Ballmer: Microsoft Is In The Zone

I wouldn’t say Microsoft’s share value is stagnant. The company’s worth over $200B according to demand for the public to own part of the company, and that’s a lot of money. They’re priced about ten times their earnings which isn’t horrible, though kind of low for a tech company that’s both earning and paying dividends. In contrast, Apple doesn’t pay dividends and they’re valued 60% higher than Microsoft (not in terms of the value of the company but the market cap divided by its earnings), Google 90% higher. Which means the investing and trading public doesn’t see eye to eye with you on how much to expect from Microsoft in terms of coming up with new ways to make more money (same with AT&T) whereas they do with these other companies. If they didn’t earn consistently or pay dividends, it would be much cheaper (stagnant), as people buy it because it’s a safe dividend-generating stock that probably won’t go much lower and might go up a little faster than the S&P 500. Take away the dividends and you’re left with plateaued earnings and … Mango.

What’s stagnant here is not the cheapness of the stock but its failure to go anywhere but sideways for a long-ass time, since Ballmer took over I think. A great big ball of talent over there and they cannot figure out how to convince the public that they’re going to come up with new ways to make more money than they already have been making. Maybe people figure that everybody who needs an Exchange server and 50 Office licenses has them and that the revenue they get from suing/licensing with their bullshit Android patents, which from what I’ve read is five times larger than their Windows Phone revenue, won’t be too significant.

So, Microsoft could either try to psych up investors, or just make more money somehow and force its stock to climb because it’s already so cheap at their earnings even given that they’ve become such a boring company (Mango and the fruity tiles notwithstanding). If you think this Windows Phone stuff might be the answer, or Windows 8 tablets and IE10, explain to me why it’s extremely difficult to find mentions of WP in any of Microsoft’s investor relations documents and SEC filings. If it’s such an obvious win like you people think, why … whatever.

Thanks for reminding us what the XBox, Skype and Bing logos look like. Terrific stuff.

Just gonna look up some random companies to see who has a higher P/E than Microsoft (again, think of it as a metric of how much more money will make than they already do sooner or later), and I’ll bang in companies that I’d expect to rank lower than a company like Microsoft who just made a super awesome and daring deal with Nokia and has a 4.7″ HTC phone on the way.

Exxon — more psyched.
Yahoo — more psyched. I thought that was a disaster stock situation, but they’re valued higher.
Allstate (they sell insurance) — more psyched.
Okay, well how about people who make tractors and stuff…
John Deere — more psyched.
Caterpillar — almost twice as psyched.
IBM — more psyched. International Business Machines is more attractive to investors than Microsoft.
GE — more psyched.

Honestly I’m trying to come up with companies that are kind of boring here. I’ll try a little more.

How about a cigarette company, everyone’s quitting smoking (I’m clean since September, no more smoking in Central Park..)
Philip Morris — 60% more psyched. Damn! Oh wait, this is probably a winner..
RIM — less psyched. Phew, we found one. RIMM, now that’s a stagnant situation, unless you’re a bargain hunter. If you can find a cheaper company than RIM without googling for lists of the cheapest stocks (in terms of P/E), well whatever, tl;dr.

I don’t know exactly how they did it, I don’t follow them too closely (though what I do read about them I don’t get from a Ballmer rant transcript). A lot of it I suspect has to do with having the perfect CEO, ever-seemingly-imminent death notwithstanding. There’s been a market for a one-size-fits-all crowd with a little more dough and a thing for brands over cost effectiveness, Apple grabbed it. You can count on companies like Apple and Google, but not Microsoft, to just keep working very hard on many things to bang their gong, to generate excitement both with consumers and with investors. And you’re telling me that if Apple didn’t exist but one day someone managed to design the iPod and started selling it on eBay in bulk he’d be worth more than Microsoft. Cut divisions that weren’t producing? Something wrong with that? Google does it too. Microsoft doesn’t? Maybe that’s because they’re just not coming up with and executing enough new ventures?

Do you happen to know what sort of profit Microsoft is making in connection to its Android shakedowns? A lot of lawyers to pay, and you have no idea what they’re making — just more than they are from Windows Phone which is just a sad thing if you think about it. If you think about it and don’t admit that it’s a sad thing because of all of that R&D that went into those patents, read the fucking patents, then you’ll pick up the humor/sadness. Microsoft may show everyone how it’s done as you say, but you forget that both Google and Apple aren’t on vacation. Their stuff gets better too. You’ll have trouble believing me but they managed to hire some smart people, software developers, suits, top to bottom, that just may not have some sort of cognitive deficit when it comes to programming new phone stuff. Microsoft may not have some treasure trove of talent these other companies lack. All of them are hard at work, though Microsoft gave itself both the advantage and disadvantage of waiting around forever to see what the other guys are doing in order to try to hit some magical middle ground.

I never said they’re languishing in a downward trend (a lot is two words by the way), I said they’re going sideways way too damn long and that consumers care a lot less about them than they used to and a whole lot more about Microsoft’s competition in general.

It’s one thing that you actually think Windows 8 tablets will take on the iPad in a way that is marginally significant, it’s another that you think OEMs of what might become the competition one day are taking Windows 8 tablets into account with timing of their releases. That’s absurd. It’s either absurd or I’m way out of the loop. Windows 8 tablets is yet another thing consumers do not and will not give a shit about. You, yes; them, not so much.

What Android-only play by Motorola? I don’t know, can’t say I care either about Motorola. I don’t like the locked bootloaders, don’t like the order of the buttons, don’t like that HSUPA thing, and I have Samsung and HTC to like. Even though you’re raising Motorola now, I’m not even googling for this shit because part of the perks of Android is that it is nowhere near as reliant on two or three OEMs to make a single phone as Microsoft is, not to mention does Google and the people involved need to kiss carrier ass so sweetly as Microsoft does to get a damn phone on the market. Your hardware is becoming kind of dated you know..

And what the fuck is this, twitter with the @Doug Simmons replying? Everywhere I look people think they’re on twitter. I know you’re addressing me, so does anyone else reading, no need for the salutation, or at least drop the at symbol.

And again, a lot is two words. I’m not “spinning” that either, trust me. Two words.

Hey. Asshole.

What in the fuck does the number of outstanding shares have to do with comparing P/Es? The P stands for price of a given share, but here’s where you get tripped up like a fuckstick, the E stands for the company’s annual profit per fucking share. Which if you throw some crazy algebra at it is the same as saying the company’s market cap divided by its annual profit. So splits and the outstanding float and all your bullshit doesn’t matter. One thing you might have criticized was how earnings can be all over the place and therefore price to sales should also be used, but not for the companies I used as examples, settled earners.

Did you mean comparing stock prices instead of market caps? If so, high five and a pat on the ass because you’d be right — if that were what either of us were talking about (or in your case attempting to talk about).

So surrounding this missing of the mark thing on your part, you’re telling me I don’t know what I’m talking about with any of this (in addition to the part where I admit to not knowing exactly what Apple did to pull in their dollars, how it all breaks down, though I get the gist). To me, well, that escalates the situation.

Joe maybe next time before you tell someone they don’t know what they’re talking about and then give them a big lesson chased with some insults and a fruity avatar, maybe only do it if you’re slightly more confident you’re the one who knows what he’s talking about, at least relative to the other guy. Because right here? Not your finest hour.

Was that directed at me? I wasn’t tossing around conjecture with buzz terms about penny stocks here. I was responding to the stagnant stock price remark from the article then it spun off into some sort of spat.

But when talking about how Microsoft is perceived as a company that’s not expected to mimic the excitement seen here in either its performance or the performance of its stock, while I hear you with the yardstick and fundamentals bit, explain to me how pointing at its very relatively low P/E for a the company the likes of Murani portrays it to be sheds as little light on things as if I came here going on about resistance levels and bollinger bands (which I didn’t)? That collective opinion of this 0.01% putting money on it is valuable, perhaps in the case of these threads even made more valuable by the fact that the dollars are detached from Microsoft employees (mostly) and our wild emotions.

While the Redmond crowd won’t head to the Mercedes dealership after work one day because their stock shoots up 200% out of nowhere, raising shareholder wealth is job number one of these companies and the shareholders have obviously a vested interest in making sure whoever’s making decisions and flying to Finland knows what time it is. I never worked for a public company but there’s got to be some pressure, at least toward the top, and to those employees whose options are vested, to do what they can to deliver to a higher value.

That great barometer you offered is probably what’s driving Microsoft to make some sort of two billion dollar deal with phone people, doubling down harder and harder. But my point is that the world, the smart money, not unlike me, isn’t expecting much from Microsoft overall. It’s a cheap stock, it’s not a random obscure company, the market for this stock is relatively efficient, so to take a P/E of ten for a tech stock that’s gone sideways for a decade and to offer that here in this context, I don’t know, it just doesn’t strike me as something I should have refrained from doing. But hey, if you and Joe think that 0.01% that ain’t buying this dog stock (or relatively underwhelming stock I should say) is in for a big surprise of Microsoft mobile success money on top of the money they already make, why not buy a few shares? It won’t go anywhere forever but hey, pays a solid dividend.

Touche on this new chunk of knowledge I wasn’t aware you had.

But if there’s any barometer here offering anything actionable, it’s whatever Thurrott said, which from what I skimmed looked positive.

Sycophantic, pretty big word there Joe. Not sure how it fits into this context but whatever, sounds smart.

There’s no ignore, but if it means a lot to you I’ll try to find something like that. I think I can get you something that will filter out my articles.

I don’t hate Microsoft. Don’t hate Windows Phone either. I don’t recall saying I hate either. I’m not in love with some things about Microsoft’s methods of operation like the patent trolling and the Microsoft Tax, but I imagine I could come up with a few things about Google that rub me the wrong way if I googled for such things enough. In fact I own shares of Microsoft. Maybe what you see as Microsoft hate is actually frustration that they keep flapping around without moving, except they’re not even flapping that hard.

The only damn shame there would be is if both of us failed to video the confrontation and toss it on youtube. In addition to thinking I’m really smart, I think I’m a really good wrestler. Bam, legshot before you can throw a punch, shoulderblades on the sidewalk like a girly man.