5 ms·
Microsoft is a public company. That means their primary product is not products or services, it's their stock. Selling products & services can be an advertiseme
by coldpie 10mo ago
Microsoft is a public company. That means their primary product is not products or services, it's their stock. Selling products & services can be an advertisement for their stock, but there are other methods of convincing people to buy their stock, too. Currently the stock market only wants stocks that have "AI" associated with them. It doesn't matter whether users like it or not, because having a viable business is not what the stock market is currently focused on. So, Microsoft is doing what they need to do to sell their primary product: shove AI into everything.
- brookst 10mo agoAre you saying they would rather double stock price than double revenue?
- coldpie 10mo agoSure. Decision makers are paid in stock price, not revenue. They would rather do whatever increases the stock price the most, with the least effort/expense.
- brookst 10mo agoIf only there was some correlation between stock price and revenue…
- graemep 10mo agoYyes, and prefer it to doubling profit or cashflow etc. I have not looked at MS in particular, but generally that is what the remuneration of the people at the top of most public companies is most strongly linked to.
- Maxatar 10mo agoIf you're someone who owns Microsoft, what option would you prefer? 1. Stock price remains the same but revenue doubles. 2. Revenue stays the same, but stock price doubles. Assuming all else equal, and recognizing that this is absolutely a simplification, but if these were the two choices then it seems a no brainer that you'd go with option 2. Revenue is a means of increasing stock price.
- Marsymars 10mo agoI guess it depends on what kind of investor you are. If you're holding MS stock long-term, and you plan to gradually shift away from equities as you near retirement and then gradually liquidate your holdings to fund your retirement, juicing the stock in the short term does nothing for you. If you're holding short-term, then you also need to sell the stock after it gets juiced, so that you can move your capital to not-yet-juiced stocks.
- Marsymars 10mo agoMissed a point above - that for said short-term investor... that strategy doesn't actually work, since a "sell high buy low" strategy on individual stocks is outperformed by just holding ETFs long-term. So really, which investors does short-term stock juicing benefit? Insider traders, I guess.
- 5kh 10mo agoA long term investor would prefer 1. Most likely option 2 would shortly be followed by halving of the stock price. Option 1 lets someone buy shares in a company that is greatly undervalued and will lead to long terms gains.
- Maxatar 10mo agoI just think you are the other person who replied to me are making the same mistake, which is mixing the means of accomplishing a goal with the goal itself. This is a mistake I see a lot (especially in software development), where people get too attached to a specific means or method that they end up confusing the method itself with the actual thing that needs to be accomplished. The goal for an investor is captured in the stock price itself. In programming terms, a corporation is a function whose output is its stock price/market cap, and revenue is but one of a host of inputs into that corporation that determines what the stock price is. Other inputs can be operating expenses, whether dividends are issued, future prospects for the company such as entering new markets etc etc... and you can have beliefs about how those various inputs affect the output or how these inputs change the output over time (short term vs. long term), that's perfectly fine... but when push comes to shove, the goal is not the revenue, it's not entering a new market, it's not reducing operating expenses... the goal is increasing the stock price (well technically the market cap).
- pjc50 10mo agoYes! Not least because doubling revenue doesn't cause the stock to double.
- saubeidl 10mo agoMaybe the stock market is not a good system to organize ones economy around then?
- cezart 10mo agoI've been thinking about this recently. The centrality of the stock market, while historically a great tool to allocate resources efficiently, might actually be a big weakness for the USA today. A capable adversary, like China, can kill entire strategic sectors in the US using the stock market. If they undercut the US companies and are willing to accept low returns on their investments, then the respective USA competition will be driven out of business by their investors, because there will be other sectors to invest in, with higher RoI. Do this at various points in strategic value chains, and over a decade or so it might kill entire verticals in strategic sectors, leaving the US economy vulnerable to any kinds of shocks.
- qweiopqweiop 10mo agoDo you need the stock market to undercut industries though? I'm not sure it's necessary
- fodkodrasz 10mo agoWhile not strictly necessary, it is a great power multiplier. It helps as it is both a gauge of the success of the strategy, and also a lever where the process can be fine tuned, eg. slowly buying stock then strategically dumping in the right time, correlated with other external shocks can have wider effect to whole industries through controlling the public opinion on specific industries.
- FuckButtons 10mo agoWe’re already there when it comes to having the industrial base necessary to fight a protracted conventional war with china. Which leaves a large ? over the US dominance over the pacific.
- frickinLasers 10mo ago
- watwut 10mo agoThat is not what stock market is. A company does not have to focus on stock price and stock price is not its primary product.
- coldpie 10mo agoThat's fair, I should reframe. The incentive given to decision makers at Microsoft is company stock. That means the primary focus for everyone who makes decisions at Microsoft is the stock price, which in turn means the stock price is the primary product for the company itself.
- _DeadFred_ 10mo agoName a major U.S. public company in recent years that has consistently prioritized improving its product over boosting short term stock price or extracting maximum profits. If capitalism were truly a healthy system about building strong products to create healthy markets, this should be the norm (and enshitification shunned), not the exception. What we actually see is a system of chartered extraction. Corporate executives are like Norman lords, granted their 'title' (CEO of instead of Earl of) by shareholders (rather than a king) in return for which both are/were expected to extract maximum value by any means necessary. Extractive tactics often at the expense of long-term product strength are behaviors shareholders expect if the CEO is to keep their bestowed 'title'. Don't forget the progenitor joint stock company The East India Company, Capitalism in it's purest form without government restriction. Profit-maximizing, absentee extraction, with company executives serving as quasi-feudal lords over assets and people. Modern corporate capitalism is hard to distinguish, in its structure,history, behavior, and incentives, from the Norman extraction system, it's just dressed in a more politically palatable wrapper and forced to mellow out from it's desired East India Company style final form.
- Marsymars 10mo ago> Name a major U.S. public company in recent years that has consistently prioritized improving its product over boosting short term stock price or extracting maximum profits. Well in some perverse sense, I'd say Meta qualifies here. Zuck isn't beholden to other shareholders and is free to burn truckloads of money on worthless projects. The big asterisk is that for Meta, "improving its product" is effectively "creating the best digital cigarettes".
- nolok 10mo agoIt's basically the reason this bubble not only exists but has a chance not to pop : there is so much stock value in it that the big tech all want to keep feeding it, and they're sitting on so much cashflow they can afford to do it It's absurd, but that's where it is. And a company like OpenAI basically hangs on it, because they have obligation almost ten time their revenue and the only way this does not deflate quickly is if others keep feeding it cash.
- hvb2 10mo ago> Microsoft is a public company. That means their primary product is not products or services, it's their stock. Yeah that's a great business idea, ask Boeing how that's going
- coldpie 10mo agoCurrent CEO: > Boeing spent about $300,000 to help Ortberg move to Seattle. His decision comes more than two decades after Boeing leadership decided to move company headquarters out of Seattle. Ortberg received about $18 million for the months he was the CEO in 2024. https://en.wikipedia.org/wiki/Robert_Ortberg https://en.wikipedia.org/wiki/Robert_Ortberg Previous CEO: > In 2022, Calhoun received $22.5 million from Boeing. Most of his 2022 compensation was in the form of estimated value of stock and option awards. He received the same $1.4 million salary as in 2021. ... In February 2023, Boeing awarded Calhoun an incentive of about $5.29 million in restricted stock units to "induce him to stay throughout the company's recovery". In March 2023, Boeing announced Calhoun was being given shares worth $15 million that will vest in installments over three years. https://en.wikipedia.org/wiki/Dave_Calhoun https://en.wikipedia.org/wiki/Dave_Calhoun Seems to be going all right?
- pjc50 10mo agoWorks for Tesla, the absolute poster child for this kind of behavior. They can lose double digit percentage of market share in key places and still give the CEO a trillion dollars.