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Discussing a Private Buyout of Microsoft

Posted by ryuzaki0 on from the that's-quite-a-deal dept.

PatriceVignon writes "Are private buyout companies setting their eyes on Microsoft? The Financial Times claims exactly that in an article called 'Private equity folk could do wonders with Microsoft', as ZDnet reports: 'Consider Microsoft, which has a balance sheet so inefficient that it would make a private equity investor weep ... The new management could take the axe to Microsoft's $6.6bn of wasteful research and development expenditure. The bloated workforce of more than 60,000 could be slashed, to the point where the huge resulting increase in cash flow would at last permit the company to borrow mega-billions.' Business Week, though, begs to differ: 'practically speaking, it's not going to happen,' and quotes Daniel Primack: 'Snakes on a Plane will win a best picture Oscar before Microsoft gets acquired by LBO firms.' What do you think?"

10 of 315 comments (clear)

  1. Snakes on a Plane will win a best picture Oscar by Anonymous Coward · · Score: 5, Insightful

    If Titanic can get one, anything is possible.

  2. And then... by The+MAZZTer · · Score: 4, Insightful

    "The new management could take the axe [sic] to Microsoft's $6.6bn of wasteful research and development expenditure."

    And then Apple will produce wondrous innovations, and replace Microsoft as the leading OS supplier, and Microsoft will go under and LBO will write it off as Microsoft's fault somehow.

    1. Re:And then... by 99BottlesOfBeerInMyF · · Score: 4, Insightful

      Apple could do that *now*, if they'd sell MacOS for commodity systems.

      You're both wrong. MS's monopoly is not dependent upon the quality of their OS compared to other vendors as much as it is upon lock-in and market position. Apple can't compete outside its vertical monopoly unless they can get OEMs to pre-install. OEMs won't pre-install because MS will kill their entire Windows business with discriminatory pricing and that means they're betting the company on the single, unlikely possibility that all the lock-in strategies MS has built into Windows won't work. At the same time Apple is betting their company on the same since they are then decapitating their hardware business and most of their profits.

      In short, for both Apple and at least two other, major companies to all take such a huge risk is highly unlikely and could very well get whoever made such a risky decision sued to oblivion.

    2. Re:And then... by Coryoth · · Score: 4, Insightful

      Microsoft research is a little wasteful, at least in as much as the amount being spent doesn't compare very well to shipped product improvements. The problem, as far as I can see as a complete outsider, seems less to do with MS Research not doing a lot of interesting work (just have a look at some of the people working there, and some of the research papers they put out), and more to do with the gap between MS Research and shipping products. I have no idea if its a communication thing, a management thing, or what, but the end result is that a lot of great research work seems to struggle to find its way into products. It seems that's the real difference between MS and Google or Apple in terms of innovation. MS has the ideas, but sometimes I wonder if there's anyone in the "product development" side actually listening.

      --
      Craft Beer Programming T-shirts
    3. Re:And then... by dslauson · · Score: 5, Insightful

      Seriously. I can't stand people who call having a big R&D budget wasteful. There are a lot of things I don't like about Microsoft, but spending money on Research and Development isn't one of them. I'd rather see them spending money there than just lining the pockets of investors.

  3. private equity not long-term by nicolaiplum · · Score: 5, Insightful

    Microsoft's R&D spending might make a private equity investor weep, but private equity investors are around to buy distressed or underperforming companies, make them lucrative, and sell them. They don't care about long-term R&D or having a product pipeline further out than when they cash in their investment by selling the company.
    Of course you could starve and loot Microsoft and make a lot of money, but only if your plan is to dispose of the carcase before it begins to rot.

    --
    "For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled"
  4. Wha? by The+Angry+Mick · · Score: 5, Insightful
    The bloated workforce of more than 60,000 could be slashed, to the point where the huge resulting increase in cash flow would at last permit the company to borrow mega-billions

    Some private equity firm thinks Microsoft, one of the richest companies in the world, would be better off borrowing money?!? I thought capitalism was about maximizing profit. When did things change?

    I guess I really need to brush up on my economics . . .

    --

    I'm not tense. I'm just terribly, terribly, alert.

  5. Is This a Joke? by susano_otter · · Score: 5, Insightful

    How does cutting R&D and the workforce = good business plan?

    And why would Microsoft need to borrow "megabillions" anyway, let alone at the cost of their workforce and R&D?

    --

    Any sufficiently well-organized community is indistinguishable from Government.

  6. Forward Into the Past by ewhac · · Score: 4, Insightful
    Don't you remember? Michael Milken went to prison. Your "junk bonds" and leveraged buy-outs were disasterous for American industry and productivity.

    The 1980's are over, and good riddance. Get over it.

    Schwab

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    Editor, A1-AAA AmeriCaptions
  7. On Surprises by panaceaa · · Score: 5, Insightful

    I wouldn't be surprised if that film actually wins best film.

    Are you a constant victim of practical jokes or something? Do people pop-out from behind corners and scream "AHHH!H#$!" five times a day? Does your girlfriend leave out pregnancy tests in the bathroom with two lines hastily drawn with a Bic pen? I'm guessing so. Dave, for your own sanity, fix your life so that if SoaP wins Best Picture it surprises you!!!

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    my blog