's stock is worth less than what it was 4 years ago, it has also basically stagnated. > but they make less money than they used to No, they make more money in absolute terms than they used to. Their margins went down because they're investing more in mobile and tablets.
- Drbble 14y ago
  99% of America is worth less than 4 years ago. We had a recession.
sauravc 14y ago
Good points, but I think this one is inaccurate: "Microsoft makes a ton of money, no one will deny that, but they make less money than they used to." Actually they make a lot more money now than since Ballmer took over as CEO.

by dean 14y ago

rvn1045 14y ago

"they make less money than they used to" That's incorrect, your looking at profit margins and not actual profits. Profits have actually been increasing every year in the last few years (except in 2009).

Steko 14y ago

People belittle Ballmer because: (1) they were the big villain for a long time and there's still a lot of unspent schadenfreude with their name on it. (2) they've always been juxtaposed with Apple which is in meteoric rise like nothing we've really ever seen. (3) because monkey boy Their stock price is flat only if you don't include the dividends they've paid out.

lkrubner 14y ago
"Their stock price is flat only if you don't include the dividends they've paid out." You have that backwards. If people think a company will pay out big dividends, then they bid up the price of the stock. That Microsoft's stock has remained mostly flat despite good dividend payments suggests that the stock would have plummeted without the dividend payments, and it will plummet if the dividend payments stop. A flat stock price despite good dividends suggests weakness, not strength.
- Steko 14y ago
  "If people think a company will pay out big dividends, then they bid up the price of the stock." No not really and if they do then the price falls once the dividend is announced. This is basic math: Company is worth x dollars. Company gives away y dollars. Company is now worth x - y dollars. Felix Salmon explains it well here: http://blogs.reuters.com/felix-salmon/2012/03/19/apples-sensible-dividend/ http://blogs.reuters.com/felix-salmon/2012/03/19/apples-sens...
  - cma 14y ago
    It doesn't fall when a dividend is announced but rather after it is paid out.
- 1123581321 14y ago
  Buyers will only bid up if they expect the dividends to increase without compromising the ability of the company to pay further dividends, or if the dividend is paid out with an asset that is currently worthless the way it's being used. It's really no different than growth stocks -- they are bid up with the idea that the last owner of the stock will ride it out in dividends until the final sale of assets.

kitsune_ 14y ago

The market does not think. It is neither efficient nor rational. If the stock market is about the future, then how do you interpret Goldman Sachs' share price of $235 in November 2007? 1 year later it fell to $53. A company's share price will tell you nothing about the actual financial stability or future of the company.

crazygringo 14y ago
Neither is it entirely non-efficient nor non-rational. Obviously, the stock market isn't about the actual future -- nobody knows that. It's about the expected future, calculated in a pure informational way. The price = the market's overall evaluation of all currently available information. Obviously it's not perfect, but the point is that if you know better, then you ought to be in investing, not programming, because you'll make a lot more money.
mrb 14y ago
This man is absolutely right. The stock market is rarely rational. This is exploited by value investors, like myself, who invest in companies that are undervalued for no reason.
- dean 14y ago
  "The stock market is rarely rational. This is exploited by value investors, like myself, who invest in companies that are undervalued for no reason." Which tends to make the market more rational again. But I agree that the market is not always rational, else there would never be a bubble.
- bgilroy26 14y ago
  >value investors Just following your logic here, value investors bank on the market's eventual rationality? Or is it rather that a company who is undervalued for no real reason today might be overvalued for no real reason tomorrow?
  - MartinCron 14y ago

hkmurakami 14y ago

>Also, their stock price has been basically flat for 10 years. That tells you what the market thinks of Microsoft. If you consider MSFT stock price to have been flat over the last 10 years, then the market itself has essentially been flat over the last 10 years. MSFT stock is up 20% over the last 10 years. The S&P 500 is up 26% over the last 10 years. That's not that big of a difference when considering (1) the immense volatility that we gone through over the last two boom and bust cycles and (2) some large portion of that 26% S&P 500 gain is Apple's 100x increase in split adjusted stock price.

brudgers 14y ago

>"The stock market" Microsoft isn't beholden to the stock market in the way Google or Apple are. The two largest shareholders are Gates and Balmer. They have about 9% of the company between them - that's more than the three largest institutional investors. As part of Dow Jones Industrial Average, many index funds have to hold Microsoft stock and have a strong disincentive to create turmoil which might drive the price down. Unlike the tech stocks to which they are often compared, Microsoft pays dividends which keeps the stock price lower. As for the stock market being the future, that future is based on speculation about the next quarter not long term innovation.

ehutch79 14y ago
9%... sooo the stock market holds 91%, sounds like it's beholden to me.
deleted 14y ago
[deleted]
Drbble 14y ago
Page Brin and Schmidt own over half of GOOG voting shares, and intend to never sell off their majority stake. I expect Jobs was similar, but what happened with his estate?
- seanmcdirmid 14y ago
  Jobs sold his founder Apple stock in the 80s (except for exactly one share), and I don't think he ever amassed very much of it after he came back, definitely not enough to be considered a major holder.

recoiledsnake 14y ago

>The stock market is all about the future, not the past. A lot of people see Microsoft's future as being less profitable than its past. That's why people belittle it. Google's stock is worth less than what it was 4 years ago, it has also basically stagnated. > but they make less money than they used to No, they make more money in absolute terms than they used to. Their margins went down because they're investing more in mobile and tablets.

Drbble 14y ago
99% of America is worth less than 4 years ago. We had a recession.

sauravc 14y ago

Good points, but I think this one is inaccurate: "Microsoft makes a ton of money, no one will deny that, but they make less money than they used to." Actually they make a lot more money now than since Ballmer took over as CEO.