Slashdot Mirror
Microsoft Accused of Squandering Billions On R&D
Julie188 writes "Even as Microsoft celebrates its 10,000th patent, angry shareholders are starting to speak out against what they say is the squandering of billions of dollars on pointless R&D projects. The 10,000th patent covers a technology that allows a device to associate data with objects placed on its surface, and is likely eventually to become part of the Surface table PC. But shareholders are fed up with the $8 billion annually spent. Said one, 'I believe Bill Gates is a charlatan because what he has said, implied, promised to shareholders and stakeholders and all of these visionary things that he mumbles and jumbles about and doesn't make reality of. MS is spending billions of dollars on R&D. Where is the return on investment?' In contrast, Apple had almost the same revenue gains as Microsoft while spending one-tenth as much."
Bell Labs, Xerox PARC, IBM's various research labs, 3M's research and others have all generated wonderful new things from their basic research. Google is just one company that encourages employees to spend a portion of their work time on personal research projects.
And now as we bemoan the "next-quarter" mentality of corporate officers and the decimation of basic research, along comes this bunch.
If corporations can't do basic research for fear of being sued, we might as well just pack up our remaining industry and ship it overseas right now.
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"You are not remembered for doing what is expected of you." - Atul Chitnis
I wouldn't say their R&D budget goes into patents and lawyers. In the actual academic world, Microsoft Research is a very common institution to see on papers. They employ a lot of smart people who are coming up with a lot of good and useful ideas.
But there does seem to be a disconnect. Very little seems to crossover from their research people to the development teams.
In agreement is shareholder Mike McDonald. McDonald owns 118,000 shares of Microsoft, bought in 2000 at an average price of $36 share (adjusted for splits and dividend payouts).
118K shares huh? Well, that's certainly a lot of money to me and probably most people reading this, but considering the fact that 8.89BILLION shares are outstanding, Bill Gates owns ~766MM, institutions (which are generally very passive owners) own over a billion shares, and mutual funds (mostly owned indirectly by you and me through 401k plans - also very passive owners) own a substantial amount, I'm thinking MS is not too worried about this.
Personally, I'm a little more concerned with the bank stocks I own (a small pittance of, also through my 401k) and what they're doing. If there's a fight to be picked on Wall Street these days, it's with the management at banks which is currently raping us for our money, not with a company that is unsuccessfully trying to conduct R&D.
If you dislike where MS is going so much, don't be an idiot and complain that they should stop their R&D... just sell your stock! If I've got a problem with the banks insisting on hundreds of billions of dollars AND billions in bonuses, THAT'S a problem worth complaining about.
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
Back in the late 1990s and earlier Microsoft's business plan was much simpler: "Windows Everywhere" was the motto and battle cry. Once the stock peaked and Windows had long hit saturation in the big computer markets things became more complicated. That was right around Gates handed things over to Ballmer.
However, that doesn't excuse Ballmer for the massive failure of leadership and execution during his tenure.
The 8+ billion dollar Xbox fiasco.
The mind bogglingly poor execution of the search team
The total flop of the Zune
The equally mind bogglingly poor result of MSN/online
People have described Ballmer having created a "Culture of Failure" at Microsoft. A culture that embraces throwing billions of dollars at a bad project of idea over a million dollars at an equally bad project or idea.
Ballmer seems to have a business plan that is simply nothing more than to "Kick Ass".
The hit to the Windows profits have been a wake up call to everyone at Microsoft. The days of feeling like Windows and Office would be an never ending flow of cash to throw at anything and everything are over.
The cuts we've seen so far are nothing. Ballmer is still of the mindset of trying to cut as little as possible to appease the Street. Until he is gone Microsoft will continue to flounder and slide sideways to lower.
Loser products like the Zune hardware are on the way out. The Xbox fiasco is most likely next to get the axe. Search and the online services messes need to be given a short timeline to get their act together or be axed.
Microsoft has really got their shit together with the security and stability of Windows. A Microsoft with a visionary and competent leader could be a giant nightmare for Linux and Apple.
So.... at the next shareholder meeting get rid of the guy!
Members of the board of directors are directly appointed to their positions (including the chair!) by the shareholders themselves. So in this case, the shareholders have nobody to complain about but themselves.
They could refer to the company charter, which often has a phrase where the primary objective of the company is "to maximize profits and increase shareholder value". If that is the case for Microsoft (I have no reason to not think so here), the directors are violating a primary tenant of their charter if they spend money frivolously. From this it would be the basis of a lawsuit by violating the basic charter of the company and its legal right to exist.
BTW, corporate charters don't have to have this clause in their charter, nor is it really necessary with even a for-profit and publicly traded company to be so focused on profits. The problem is that this is so typical that many investors won't put money into a company unless this is explicitly in the charter. Ben and Jerry's Ice Cream is one of the companies I know of that is publicly traded but does not have this in the corporate charter.... but companies like this are an exception.