MSFT posts first loss ever

[JohnnyCanuck]

Not sure why anyone's calling for Ballmer's head, especially from a shareholder value perspective. Three years ago, the stock was trading at $23/share and yesterday it closed at $30.11. That's an annualized return of 9.4% ... pretty damn good return on investment in the current equity market environment.

On top of that, MSFT pays a reasonable dividend (which has increased in every one of those three years).

While the stock may not have enjoyed the spectacular growth of Google or Apple, it has performed very well for a mature stock and has provided an income level to shareholders through dividends that is superior to both Apple and Google.

As an MFST shareholder, I am actually reasonably satisfied with the performance of Mr. Ballmer and the current Board. I chose the three year period because I invested in 2009.

[NeilN]

Ballmer became CEO on January 2000. In January 2001 the stock price was $21 (this is after the 2000 crash so I'm making the numbers more favourable to Ballmer). This gives an annualized return of 3.1%, horrible for a company who has a virtual monopoly of the business desktop.

As a Microsoft shareholder for the last 20 years, I think Ballmer and his monkey boy routine should have been turfed a long time ago.

[99semaj]

Originally Posted by JohnnyCanuck

I think you're dead wrong when you say they have failed to leverage the Xbox 360. In fact, compared to Google and Apple (they other players in the ecosystem integration battle), no one owns the living room like Microsoft and no one is positioned better with respect to that integrated market than Microsoft.

Xbox 360 You draw the conclusion that 360's a failure because the hardware may have generated a loss. Colin's point is more important, a number of those MS ventures protect their core products. Beyond that, I would go a step further and say that Microsoft has well positioned themselves to be the only fully integrated platform of any consequence and that will eventually erode Apple's advantage in other market segments.

I respect your opinion, but frankly I just don't see it. How is MSFT owning the living room? I agree they should be well-positioned but ten years on I just don't see it paying off. Does their profit exceed AppleTV, or even Google TV?

As for me drawing a conclusion, I'm not just considering the hardware loss, I'm considering the balance sheet inclusive of licensing, XBox live revenue, et al.

Three or more quarters of losses and I'd be watching for the listing of the ship, but at this point I don't see much of a story here. Having said that, I agree with everyone calling for Ballmer to get out.

Whoa, nobody said anything about a sinking ship...MSFT is in no danger of failure, and will rule the desktop until the end of the PC era. My comments are solely limited to the poor management of segments outside OS/Office.

In hindsight, I really wished I had more accurately named the thread...perhaps a kind moderator could change it to "MSFT non-core writedowns sapping profits"

[Zod]

I have no facts to back it up but I think there are a lot more 360's in living rooms than AppleTV's or GoogleTV's. I don't know how many 360's are used for video rentals or netflix services.

Microsoft could have a rough go with windows 8. It has so much bad press from how it isn't PC friendly. They'll get revenue from OEM's, as they can force it on a new computers, but I think they'll be hurting in upgrade revenue.

It means they're really banking on breaking into mobile devices where the new OS should shine. If the fail to break the Samsung/Apple foothold in that sector, Windows 8 could be a flop.

The books could also be hurt with the new XBOX coming out next year. I think they sell consoles at a loss at the beginning of a console cycle. Right now they profit from every 360 sold. They're could a be blip when the new console comes out.

[ScaryBob]

MSFT is going to have a difficult time going forward. Tablets are predicted to overtake laptops and PCs in sales within the next two years. That market is dominated by Android and iOS, not Windows. Win8 is getting a lot of resistance. It may turn out to be another Vista, but that is to be seen. Metro tablets and phones may make inroads but it will be difficult since many companies now have a BYOD policy instead of bulk corporate purchasing programs. MS has been years late in a number of markets and it has hurt their credibility. (Windows Phone 7 anyone?) I see MSFT as being poised where IBM and DEC were with the introduction the PC. Their mainstay platform (IBM/MVS, DEC/VMS, MSFT/Windows) is losing ground and their lunch is being eaten by competitors with increasingly popular, innovative products. Windows for PCs and MS Office will keep MSFT afloat for a few years yet but they need to produce something (software or hardware) that will be a popular and profitable as the iPhone or iPAD. As long as they keep playing "me too" and purchasing overpriced "synergies", it's a downhill slide.

[JohnnyCanuck]

You seem to all forget Microsoft's massive enterprise advantage. Apple certainly has nothing to challenge Exchange as the enterprise product of choice. Google can leverage Apps to some extent in this market, but privacy and security concerns prevent it from making massive inroads. That enterprise advantage leads to Microsoft operating systems and software dominating the corporate marketplace (despite the falling prospects of PCs in the consumer environment ... they going nowhere in the corporate world).

Microsoft also does have a massive advantage on the integration front. Eventually I see convergence and integration as a big thing and no one is as well positioned as Microsoft (hence the decision to make the Surface themselves).

Lastly, do not count out the ability to Redmond to innovate. Kinect is a hugely innovative product whose potential has barely been explored at this point. Although it hasn't made its way into any kind of mass adoption, the Lync Translator is pretty cool technology. They are doing some amazing stuff, some if it sector specific (medical research), some of it consumer oriented (Kinect). They can, and quite possibly will, hit a home run in the consumer space sometime soon.

[99semaj]

I totally do not count MSFT' ability to innovate...that's the whole point I try to make...they have failed consistently on this for a decade, save for Windows 7. (Though for the record, I am one of the few that actually think they might have it right with Windows 8)

And for the record iOS integrates perfectly with Exchange.


Here's an interesting article aligned with my thought process:

http://m.vanityfair.com/business/201...-steve-ballmer

[ScaryBob]

You seem to all forget Microsoft's massive enterprise advantage.

IBM and DEC had the same at one time. I'm not saying that MSFT will go the same way as DEC. In the long term, it could end up a lot like IBM is now. That is, a major corporate IT player with much smaller consumer presence.

[Spike4881]

Originally Posted by ScaryBob

MSFT is going to have a difficult time going forward. Tablets are predicted to overtake laptops and PCs in sales within the next two years. That market is dominated by Android and iOS, not Windows. Win8 is getting a lot of resistance. It may turn out to be another Vista, but that is to be seen. Metro tablets and phones may make inroads but it will be difficult since many companies now have a BYOD policy instead of bulk corporate purchasing programs. MS has been years late in a number of markets and it has hurt their credibility. (Windows Phone 7 anyone?) I see MSFT as being poised where IBM and DEC were with the introduction the PC. Their mainstay platform (IBM/MVS, DEC/VMS, MSFT/Windows) is losing ground and their lunch is being eaten by competitors with increasingly popular, innovative products. Windows for PCs and MS Office will keep MSFT afloat for a few years yet but they need to produce something (software or hardware) that will be a popular and profitable as the iPhone or iPAD. As long as they keep playing "me too" and purchasing overpriced "synergies", it's a downhill slide.

I think it's a little early to start announcing MSFT's decline and subsequent failure. The cost to upgrade my laptop from 7 to 8 will be 40.00 and by all accounts Win 8 actually has lower requirements than 7 did. I think a tonne of folks will bite on that based upon the cost alone, and the Metro UI is pretty darn impressive (and the Live tiles are pretty innovative). I think their plans are not to buy into the products, but the ecosystem - which is a pretty radical departure from a "me too" company.

[QuickSilver]

Originally Posted by 99semaj

And for the record iOS integrates perfectly with Exchange.

....you still need Exchange so I really don't see your point? Personally in the years I have been doing IT nothing beats exchange for corporate email. Android also integrates with Exchange.....

[ScaryBob]

The cost to upgrade my laptop from 7 to 8 will be 40.00

That's the lowest cost upgrade I've ever see for Windows. It wasn't that low even when MSFT and IBM were battling it out with discounted versions of Windows and OS/2. MSFT will not make much, if any, profit at that price point.

It's obvious the MSFT is perceiving difficulties with Win8 gaining acceptance on the tablet, laptop and desktop. Personally, I would prefer a Win8/Metro tablet. (Android feels like Windows 95 and it's less reliable.) I'm just wondering what the price point will be. If it's close to Android tablet levels, it will be a sale. If it's at iPad levels, I'll pass.

BTW, I'm not predicting MSFT's failure, just a gradual decline if fails to become a market leader instead of a follower.