Everybody's back to hating Mr. Softie.
But this time the Redmond beast is feeling heat from investors and analysts and not from regulators looking to inhibit the bundling of software or consumers cursing security flaws or the bugginess of Windows.
Yep, now it is investors who are expressing their ire over quarterly financial performance and future guidance which, for the first time, overtly accounts for the piles of cash that must be spent building server farms among other things in order to meet the Google challenge. And such dissatisfaction is coldly evident in the recent price decline of 15% in five trading days since the release.
While negative investor sentiment accelerates, it becomes extremely easy to come up with reasons to avoid if you are not long and to sell if you are. Guidance is punk. Google is swarming. Apple circling. The Vista release has been pushed ever further out into the future -- so on and so forth ad nauseam.
Investors who have held Microsoft for years have little to show for it. And in a way, the long term stock price flat line is strangely symbolic of the complacency that has pervaded the company in many areas save the dogged tenacity it has displayed going after Sony's Playstation. Perhaps, the competition and whiff of desperation is exactly what the beast needs to stir itself and don the ruthless aggression which made it, for a time, the largest company on Earth.
And as the bearish consensus solidifies, fewer will bring themselves to focus on significant positives. For one, the stock is significantly cheaper than it was a week ago(surely you recall the quaint mantra "buy low"). The company is earmarking money for future growth which is a hint of optimism as Gates and Ballmer could simply decide to divvy up another one time pay out -- a move that smacks of the nothing better to do with it rag. It has hired some of the best people recently including Ray Ozzie who has been publically vocal about the changes which must be made. It generates a ton of cash and has the financial wherewithal for the coming the present war of attrition.
There's a great scene in the movie Caddyshack where Al Czervik (Rodney Dangerfield) standing on the golf course says to his broker on the phone, "Everybody's buying? sell sell! Everybody's selling, then buy buy!"
Presently, Microsoft is getting no respect from investors. And as this selling reaches a climax down here in the low 20's, it becomes attractive.
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Reader Comments (Page 1 of 1)
5-04-2006 @ 9:38PM
George said...
I am furious at the reckless and hostile disregard Ballmer and Gates have for the investor. If they want to invest in the future fine, no problem. But they have nearly 50 billion in cash they could be using for this investment. Dip into the cash reserves for R&D etc. But these selfish greedy people are taking money from the present and future bottom line. And totally without any warning. This was devious and vindictive because they knew innocent small investors like me would be left holding the bag. Now I know why the People on the Yahoo chat line hate these guys.
5-04-2006 @ 9:53PM
T. J.Dillon said...
Ballmer and Gates own so much stock that a dividend for stockholders would make their income tax so high its almost unbelievable. And the small dividend that would accru to small stock holders would be of no significance to them.
They just can't afford it.
5-05-2006 @ 6:13AM
Gregor said...
I love the way a both a bullish Barron's Cover Story on MSFT, and a PR campaign in several lifestyle magazines, showing how Bill Gates "works" with "three flat panels" in front of him, immediately precedes the smackdown.
I'm convinced now that Gates is carving out the same path as Howard Hughes. They've got to get him out of there. This is looking like NewsCorp more and more, every day. Too much control by the Founder, and now the behmoth he's created is frozen in the headlights. So the strategy devolves into spending money, and buying other companies.
I tried the new I.E. beta the other day. It was farking huge, slow, and it's attempt at tabbed computing irritating.
I removed it. And immediately went back to my FireFox.
Windows Media Player? What a farce for the User. I've used Real Player for years.
Jeff Matthews has a radical idea: how about MSFT creates software that people actually enjoy, that works?
However, as a trade, MSFT is set up very nicely, especially with the INDU pretty close to the old highs. I'd shoot for 3-4 points off a bottom, then mayb, just maybe, keep 10% of that position for longer term to see if they can get it together.
5-05-2006 @ 12:52PM
ned carroll said...
please,everyone forgets the money they made in the past and blame bill and ballmer.I am not happy about recent stock moves but it is the supposed intellectual minds of these analysts that blows me away that people listen to them.The past posting of earnings were ok off 2cents big deal profits were up 16 per cent.I also would like to see more stock bought back and retired i think thats the way for investors to be happy.I was dissappointed that there was a major sell off due to this analysts but they have no interest in the company this is payback for the many years they looked like fools when msft was the darling of wall st.When i saw the stock falling i sold other holdings and bought more msft. no debt, plenty of cash,how many companies can boast that kind of buisness savvy. So when it goes up and it will lets not hear the same whining personally i am sick of analysts and those people who hate msft. for whatever reason probably jealousy,just shut up!!!
i also am tired of people who bitch at the amount of money the excutives have,they earned the old fashioned way and bill gates is spending his to help humanity so shut up!!!! thank you
5-05-2006 @ 12:52PM
ned carroll said...
please,everyone forgets the money they made in the past and blame bill and ballmer.I am not happy about recent stock moves but it is the supposed intellectual minds of these analysts that blows me away that people listen to them.The past posting of earnings were ok off 2cents big deal profits were up 16 per cent.I also would like to see more stock bought back and retired i think thats the way for investors to be happy.I was dissappointed that there was a major sell off due to this analysts but they have no interest in the company this is payback for the many years they looked like fools when msft was the darling of wall st.When i saw the stock falling i sold other holdings and bought more msft. no debt, plenty of cash,how many companies can boast that kind of buisness savvy. So when it goes up and it will lets not hear the same whining personally i am sick of analysts and those people who hate msft. for whatever reason probably jealousy,just shut up!!!
i also am tired of people who bitch at the amount of money the excutives have,they earned the old fashioned way and bill gates is spending his to help humanity so shut up!!!! thank you
5-05-2006 @ 10:10PM
MERRILL SUHR said...
MSFT HAS BEEN FINED OVER $4BILLION IN THE LAST FEW YEARS THATS ENOUGH TO MAKE EVERY SHAREHOLDER CRINGE BUT THE ICING ON THE CAKE IS THEY ARE SITTING ON 50 BILLION $ AND THEY RAISE THE QUARTERLT DIVIDEND A PENNY IS BILL GATES DOIND STAND UP????