Comments on: Quarterly weakness for Microsoft

By: Blendah Tom

Blendah Tom — Tue, 30 Jan 2007 02:15:21 +0000

Is it possible that Microsoft has positioned itself to be more vulnerable to Google by creating a product that could essentially create a marketplace where the ordinary user will feel completely overwhelmed and Google's simplistic approach to software be more inviting to them.

We know that Google has been very active in the Linux area and with all of the web based media platforms that are out there it would just stick to keeping it simple i.e Mail/Docs/Spreadsheets/Calendar

By: Jesse Kopelman

Jesse Kopelman — Sat, 27 Jan 2007 01:05:19 +0000

Sramana, that is why Om is suggesting a tracking stock as opposed to an actual spinoff. Still Om, don't you remember what happened all the other times companies tried tracking stocks? That concept has never worked as advertised. I say break the damn thing up. It will ease regulatory pressure and open the door for streamlined operations. Anyone familiar with giant companies knows that the divisions don't cooperate with each other anyway, so what is there to lose?

By: Sramana Mitra

Sramana Mitra — Fri, 26 Jan 2007 22:43:58 +0000

Om,

Why should Microsoft spin-off a high growth area that has been generating most of the positive news, and thus stock momentum for them?

Companies tend to spin off the laggards, not the hot businesses.

Sramana

By: Jud Sprncer

Jud Sprncer — Fri, 26 Jan 2007 15:56:54 +0000

Om,

I used to be in the "spinoff" parts of the company camp. I just don't see how exactly Microosoft and its customers would benefit from that though.

Shareholders might by removing the (rapidly dropping) loss from the ongoing reports. However, Microsoft said that profitability for the XBox starts in July.

By: Om Malik

Om Malik — Fri, 26 Jan 2007 03:29:54 +0000

Louis,

You make excellent points, and your question about Google is a very valid one. I think they might have a few years left in them, especially if you follow the growth curves of the top three or four companies that have a quasi-monopoly status - eBay, Microsoft, Cisco come to mind.

I think Microsoft should create a tracking stock for their devices division, which I think is the one that has the potential of mimicking a growth stock. (PS2 sales trajectory for XBox, Zune type devices etc.) And when time is right, spin it off.

By: Louis Gray

Louis Gray — Fri, 26 Jan 2007 03:15:50 +0000

Microsoft stock has not been a growth engine for more than a decade now - and the company can't expect to be a high-growth enterprise in the way it once was, given its products' massive penetration in all markets.

That leads to two thoughts:

1) Should Wall Street expect companies as large as Microsoft to continue their growth rate through product diversification, or should they stay smaller and accept a reduced top line number, in order to focus on core markets?

2) How soon until we see Google's meteoric rise start to skid? You can only grow so fast for so long, no matter how many acquisitions you have and product launches you roll out…