Any Excuse to Run This Clip
Giant hedge fund manager to Microsoft CEO Steve Ballmer: Step down!
“His continued presence is the biggest overhang on Microsoft’s stock,” [David] Einhorn said in reference to Ballmer.
The comments by outspoken Einhorn, who made his name warning about Lehman Brothers’ financial health before the investment bank’s collapse, are the most pointed yet from a high-profile investor against Microsoft’s leadership.
Microsoft shares, which have been static for over a decade, gained 0.87 percent in after-hours trading after Einhorn’s comments, the most of any Dow Jones industrial average component.
Ballmer is a one-trick pony — and it isn’t even his trick. Find an existing market, throw money and talent at it until Version 3.0 is good enough to compete, then dominate the market and leverage for big profits. It’s a brute-force approach, which worked well enough in the Nineties (Windows) and the Naughts (Xbox), but has run out of steam for in the “post-PC” era.
People still want and need their PCs, and Microsoft will keep making tons of money on Windows and Office. But that market will change eventually, and with Ballmer at the top, Microsoft is uniquely unsuited to deal with that eventuality.
Honestly though, Ballmer is less of a dinosaur than he his an ungainly creature.
Say what you like about MS, but at least they’re not a you-no-lookee “Proprietary hell” like Apple.
Mighty annoying, especially since their OS is BSD under the hood.
@mojo,
Well, unfortunately their new Windows Phone OS kindof is. It is locked down pretty much the same as an iPhone – you can’t just hook it up to your pc with a USB cable and put your own apps on it, apps have to come from their app store, and you have to use Zune software to do that (their itunes). You can’t even put your own ringtones on it. I still like the phone though. And hopefully these things will change as time goes on.
How do you go after Microsoft and invest in the New York Mets on (pretty much) the same day?
I suspect Einhorn wants to be the Bill Gates of baseball –or at the very least, the next George Steinbrenner. Hope Wilpon’s ready for some Ballmer-like criticism 1-2 years down the line and the hostile takeover attempt from the minority shareholder (which given the state of the Metropolitans the fans may not object to, though odds are just as good a decade from now Einhorn will be seen as the National League’s version of Peter Angelos. Or Windows Vista).
Nearly 20 years into the Internet Age and MSFT’s main profit centers remain Windows and Office, just like in 1998. Assuming that marketplace never changes (not gonna happen but bear with me) that means MSFT’s revenue stream comes from milking a product line that basically never changes, never grows and never needs to be advertised. It almost sounds like tobacco. Now Altria (the former Philip Morris) has a P/E of 14 today. Similarly, Reynolds is about 17 and Lorillard is 16. MSFT sports a multiple of just under 10. It is lower because, unlike tobacco, it’s marketplace stands to be disrupted very soon.
This company has no growth left in it. The BOD should increase the dividend yield to something like 5-7%.