09.22.08

Steve Ballmer Admitted Microsoft is Absurdly Overvalued

Posted in Finance, Microsoft, Steve Ballmer at 8:12 am by Dr. Roy Schestowitz

“There is such an overvaluation of technology stocks that it is absurd. I would include our stock in that category. It is bad for the long-term worth of the economy.”

Steve Ballmer

The quote above was extracted from the following new post, which analyses the character of Microsoft’s CEO, at least at a most shallow level.

Yet there would seem to be plenty of reasons to doubt one thing about Steve Ballmer, and that is his sanity.

This is not personal attack (or an egg attack); it’s an innocent observation, which other sites like Gizmodo are making as well. The financial situation of Microsoft was discussed in [1, 2, 3] and also in the IRC channel on Sunday afternoon. Erratic behaviour may be an indication of something in the hiding. Some days ago we wrote some more about it (see the section at the very bottom). Shown below are Microsoft’s buybacks as of August 2008 (courtesy Todd Bishop, who formally quit last week). The stock is being artificially pumped, so there’s only an illusion of sustainability (short term).

Microsoft buybacks

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10 Comments

  1. Needs Sunlight said,

    September 22, 2008 at 10:39 am

    Gravatar

    How much of M$ revenue is due simply to buying and selling its own stock and various stock portfolios?

  2. AlexH said,

    September 22, 2008 at 11:13 am

    Gravatar

    @Needs: probably a large amount but a small proportion, if that makes sense.

    Contrary to what this site says, buying stock isn’t a sign of weakness – see Wikipedia’s article for a basic treatment.

    They certainly will play the market with other stocks, and if well managed that ought to turn a profit. Effectively, they’re just taking control of what the banks would be doing in any event, but it’s not income per se until it’s realised. Based on recent financial statements, they have $13b in short-term investment.

  3. Roy Schestowitz said,

    September 22, 2008 at 11:18 am

    Gravatar

    Don’t ever rely on what Microsoft tells you. The SEC is still asleep at the wheel. it’s only beginning to wake up now.

  4. Roy Schestowitz said,

    September 22, 2008 at 11:19 am

    Gravatar

    I should add:

    Microsoft is said to have engaged in fraud before:

    http://boycottnovell.com/2008/08/31/charles-pancerzewski-vs-fraud/

    Two months ago an ex-Microsoft accountant was sent to prison for fraud.

  5. AlexH said,

    September 22, 2008 at 11:24 am

    Gravatar

    I wouldn’t throw accusations of fraud around quite so easily if I were you.

  6. Roy Schestowitz said,

    September 22, 2008 at 12:01 pm

    Gravatar

    I throw no accusations. I present some facts in the above (about the conviction and the older saga). It’s only natural to be suspicious at the moment, but I make no accusations. All the information is contained in the press that publishes only validated facts. Take the time to read it.

  7. AlexH said,

    September 22, 2008 at 1:00 pm

    Gravatar

    Sorry?!

    The stock is being artificially pumped, so there’s only an illusion of sustainability (short term)

    Pumping stock is illegal. If you’re saying they’re doing it, that’s an accusation of fraud.

    Where are the validated facts?

  8. Roy Schestowitz said,

    September 22, 2008 at 1:05 pm

    Gravatar

    Pump & Dump is illegal. For Microsoft to boost its stock (pump) is perfectly fine.

    http://www.faqs.org/abstracts/News-opinion-and-commentary/Link-to-IBM-helps-pump-up-tech-stock-Microsoft-to-fall-short-of-forecasts.html

    Microsoft is buying back its stock to elevate it,

    http://seattletimes.nwsource.com/html/businesstechnology/2003437957_vista19.html

  9. AlexH said,

    September 22, 2008 at 1:13 pm

    Gravatar

    Actually, any manipulation of the stock price is illegal. Pump and dump obviously doesn’t apply to MS stock.

    Stock buy-backs do elevate the price, and rightly so. You should read the link I posted earlier.

  10. Roy Schestowitz said,

    September 23, 2008 at 11:27 am

    Gravatar

    The emphasis is not just the buybacks though (don’t be easily distracted). It’s the fact that they fund it using a loan (i.e. debt). That’s the whole point of the followup post.

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