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Ballmer, Gates on Microsoft's Future
RoadFever writes: "At the Microsoft shareholders meeting, CEO Ballmer acknowledged they may have a popularity bug. "We understand, based upon the fact that our industry didn't rally to support us, that we need to change the way we interact and relate to our industry," Ballmer said.
There's a summary article in the Seattle Times and more stuff on the Microsoft investor relations page.
Will words translate to action? Well, the company might want to start by toning down the habit of taking credit for every innovation: "Really, the reason you see open source there at all is because we came in and said there should be a platform that's identical with millions and millions of machines," Gates said." The question-and-answer session near the end of the meeting has the most juicy quotes.
Forget all the anti-trust stuff and "we don't play well with other" crap for a minute. In terms of "investment relations" what MS needs to do is pay out a god damn dividend. They're sitting on a pile of cash, and the days of constant double digit growth are behind them. They are going to have to face up to the fact that they are a grown, mature company and their stock price is going to act accordingly.
That's what's driving their licensing debacle, BSA audits, etc. They've hit the wall in terms of market penitration on the desktop, they never achieved the "slam dunk/home run" domination of the server market they thought they would (not to mention where they do dominate there-- small print, file, web servers they've got linux/BSD nipping at their heels) and the X-box is going to put a hit on revenues for the next few years even if its a runaway success. Other than Web Sevices, which at best are a few years away, they have no room for massive growth.
So, if the stockprice ain't going up all that much they better start paying out on all that cash they're sitting on, or some investers are going to be none too happy.
(then again, I'm a code jockey, what the f**k do I know about finance)
The PC platform that Gates is touting was created by IBM, not Microsoft. Sure, Microsoft software was running on all of them but what made it appealing was the low costs of the hardware which came about by IBM's rather loose licensing policies. It took a very long time for the PC to become vaguely usable, but it remained cheap and ubiquitous which is why it eventually came to dominate.
But Microsoft's position in that domination was, at best, an accident. They were in the right place at the right time and did a good job of screwing IBM. Credit to them for that, but not much else.
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If you were to distill the -essence- of what was said (especially on women on the Board and in the company), you'd end up with exactly nothing. Sure, they may be concerned about this, or feel strongly about that. I'll allow for that possibility. But feelings don't equate to action. They're just feelings, the same as "happy" and "sad".
Even the sweeping apparently-grandiose statements made wrt "Open Source" and "Free Software" really reduce to nil. Sure, they may have been a factor in the popularity of "Open Source". But there are probably as many coders inspired by a rainbow, or a fascinating geological formation.
In short, I have to give credit for an amazing non-statement, which said exactly nothing and offered nothing. However, the credit has a value of $0.00.
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
In answer to the question of why MSFT doesn't pay a "g**d damn dividend", it's pretty simple.
Look, MSFT is a shell company, one that permits Bill and Paul and a few other major shareholders to buy other companies. By maximizing the capital growth and having no dividends, they reduce their effective tax rate to 8 to 10 percent. Then they sell off a few shares and pay the 5 year capital gains tax on them, or sell the high purchase shares and keep the low purchase shares, thus getting a capital loss.
That's why there's no dividend.
Until MSFT becomes more like GE, where no single shareholder owns more than 20 percent of the stock, this will never change.
This is their way of avoiding taxes. People like me buy a mix of stocks - some dividend and some non-dividend - we use the non-dividend stock to go long on capital gains and thus reduce our tax hit (realized income) and use the dividends from the other stock (or bonds, PERQs, SPARQs, money market) to provide enough cash flow for expenses.
Thus we pay less tax than the working poor do. My realized income is very small. And so is Bill's and Paul's.
Unless you change the tax system, we'll keep doing things like that. There is no incentive to realize earned income, under the current system.
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--- Will in Seattle - What are you doing to fight the War?