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Fast Money Microsoft


redskin
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I'm embarrassed to admit that I occassionally watch the Fast Money show on CNBC.  I usually finish thinking it was a huge waste of time as there is very little substance discussed.

 

I think it is entertaining how the 'Traders' reacted to Microsofts results.  They are disappointed with the performance of the company and some of them are suggesting letting Ballmer go.

 

I don't have an investment in Microsoft, but look at the numbers under Ballmer....

 

Operating income has increased from $11B in 2001 to $24B in 2010.  Over the same period sales have gone from $25B to $64B.

 

Return on Equity the past 3 years....  '08 52%  '09 38%  '10 43%

 

I don't know what they were expecting out of management.  Doesn't seem justified to change management.

 

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He was short BRK, so that means he lost about 44%

 

Long GS, so he's up about 15%

 

Long L, so he's up about 47%.

 

Big assumption, but if he would've had a 1/3 of the portfolio in each, he's up about 6% while the market is up around 30%.

 

I don't think Warren is the idiot here.  :o

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I'm embarrassed to admit that I occassionally watch the Fast Money show on CNBC.  I usually finish thinking it was a huge waste of time as there is very little substance discussed.

 

I think it is entertaining how the 'Traders' reacted to Microsofts results.  They are disappointed with the performance of the company and some of them are suggesting letting Ballmer go.

 

I don't have an investment in Microsoft, but look at the numbers under Ballmer....

 

Operating income has increased from $11B in 2001 to $24B in 2010.  Over the same period sales have gone from $25B to $64B.

 

Return on Equity the past 3 years....  '08 52%  '09 38%  '10 43%

 

I don't know what they were expecting out of management.  Doesn't seem justified to change management.

 

 

...and the stock has gone nowhere.  I think the criticism of Ballmer is valid.  He basically has done nothing extraordinary considering he took over a monopoly and has had blunder after blunder.  In fact, if Windows 7 hadn't been a success, he would probably be gone.  

 

Microsoft seems to have no business strategy to speak of.  Their non-core products are generally an embarrassment to the company but their obsession on those same embarrassing non-core products was effecting the quality of their core product.  (e.g. putting resources into the Zune while releasing Vista.)  

 

74% of businesses still use an OS that is a decade old (Microsoft XP.)  That's a lot of missed opportunities.  You can only coast on past successes so long.  Now that the mobile computing revolution is upon us, MSFT has one again missed a big opportunity.  People are just frustrated and I am sure shareholders don't like owning a company where half of the equity just sits there earning 1%.

 

You bring up a good point, I see both sides. Also he almost bought Yahoo for a retarded about of money.

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Also he almost bought Yahoo for a retarded about of money.

 

This is an important point to remember, and one that keeps me lukewarm to MSFT generally.  Yes, they look attractively valued, and that $40 billion in cash is nice.  But, you need to be able to do something smart with it over time that produces a worthwhile return.  The last 10+ years don't provide much evidence that MSFT can put that money to good use, and the Yahoo deal is a reminder that they may very well do something incredibly stupid with the money.

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‘I am a better investor because I am a businessman and a better businessman because I am an investor.’ Warren E. Buffett

 

Some Wall Street guys should learn to become "better investors"...and take a cup of humility. Ballmer is not 100% critics-proof, but to call for his resignation is far stretched.

 

Cheers!

 

 

 

 

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Ballmer is not 100% critics-proof, but to call for his resignation is far stretched.

 

Have to agree with this - Ballmer wants good things to happen to Microsoft, there is no question about it. When he took over from BillG, Microsoft was reeling from a disastrous fight with the DoJ and another one with the EU and a third one with the Korean government. It is to Ballmer's credit that he dealt with these in a way that it is no longer consuming headlines, the cost of these fights was tens of billions of dollars in fines, cost (business and opportunity) and then untold restrictions on Microsoft's businesses.

 

The beauty of the Buffett/Munger model is that they have been very ethical in their dealings and have had to spend the least amount of money in lawsuits. Good ethics makes for good business and less trouble.

 

Ballmer hasn't sold his Microsoft shares unlike Gates. He is paid a nominal salary and doesnt take stock grants. That said, the Microsoft hiring, promoting and spending hasn't been prudent in the recent past. Also, their model to sustain new innovations hasn't been stellar - it could have been done a lot more effectively than it has been done.

 

 

 

 

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Another shortcoming at Microsoft is the obscene salary paid to the board members.

 

Microsoft Corp. said Friday that it had increased total annual compensation for its non-employee board members to $200,000, up from approximately $158,000 previously.

The 2006 retainer for members of its board of directors who do not work at Microsoft will include about $80,000 in cash and the rest in stock awards, the company said in a regulatory filing.

 

Another plus of the Buffett/Munger model is the keen understanding of human behavior and the role of incentive in shaping that behavior.

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