12.15.08

Gemini version available ♊︎

Microsoft Under the Scalpel

Posted in Finance, Microsoft at 4:43 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

AN interesting new headline has entered Google News. It states: “Why Microsoft Is Headed to $4.” While it seems like an exaggeration, depending on what time range one considers, it does raise some valid points.

A while back, when Microsoft shares were trading in the mid-$20s, we used charts to predict they would eventually fall to $4 or lower. How could such a thing happen to a company with a product that dominates the software world, and with cash reserves totaling more than $20 billion? For starters, consider that Microsoft used to have twice that sum on hand but squandered a big chunk of it on investments that would make the guys at Bear Stearns look like visionaries. Also, they have not exactly enticed new customers in droves with the clunky Vista operating system. While the Redmond behemoth may have been able to ram this product down the throats of captive business and institutional customers, much as they have been doing for years with each new, gratuitously enhanced version of Windows, individual buyers have deserted the platform en masse. Just look around you the next time you’re at Starbucks: probably half of the computers one sees these days outside of the office and commercial airliners are Macs. The percentage is even higher at college libraries. These are tomorrow’s business users, and most of them wouldn’t use a PC if it were given to them free.

[...]

But the stake through Microsoft’s cold, monopolistic heart may be the new product announced last week by IBM –an office suite that runs on cheap :thin clients” connected to a backroom Linux server. IBM says customers will save $500-$800 compared to what they would spend to license Microsoft’s office suite, which includes the ever popular Excel, PowerPoint and Word. The savings would come not just from the software, but from, reduced costs for hardware, electricity and air conditioning.

Microsoft’s stock is already shaken and a formal warning from Microsoft seems likely following at least one warning from analysts. This was covered by quite a few Microsoft watchers:

Todd Bishop: More questions over Microsoft profits

Microsoft shares are currently down about 6 percent on the day, to $19.38.

What would a Microsoft earnings warning look like? For a clue, you have to go all the way back to December 2000, in the middle of the dot-com bust, which appears to be last time the company issued such a warning. It came out around the middle of the month, on Dec. 14, so if the past practice is any indication, any new warning could be a few days away.

Mary Jo Foley: Microsoft walks the downturn-messaging tightrope

Is Microsoft poised to join other tech vendors in announcing dismal second quarter earnings or is the company going to yet again manage to meet or beat its traditionally conservative guidance (this time against seemingly impossible odds)?

Joe Wilcox: What Happens if Microsoft Warns?

Microsoft issued a dire profit warning at the start of the last recession, in December 2000. Will the 2008 recession lead to another warning?

Eric Savitz: Microsoft: Waiting For The Warning

Morgan Stanley’s Adam Holt this morning notes that the company has not negatively pre-announced earnings since December 2000. But given that business conditions have deteriorated since the company last provided guidance in October, he thinks the company could come up short of its targets for the quarter, whether or not they give the Street advance warning.

In addition to this, IDG has an article about something it calls “Microsoft’s identity crisis,” which is characterised by odd steps they have recently been taking.

The Softwear t-shirts seem like another directionless Microsoft move, much like the short-lived Bill Gates/Jerry Seinfeld ad campaign, which by the way, was voted the No. 1 bad commercial while Apple’s “I’m a Mac, I’m a PC” ads were voted the No. 1 good commercial in Anderson Analytics’ 2008 survey of 1,000 college students.

Microsoft layoffs have already begun [1, 2, 3, 4] and the following erroneous report [via Google News] says “EXCLUSIVE: Microsoft To Lay Off 1,500 In California; 200 In L.A.” It’s not true, not just yet anyway. But what if Microsoft issues a warning?

Financial crisis

Share in other sites/networks: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Reddit
  • email

Decor ᶃ Gemini Space

Below is a Web proxy. We recommend getting a Gemini client/browser.

Black/white/grey bullet button This post is also available in Gemini over at this address (requires a Gemini client/browser to open).

Decor ✐ Cross-references

Black/white/grey bullet button Pages that cross-reference this one, if any exist, are listed below or will be listed below over time.

Decor ▢ Respond and Discuss

Black/white/grey bullet button If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

A Single Comment

  1. amd-linux said,

    December 15, 2008 at 7:48 am

    Gravatar

    MS is currently trying to defend the Linux market entrance in the netbook segment and they are somewhat successful, unfortunately for their shareholders:

    They close marketing agreements that the producer gets a per-device marketing subsidiary for every device sold that contains Windows. They also have to obligate themselfes not to sell comparable devices without Windows but only devices with limited capabilities.

    They maybe charge roughly 30 USD / copy for Windows XP per pre-installed device. They maybe pay, on the other side, 25 USD for every Windows machine sold.

    The manufacturer pays de facto only 5 USD per device, close to the costs for an customized Linux.

    MS can show the world that their revenue still is high and growing with netbooks. However, their marketing costs, that basically set the license income off, will sooner or later bite them hard.

    Since marketing costs and license revenue might be deferred, you can not compare this on a quarter-by-quarter comparision, the subsidies are not easy to detect.

    I am going so far to say that in some cases (Asus?), subsidies for marketing might be even higher than Window license costs, so MS might already be PAYING per license just to defend the netbook market segment.

    They might be able to hide the costs for a while but sooner or later, this will really hurt. Not even MS can fight off FOSS with subsidies – their treasure chest is not an unlimited ressource….

DecorWhat Else is New


  1. Links 19/10/2021: Karanbir Singh Leaves CentOS Board, GPL Violations at Vizio

    Links for the day



  2. [Meme] Giving the Knee

    The 'knee' champion Kratochvìl and 'kneel' champion Erlingsdóttir are simply crushing the law; they’re ignoring the trouble of EPO staff and abuses of the Office, facilitated by the Council itself (i.e. facilitated by themselves)



  3. Josef Kratochvìl Rewarded Again for Covering Up EPO Corruption and the EPO Bribes the Press for Lies Whilst Also Lying About Its Colossal Privacy Violations

    Corrupt officials and officials who actively enable the crimes still control the Office and also the body which was supposed to oversee it; it's pretty evident and clear judging by this week's press statements at the EPO's official Web site



  4. [Meme] Sorry, Wrong Country (Or: Slovenia isn't Great Britain)

    Team UPC is trying to go ahead with a total hoax which a high-level European court would certainly put an end to (if or when a referral is initiated)



  5. How Denmark, Iceland, Finland, Norway and Sweden Voted on Patently Unlawful Regulations at the EPO

    We look back and examine what happened 8 years ago when oppressed staff was subjected to unlawful new “regulations” (long enjoyed by António Campinos, the current EPO autocrat)



  6. The EPO’s Overseer/Overseen Collusion — Part XVII: The Non-Monolithic Nordic Bloc

    We start our investigation of how countries in northern Europe ended up voting on the unlawful “Strike Regulations” at the EPO and why



  7. Proof That Windows “11” is a Hoax

    Guest post by Ryan, reprinted with permission



  8. Firefox Becomes as Morally Reprehensible as Apple, Facebook, or Uber

    Guest post by Ryan, reprinted with permission



  9. Links 19/10/2021: GNU dbm 1.22 and Godot 3.4 RC 1

    Links for the day



  10. [Meme] [Teaser] GitHub an Expensive and Dangerous Trap (Also: Misogyny Hub)

    The ongoing Microsoft GitHub exposé will give people compelling reasons to avoid GitHub, which is basically just a subsidised (at a loss) trap



  11. Norway Should Have Voted Against Benoît Battistelli's Illegal (Anti-)'Strike Regulations' at the European Patent Office

    Benoît Battistelli‘s EPO faced no real and potent opposition from Norwegian delegates, who chose to abstain from the vote on the notorious and illegal so-called ‘Strike Regulations’ (they’re just an attack on strikes, an assault on basic rights of labourers)



  12. Links 19/10/2021: Sequoia PGP LGPL 2.0+, Open RAN Adoption

    Links for the day



  13. [Meme] [Teaser] Benoît Battistelli, King of Iceland

    Later today we shall see how the current deputy of the head of the EPO‘s overseeing body was in fact likely rewarded for her complicity in Benoît Battistelli‘s abuses against EPO staff, including staff from Iceland



  14. IRC Proceedings: Monday, October 18, 2021

    IRC logs for Monday, October 18, 2021



  15. Links 19/10/2021: MyGNUHealth 1.0.5 and Ubuntu 22.04 Now Developed

    Links for the day



  16. [Meme] [Teaser] Thrown Under the Bus

    Tomorrow we shall look at Danish enablers of unlawful EPO regulations, Jesper Kongstad and Anne Rejnhold Jørgensen



  17. The World Needs to Know What Many Austrians Already Know About Rude Liar, the Notorious 'Double-Dipper'

    Today we publish many translations (from German) about the Austrian double-dipper, who already became the subject of unfavourable press coverage in his home country; he’s partly responsible for crushing fundamental rights at the EPO under Benoît Battistelli‘s regime



  18. The EPO’s Overseer/Overseen Collusion — Part XVI: The Demise of the Austrian Double-Dipper

    Friedrich ‘Rude Liar’ Rödler is notorious in the eyes of EPO staff, whom he was slandering and scandalising for ages while he himself was the real scandal



  19. Links 18/10/2021: Porteus Kiosk 5.3 and Ventoy 1.0.55

    Links for the day



  20. [Meme] [Teaser] More to Life Than Patents

    Greedy sociopaths oughtn’t be put in charge of patent offices; this is what’s dooming the EPO in recent years (all they think about is money



  21. Microsoft GitHub Exposé — Part II — The Campaign Against GPL Compliance and War on Copyleft Enforcement

    Microsoft contemplated buying GitHub 7.5 years ago; the goal wasn’t to actually support “Open Source” but to crush it from the inside and that’s what Microsoft has been doing over the past 2.5 years (we have some details from the inside)



  22. Links 18/10/2021: Linux 5.15 RC6 and 7 New Stable Kernels

    Links for the day



  23. [Meme] The Austrian School of Friedrich Rude Liar

    With reference to the Austrian School, let’s consider the fact that Friedrich Rude Liar might in fact be standing to personally gain by plundering the EPO‘s staff by demonising them while helping Benoît Battistelli crush them



  24. IRC Proceedings: Sunday, October 17, 2021

    IRC logs for Sunday, October 17, 2021



  25. How (Simple Technical Steps) to Convince Yourself That DuckDuckGo is Just Spyware Connected to Microsoft, Falsely Advertised as 'Privacy'

    In recent days we published or republished some bits and pieces about what DuckDuckGo really is; the above reader dropped by to enlighten us and demonstrate just how easy it is to see what DuckDuckGo does even at the client side (with JavaScript); more people need to confront DuckDuckGo over this and warn colleagues/friends/family (there’s more here)



  26. Austria's Right-Wing Politicians Displaying Their Arrogance to EPO Examiners

    The EPO‘s current regime seems to be serving a money-hungry lobby of corrupt officials and pathological liars; tonight we focus on Austria



  27. [Meme] Friedrich Rödler's Increasingly Incomprehensible Debt Quagmire, Years Before EPO Money Was Trafficked Into the Stock Market

    As it turns out, numerous members of the Administrative Council of the EPO are abundantly corrupt and greedy; They falsely claim or selfishly pretend there’s a financial crisis and then moan about a "gap" that does not exist (unless one counts the illegal gambling, notably EPOTIF, which they approved), in turn recruiting or resorting to scabs that help improve ‘profit margins’



  28. The EPO’s Overseer/Overseen Collusion — Part XV: Et Tu Felix Austria…

    Prior to the Benoît Battistelli and António Campinos regime the EPO‘s hard-working staff was slandered by a corrupt Austrian official, Mr. Rödler



  29. Links 17/10/2021: Blender 2.93.5, Microsoft Bailouts

    Links for the day



  30. Links 17/10/2021: GhostBSD 21.10.16 and Mattermost 6.0

    Links for the day


RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

Recent Posts