4 ms·

How can someone say that Microsoft is bleeding with a straight face? I know media likes to skew that way, but it's not like the numbers aren't available. https:

by xarien 13y ago

How can someone say that Microsoft is bleeding with a straight face? I know media likes to skew that way, but it's not like the numbers aren't available. https://www.microsoft.com/Investor/EarningsAndFinancials/TrendedHistory/AnnualStatements.aspx https://www.microsoft.com/Investor/EarningsAndFinancials/Tre...

danieltillett 13y ago
Yes it is still making a ship load of cash every month - I would like to have a 'bleeding' problem like this.
- mathattack 13y ago
  They are making mounds of cash, but their shareholders haven't been rewarded for the past 10+ years of it.
  - nivla 13y ago
    Wouldn't the increase in share price and payment of quarterly dividends count as a reward? [1] [1] http://finance.yahoo.com/q/bc?s=MSFT+Basic+Chart http://finance.yahoo.com/q/bc?s=MSFT+Basic+Chart
    - throwawaymsft 13y ago
      Not when it underperforms the market in general: http://finance.yahoo.com/q/bc?s=MSFT&t=5y&l=on&z=l&q=l&c=%5EGSPC http://finance.yahoo.com/q/bc?s=MSFT&t=5y&l=on&z=l&q=l&c=%5E...
      - nivla 13y ago
        I would take a dividend paying stock that is slightly under performing than the market, than a non dividend paying one. Also everytime a dividend is issued, the price is adjusted for any possible arbitrage. If you were to solely depend on S&P500 as the index for performance, I guess investments in Lockheed Martin would be a waste.[1] [1]http://finance.yahoo.com/q/bc?s=LMT&t=5y&l=on&z=l&q=l&c=%5EGSPC http://finance.yahoo.com/q/bc?s=LMT&t=5y&l=on&z=l&q=l&c=%5EG...
        mathattack 13y ago
        It's really a matter of total returns, using the SAP as a benchmark. The Spider S&P ETFs capture total returns. There's an argument that dividend payers outperform the index over the long haul, but that's something different.
        throwawaymsft 13y ago
        As mathattack said, the SPY fund pays out dividends too (from the 500 items in its basket). Person A has 100k to invest, and puts it all into Microsoft. He's betting MSFT will outperform the rest of the industry, and likely all industries. Presumably he spent some time and effort to research this decision, seeing as investing in a single stock is risky. Person B wastes no time, makes no predictions, and just puts 100k in the general market. He gets the average appreciation and average dividend returns along the way. Person B ends up ahead: less risk (one vs. many), better returns, and zero time in research.
        nivla 13y ago
        Well your assumption that a stock has to outperform a specific market index to be consider worthy is not true. S&P500 is just an index of 500 capital sorted hand picked companies. You made some flawed assumptions: [1] All companies in the index pay dividends. [2] MSFT is not one of the companies in the index. [3] There is only one industry in the index or all industries in the index are somehow complementary (ie. a loss/gain in one will see a similar loss/gain in another) [4] Most industry are related to Technology (Only 62 out of the 500 companies are in the Technology sector) Using your example, if the Technology industry outperforms all other industry within a given period, Person A would enjoy a profit whereas Person B might walk away with a loss. Market indices shouldn't be used as the benchmark for the true reflection of a company's performance/worth. Lockheed Martin is the key example, its one of the most desired stocks that has been growing steadily and pays one of the highest dividends, yet it underperforms the market.
        throwawaymsft 13y ago
        A decision to invest in Microsoft needs to be compared against the opportunity cost: investing in an unbiased sample of companies (you can invest in the Russel 2000 if you want), for much less risk. Taking a job to work at McDonalds is a bad decision when the alternative (picking a random job available to you, essentially) pays more. Even if you "get paid" while working at McDonalds, it wasn't a worthwhile decision. (By the way, stocks are absolutely compared against the average market to see if they are a worthwhile decision. Why do you want to invest in an underperformer when you can invest randomly and do better? It's like testing a drug against a placebo.)
  - xarien 13y ago
    I'm guessing you don't own their stock. They have one of the best dividend payouts in the sector. MS in the last decade has been low risk and steady rewards.
    - mathattack 13y ago
      Over the past 15 years (and 10, so that I'm not cherrypicking the dot com bust) they've dramatically underperformed the market.
      - xarien 13y ago
        Why argue oranges when I'm describing apples? (dividends)
        mathattack 13y ago
        Total returns are what matter. Stock appreciation plus dividends. If the broader market returns 10%, you can't say, "But I got a 3% dividend, that's apples to oranges." In the end it's all part of the total return. I'm not arguing that dividends don't matter - on the contrary they matter a lot. But a stock with low total returns over time isn't saved just because the dividend portion of that is high.
        xarien 13y ago
        Total returns is calculated at the point of sale. How do you argue this and not cherry pick? For instance, as mentioned this stock is very low risk so if you look at the drop during the crashes, you'll notice that it doesn't fall nearly as hard as other riskier stocks (risk vs reward). For a rock solid stock (low risk large cap) that offers great dividends, it's really hard to beat MSFT.
        mathattack 13y ago
        There are 2 ways to look at it: 1) Look at total returns after the fact. Over the past 10-15 years, Microsoft has underperformed the indexes, even on a risk adjusted basis. (If you want to compare it to low vol stocks rather than tech, look at DFA's value fund) Generally high dividend stocks outperform low dividend stocks over the long haul, so this non-performance is even more striking. 2) You can make a judgment that in the future this will change. What's the basis of this, when most stock pickers are wrong as often as they are right?
jpatokal 13y ago
Because this: http://static.businessinsider.com/image/519538866bb3f78a6900000e/image.jpg http://static.businessinsider.com/image/519538866bb3f78a6900... Do you see Windows' slice of the pie getting larger anytime soon?
- frozenport 13y ago
  What the hell is a computer platform market share? Should Android and Windows be in the same category? Should Windows and Blackberry be in the same category? Is an Android device going to be loaded with thousands of dollars of software and hardware and used for CAD?
  - PakG1 13y ago
    Why wouldn't it? Seriously, why wouldn't an Android device sometime in the future be loaded with thousands of dollars of software and hardware and be used for CAD? There is no reason to say that this will never happen. But besides that, Windows also used to be used for loading tens of dollars of software and be used for email, word processing, surfing the web, etc. That use of Windows is shrinking. What's taking it? Android and iOS. So yes, this is all one big market. And nobody can say for certain whether that would eventually extend to the market of software that costs thousands of dollars per license either. Especially if software continues to move towards SaaS models.
    - frozenport 13y ago
      You bring up a valid technical point, but it fails to capture the notion of platform. I think we both agree that Android could run desktop class software, hell you can probably x-forward and do it now. When we see this graph I foam at the mouth, thinking that a Windows x86 computer and cell phone are on the same level. But is that how it being used? Is that how it is being used in 2005, is that how it is being used in 2012? Ironically the recent spike in x86 Windows tablet sales (now priced at $200) might actually unite these form factors - under MS's terms. My point is that these lines are rather arbitrary, and are today a poor indicator of computing market share weighted by margins - which was indisputably how MS makes it money. I wonder if they have to replace each-other or do they augment or compete on a different playing field. Although strongly agree that a disproportionate amount of investment in SF is going toward the Android side.

by xarien 13y ago

danieltillett 13y ago

Yes it is still making a ship load of cash every month - I would like to have a 'bleeding' problem like this.

mathattack 13y ago
They are making mounds of cash, but their shareholders haven't been rewarded for the past 10+ years of it.
- nivla 13y ago
  Wouldn't the increase in share price and payment of quarterly dividends count as a reward? [1] [1] http://finance.yahoo.com/q/bc?s=MSFT+Basic+Chart http://finance.yahoo.com/q/bc?s=MSFT+Basic+Chart
  - throwawaymsft 13y ago
    Not when it underperforms the market in general: http://finance.yahoo.com/q/bc?s=MSFT&t=5y&l=on&z=l&q=l&c=%5EGSPC http://finance.yahoo.com/q/bc?s=MSFT&t=5y&l=on&z=l&q=l&c=%5E...
    - nivla 13y ago
      I would take a dividend paying stock that is slightly under performing than the market, than a non dividend paying one. Also everytime a dividend is issued, the price is adjusted for any possible arbitrage. If you were to solely depend on S&P500 as the index for performance, I guess investments in Lockheed Martin would be a waste.[1] [1]http://finance.yahoo.com/q/bc?s=LMT&t=5y&l=on&z=l&q=l&c=%5EGSPC http://finance.yahoo.com/q/bc?s=LMT&t=5y&l=on&z=l&q=l&c=%5EG...
      - mathattack 13y ago
        It's really a matter of total returns, using the SAP as a benchmark. The Spider S&P ETFs capture total returns. There's an argument that dividend payers outperform the index over the long haul, but that's something different.
      - throwawaymsft 13y ago
        As mathattack said, the SPY fund pays out dividends too (from the 500 items in its basket). Person A has 100k to invest, and puts it all into Microsoft. He's betting MSFT will outperform the rest of the industry, and likely all industries. Presumably he spent some time and effort to research this decision, seeing as investing in a single stock is risky. Person B wastes no time, makes no predictions, and just puts 100k in the general market. He gets the average appreciation and average dividend returns along the way. Person B ends up ahead: less risk (one vs. many), better returns, and zero time in research.
        nivla 13y ago
        Well your assumption that a stock has to outperform a specific market index to be consider worthy is not true. S&P500 is just an index of 500 capital sorted hand picked companies. You made some flawed assumptions: [1] All companies in the index pay dividends. [2] MSFT is not one of the companies in the index. [3] There is only one industry in the index or all industries in the index are somehow complementary (ie. a loss/gain in one will see a similar loss/gain in another) [4] Most industry are related to Technology (Only 62 out of the 500 companies are in the Technology sector) Using your example, if the Technology industry outperforms all other industry within a given period, Person A would enjoy a profit whereas Person B might walk away with a loss. Market indices shouldn't be used as the benchmark for the true reflection of a company's performance/worth. Lockheed Martin is the key example, its one of the most desired stocks that has been growing steadily and pays one of the highest dividends, yet it underperforms the market.
        throwawaymsft 13y ago
        A decision to invest in Microsoft needs to be compared against the opportunity cost: investing in an unbiased sample of companies (you can invest in the Russel 2000 if you want), for much less risk. Taking a job to work at McDonalds is a bad decision when the alternative (picking a random job available to you, essentially) pays more. Even if you "get paid" while working at McDonalds, it wasn't a worthwhile decision. (By the way, stocks are absolutely compared against the average market to see if they are a worthwhile decision. Why do you want to invest in an underperformer when you can invest randomly and do better? It's like testing a drug against a placebo.)
- xarien 13y ago
  I'm guessing you don't own their stock. They have one of the best dividend payouts in the sector. MS in the last decade has been low risk and steady rewards.
  - mathattack 13y ago
    Over the past 15 years (and 10, so that I'm not cherrypicking the dot com bust) they've dramatically underperformed the market.
    - xarien 13y ago
      Why argue oranges when I'm describing apples? (dividends)
      - mathattack 13y ago
        Total returns are what matter. Stock appreciation plus dividends. If the broader market returns 10%, you can't say, "But I got a 3% dividend, that's apples to oranges." In the end it's all part of the total return. I'm not arguing that dividends don't matter - on the contrary they matter a lot. But a stock with low total returns over time isn't saved just because the dividend portion of that is high.
        xarien 13y ago
        Total returns is calculated at the point of sale. How do you argue this and not cherry pick? For instance, as mentioned this stock is very low risk so if you look at the drop during the crashes, you'll notice that it doesn't fall nearly as hard as other riskier stocks (risk vs reward). For a rock solid stock (low risk large cap) that offers great dividends, it's really hard to beat MSFT.
        mathattack 13y ago
        There are 2 ways to look at it: 1) Look at total returns after the fact. Over the past 10-15 years, Microsoft has underperformed the indexes, even on a risk adjusted basis. (If you want to compare it to low vol stocks rather than tech, look at DFA's value fund) Generally high dividend stocks outperform low dividend stocks over the long haul, so this non-performance is even more striking. 2) You can make a judgment that in the future this will change. What's the basis of this, when most stock pickers are wrong as often as they are right?

jpatokal 13y ago

Because this: http://static.businessinsider.com/image/519538866bb3f78a6900000e/image.jpg http://static.businessinsider.com/image/519538866bb3f78a6900... Do you see Windows' slice of the pie getting larger anytime soon?

frozenport 13y ago
What the hell is a computer platform market share? Should Android and Windows be in the same category? Should Windows and Blackberry be in the same category? Is an Android device going to be loaded with thousands of dollars of software and hardware and used for CAD?
- PakG1 13y ago
  Why wouldn't it? Seriously, why wouldn't an Android device sometime in the future be loaded with thousands of dollars of software and hardware and be used for CAD? There is no reason to say that this will never happen. But besides that, Windows also used to be used for loading tens of dollars of software and be used for email, word processing, surfing the web, etc. That use of Windows is shrinking. What's taking it? Android and iOS. So yes, this is all one big market. And nobody can say for certain whether that would eventually extend to the market of software that costs thousands of dollars per license either. Especially if software continues to move towards SaaS models.
  - frozenport 13y ago
    You bring up a valid technical point, but it fails to capture the notion of platform. I think we both agree that Android could run desktop class software, hell you can probably x-forward and do it now. When we see this graph I foam at the mouth, thinking that a Windows x86 computer and cell phone are on the same level. But is that how it being used? Is that how it is being used in 2005, is that how it is being used in 2012? Ironically the recent spike in x86 Windows tablet sales (now priced at $200) might actually unite these form factors - under MS's terms. My point is that these lines are rather arbitrary, and are today a poor indicator of computing market share weighted by margins - which was indisputably how MS makes it money. I wonder if they have to replace each-other or do they augment or compete on a different playing field. Although strongly agree that a disproportionate amount of investment in SF is going toward the Android side.