Microsoft on Thursday reported first quarter earnings just ahead of Wall Street estimates, though the company's sales and current quarter forecast fell short of expectations.
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Member since:2005-08-12
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The OP was right. MSFT reported about 10.7 billion shares outstanding as of 9/9/2005.
A "share outstanding" is one that is owned by an individual, including restricted stock grants that are not yet vested. This differs from "allocated shares" which are the total number of shares the company is divided up into, some of which may actually be held by the company itself.
When people mention "market capitilization", they are talking the stock price multiplied but the outstanding shares. In this case, about 267 billion US dollars for MSFT as of this morning.
When you figure in inflation, that represents about an average 9% drop in value each year over the past 4 years or so.
I think what the OP was pointing out is that even at that steady rate of decline, it would take 16 years for them to get down to Apple Computer's current market cap, 22 years to reach Gate's personal net-worth, about 50 years to get to RedHat's market cap and about 54 years to reach Novell's.
If Microsoft's sliding into the gutter, it's going to take them a long time to get there at this rate.
Member since:2005-07-09
> If Microsoft's sliding into the gutter, it's going to
> take them a long time to get there at this rate.
Yes and no. The thing is, Microsoft's current profit depends on it's monopoly. While Microsoft has a monopoly, you'd dead on, but things look very different when they are no longer a monopoly. Suppose ODF removes the need for MS Office and Linux or MacOSX or WINE runs all apps that Windows runs, so Windows becomes irrelevant. If this happens, Microsoft would lose it's monopoly status and it's cash cow. That would put a significant dent in their profit. And if can't rely on milking their cash cow, they'll have to compete like every other company and significantly increase their expenses. These two fact would have a dramatic effect on their capitalization.
Member since:2005-07-06
There other product lines are either just starting to make some money or working there way to proffitability. So, I think by the time any of that would happen, it will be offset by their other divisions actually pulling their own weight.
Also, Microsoft has enough cash to last an entire year with absolutely no revenue (something BG has had in place for a couple of years).
Member since:2005-07-06
There other product lines are either just starting to make some money or working there way to proffitability. So, I think by the time any of that would happen, it will be offset by their other divisions actually pulling their own weight.
Also, Microsoft has enough cash to last an entire year with absolutely no revenue (something BG has had in place for a couple of years).
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Repost because, apparently, this was something that should be modded down to someone? Grow up.
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Disclaimer: its been a while since I have been in the financial industry.
Shares Outstanding = shares in the open market
Treasury stock = the stock that the company has bought back from the market. This might also include shares not sold to the market.
I would give a better answer; but I would have to dig through GAAP (Generally Accepted Accounting Principles).
Anyone else care to shed some light?
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Yes they will, if microsoft think Office12 and Vista will make it up then I think there in for a shock. As Linux gains ground and other competition, the next 2 years are going to be hard for Microsoft which they even admit themselfs.
I hope Linux pushes Microsoft to make better products, which can only be good. I would like to see them lose a big chunk of earnings to give them a shock or scare, which they needs badly. Microsoft are getting up tight as you can see from the Vista release and no new products in the market for way to long. It's tipical to see them put spin on less then expected earnings.
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2005-10-19
Not only is MSFT not in finanacial trouble the longterm outlook is very solid.
They are approaching a new release cycle with a lot of updated products coming to market, they are repurchasing 60 billion dollars of their own outstanding shares in a multi-year arrangement, and they have invested heavily in a very diverse group of outside the industry corporations.
Anyone proclaiming gloom and doom for MSFT is doing so purely based on statements full of IF this, and SUPPOSE that. Most of which are complete fantasy.
Having 30+ billion dollars in cash on hand isn't a bad thing either.
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Their stated stock buyback plan is $30B USD over 4 years and they have $42B USD "in the bank". I agree that they are not in "financial danger," but they are certainly not "solid" either. As of this week, they have three profitable products/services: the Windows operating system, Microsoft Office, and SQL Server.
The Windows operating system is currently bouyed by a recent upswing in PC sales for which they've received OEM sales. Retail sales have dropped considerably and OEM sales overseas are dropping too. Windows server sales are also slowing. The best case scenario is that everyone is waiting for Vista, the worst case is that Windows is facing actual competition. In either case, the release of Vista will be the true test. If it's not widely adopted, the OS business will be VERY badly hurt. MS is having more problems overseas than here in the US. I would guess that the key is to get widespread adoption in the US, because without it it's very unlikely foreign countries will adopt.
SQL Server is a growing business, but clearly not nearly as profitable as they originally forecasted. Other than tight integration with Windows, it's problem is that it's not a very compelling product when compared to its peers. I expect both Microsoft and Oracle to get hammered in the DB space in the next few years.
Microsoft Office is a pretty solid seller. I don't see it going away any time soon (migations like that in Denmark notwithstanding), particularly if they conceded to provide ODF support. The biggest problem on this front is most people already have Office and MS has already stated that Office 12 will have no new features, only a redesign of the UI to bring existing features that were typically overlooked to the front. I have no idea how that will play out in the market, but I'm guessing Office 12 is not going to be a huge seller, so Office sales will probably slow perceptibly.
All other products and services, right now, are operating at a loss (some intentionally, some not). The new Xbox, for example, is remarkable for its underperforming sales.
I wouldn't put too much weight on Microsoft's corporate acquisitions. Historically, the majority of Microsoft's products and services were developed by third parties and then purchased or licensed, integrated (sometimes piecemeal) with various internal initiatives, and then released. While these have added value to Microsoft, there's nothing novel in the process and no reason to believe that the impact of any recent purchase will be relatively more potent. Moreover, Microsoft has historically underdeveloped many of the technologies they purchase (a good example is PowerPoint, which has seen little evolution over the past decade despite the advancements in hardware and software).
No, I think MS is definitely in a rut. They may not be in fiscal trouble, but they are just as certainly not a very good investment right now. They are like a pharamceutical company with a dry pipeline: fingers in everything, looking to buy some innovation, but without anything on the table that would point to a rosy future.
Member since:2005-09-02
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You forgot BizTalk, Exchange, VisualStudio, MSN, VirtualPC, LiveMeeting, MS Games,... in your list of profitable products.
They are like a pharamceutical company with a dry pipeline: fingers in everything, looking to buy some innovation, but without anything on the table that would point to a rosy future.
Actually it's exactly the opposite, Microsoft has a never had so many products on the verge of being released : SQL Server 2005, Whidbey, Office 12, Windows Vista, ...
Member since:2005-10-29
"Actually it's exactly the opposite, Microsoft has a never had so many products on the verge of being released : SQL Server 2005, Whidbey, Office 12, Windows Vista, ..."
I don't think SQL 2005 will be a such a great cash cow, the trend has been just a slight lose in market share over the past 2 years.
The market is still growing fast, so sales may be increasing. But how do you compete with free licensing?
http://news.netcraft.com/archives/2005/10/04/october_2005_web_serve...
And for Office 12, I see no features just skimming over the ms site. All they sre hyping is xml open format and a redesign to make some difficult apps easier to use. But doesn't an open format help remove vender lockin?
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2005-07-06
Notice that the XBox is losing even more money than ever. At some point, isn't something supposed to show a profit? I know all game companies sell the hardware at a loss to boost the popularity of the console, but they do so knowing that the games will (eventually) make it profittable.
XBox has never come close to making a profit, showing that MS is selling at such a loss that no amount of games can cover it. They can do this because they make more than enough money from their Windows business to cover the losses. However, using one profittable part of a company to cover another which is being sold at a loss to drive out competitors is the very definition of illegal monopolistic action.
The question is, would MS still be selling XBox at a loss if they didn't have any competition? Even Sony doesn't do this. Sure, they sell the PS2 at a loss, but they more than cover it in sales of games. Sony doesn't take money from the TV division (for example) to make up for losing money from the PS2. The Playstation (2, 1, and PSP) stand or fail on their own. Ditto for Nintendo.
Member since:2005-07-06
However, using one profittable part of a company to cover another which is being sold at a loss to drive out competitors is the very definition of illegal monopolistic action.
The question is, would MS still be selling XBox at a loss if they didn't have any competition? Even Sony doesn't do this. Sure, they sell the PS2 at a loss, but they more than cover it in sales of games. Sony doesn't take money from the TV division (for example) to make up for losing money from the PS2. The Playstation (2, 1, and PSP) stand or fail on their own. Ditto for Nintendo.
No, that is not the definition of an illegal monopolistic action. They are NOT using any of their other markets to gain leverage in the console market. They are only using MONEY, which in itself is not illegal. Even further, the fact that Xbox is not the best selling console and they are losing money further proves it is not an illegal action.
The Xbox is in no way shape or form forced upon consumers by Microsoft or partners, and you can't even make an argument that it is. You CAN for IE, because it is bundled with Windows, and thus almost assured that consumers will try it.
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"However, using one profittable part of a company to cover another which is being sold at a loss to drive out competitors is the very definition of illegal monopolistic action."
"No, that is not the definition of an illegal monopolistic action."
Right, it is the definition of Dumping. "What level constitutes "unfair" may be objectively defined as a price lower than the price in the manufacturer's own country, or *lower than the actual cost of production.*"
They are indeed using their dominance in OS and Office software to gain entry to another market (that it isn't working especially well is beside the point). A company isn't supposed to use money from another division to enable them to sell something at a cut rate in a way that will drive their competitors out of business.
Sony can use sales from TVs or whatever to keep up, but Nintendo can't*. Sega couldn't. It may be good for consumers now (aside from Dreamcast fans) to have prices kept low, but if MS outlasts everyone thanks to Windows profits, they won't feel the need to keep prices down for long. Economics people, some of you don't really seem to have a clue.
*they are doing fine for now of course, and MS isn't taking over the market but one can be sure they are trying.
Member since:2005-07-06
They aren't using their dominance in OS and Office software directly. Indirectly, kind of.
But if you want to argue using money to enter a new market is illegal, then you HAVE to put Sony under that category. But what they are doing is not illegal, monopoly or not. They are simply using their own money as venture capital.
Face it, you, me and everyone knows that Microsoft can not drive everyone out of the already well-established market, especially Sony.
A company isn't supposed to use money from another division to enable them to sell something at a cut rate in a way that will drive their competitors out of business.
Please find me what law covers that and what the specific language is for the law that defines such.
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XBox has never come close to making a profit, showing that MS is selling at such a loss that no amount of games can cover it.
Why not admit you are totally f'ing clueless right now and save us all the hassle of figuring it out while we read your drooling nonsense, mmm k ?
http://news.com.com/Microsoft+reports+profit+surge/2100-1014_3-5553...
From Jan but the xBox had a profitable quarter.
They can do this because they make more than enough money from their Windows business to cover the losses.
Look at the big brain on JLF65! You are one smart motherf&cker!
however, using one profittable part of a company to cover another which is being sold at a loss to drive out competitors is the very definition of illegal monopolistic action.
Only if it can be proven in a court of law that *consumers* were hurt.
Which from what I can see from the consumer standpoint its freakin' great! 3 major competitors and the hardware is cheap!
The question is, would MS still be selling XBox at a loss if they didn't have any competition?
Would sony or nintendo be selling their units at a low price if MS were not pushing prices down ? Of course not! Consumers would be getting milked hard if there was only one of them in the market. Duh!
Even Sony doesn't do this. Sure, they sell the PS2 at a loss, but they more than cover it in sales of games.
Well they do or they don't. Make up your mind!
Just because MS is largely losing money (1 profitable quarter) on xbox dosen't mean they should up the price of their hardware (althought they'd prob love to do just that but can't due to the 'realities' of the market)
Sony doesn't take money from the TV division (for example) to make up for losing money from the PS2.
Bullsh*t. Where do you think the original Playstation development money came from ? They rolled profit from other divisions into a new division and took a chance.
The same thing MS is doing, only difference is that Sony is seeing good return on investment and MS is still losing money on their 'chance'
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2005-10-29
Their gaming division is in trouble also. BTW, I lol when I read the xbox had it's first, and was that it's only profitable quarter! Sony seems to be doing a tradtionial asian business tactic of hurt yourself if it will destroy your competition. A good short game if you bank account can withstand it. MS seems to try to be outspending evering one hoping to just get established. But I think they will refocus on making the xbox their stepping stone to the center of your home entertainment after lossing more money.
But to the point, Nintendo is doing great bussiness strategy. They aim not to be number one, with allows them not to waste money making the effort. They will set back with second or third place, currently second world wide, and make money on both hardware and software!
Just a quote from my last link to let you know what kind of company sony and ms are dealing with, in case any one did not know.
"Yes, Nintendo posted a first half of fiscal year loss for their current fiscal year. It's old news now.
But, it should be noted that this is the first loss they've ever reported since going public in 1962; 41 years came and went without any financial loss. And Nintendo has existed, in different names, since the late 1890's. That's over 100 years for those not quite up to speed."
http://nintendoinsider.com/site/EEEZuAypVuTuOJPzyb.php
http://www.gamesarefun.com/gamesdb/editorial.php?editorialid=4
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