Slashdot Mirror
Motley Fool Writes Off Microsoft
The Vista disaster has caught Wall Street's attention before but I've never seen the popular press understand the issues like this argument in the Motley Fool. The opposing argument is a weak statement of faith, essentially "as it was in the beginning is now and forever shall be." "You don't need to watch the 'I'm a Mac, I'm a PC' commercials to see that Microsoft is taking a beating. You see it in the company's financials where its online unit, incredibly, is operating at a loss; overheating Xbox 360 consoles find the company taking a huge warranty hit for a system losing market share to the Wii; and the upgrade wave of its flagship operating system has been more of a ripple than a tsunami. That last point is important. This was supposed to be Microsoft's final feast, the major last hurrah for its Windows Vista operating entry and its Office 2007 suite of applications before the inevitable embrace of cheaper open source operating systems and Web-based apps... In fact, even Microsoft will tell you that its fortunes peaked several months ago."
AP
Microsoft Tops Street in 2Q; PC Sales Up
Friday January 25, 9:45 am ET
By Jessica Mintz, AP Technology Writer
Microsoft Beats Street in 2nd Quarter; Vista, Office, Xbox Games Helped
SEATTLE (AP) -- Microsoft Corp. forecast a rosy 2008 -- despite broader economic worries -- after it blew by Wall Street's expectations for a second consecutive quarter.
"We will be impacted just like everybody else," if the U.S. falls into a recession, Chief Financial Officer Chris Liddell said Thursday. "But overall, we feel very optimistic about our second half."
Company officials touted rising sales in each of Microsoft's business divisions, a slate of important upcoming business-software launches and the growing contribution from sales in non-U.S. markets.
Microsoft raised its outlook Thursday for the rest of its fiscal year, which ends in June, matching Wall Street's forecast and sending shares up in after-hours trading.
The software maker's quarterly earnings jumped 79 percent to $4.71 billion, or 50 cents per share, from $2.63 billion, or 26 cents per share in the second quarter a year earlier. Quarterly revenue climbed 31 percent to $16.37 billion from $12.5 billion.
What part of Microsoft's record earnings yesterday did Slashdot seem to overlook? I think the joke is on us.
http://www.news.com/8301-13860_3-9857633-56.html?tag=newsmap
There is a corresponding Bull Argument that argues the Counterpoint - each with its own rebuttal of the other argument.
/.!
So much for Motley Fool writing off Microsoft. Typically - guess which article gets highlighted in
BTW, the XBox portion of MS (the games division) -has- stopped hemorraging cash.
http://games.slashdot.org/article.pl?sid=07/10/26/2052251
http://xbox360.ign.com/articles/847/847658p1.html
Yes, 2 quarters in a row now, it has turned a profit.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
Absolutely common to skip versions.
;)
My company went from 95/98 directly to XP. Even with Office we still have most of the installs at Office 97 or 2000 with only a few Office 2003 copies.
When we upgrade, I expect it will be directly to "Windows 7". And since I'm the IT Director, my expectations will probably prove accurate.
Being a small company, the cost of upgrading is prohibitive, so we squeeze the last bit of usage out of our expenditures.
load "windows7"
I wish people would understand the market and understand VALUATIONS... Microsoft at these higher levels has a PE of 21. Apple at 200 had PE of around 45 or so. A valuation of 45 requires extreme growth each and every quarter with no errors. Apple said themselves that the next quarter will be slower. Thus the market is going to refactor everything.
And after all if you had invest in Apple last year you would have had 117% returns. Apple is overvalued... plain and simple...
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
They have been paying out a lot of dividends over the last few years, and have been putting money into new tech. Depleting their cash reserves is not a sign of weakness, it is a purposeful response to shareholder complaints. A few years back they faced a lot of criticism from shareholders because they had to large of a cash reserve. Why is this a problem? Cash reserves are not making the company (or shareholders) any money. If a company can't find anything to do with their cash reserves that they think will meet their required rate of return on investment (ie: invest in R&D, capital, or other ways to improve the future profitability of the company), they should return that money to shareholders via dividends.
Their current depletion of cash does not suggest that they will be in debt in a few years. Once they have lowered their cash reserves to a level deemed appropriate by their shareholders, they will change their strategy. So to answer your question, yes there is a huge difference in eliminating 40 billion in reserves and taking on 40 billion into debt.