Microsoft is reportedly spending $41 billion to buy back their own shares. They are also raising their dividend pay out (until 2003 they didn't even pay any dividends). Any one else think this is a bad move on Microsoft's part?
Based on where the technology industry is going, they should be investing the $41 billion in new ideas & products - not buying back stock.
A company that is losing market in search to Google, losing brand mindshare to Apple, should be worried about losing browser/OS share to Google (I'm thinking more Google Apps more than Chrome here), needs new ideas - and I don't mean "Let's put Jerry Seinfeld in our ads" ideas.
Let's be clear: Microsoft current has no problem. Windows & Office continue to bring in money. But I think that there is a coming problem at Microsoft. Unless there is a big secret program that will potentially yield a myriad of revenue generators, I think that Office and Windows are in danger of becoming obsolete. Not today, not tomorrow - but there is a a chink in the armor that has yet to be attacked in a focused manner by a competitor.
If it's true that there is trouble coming Microsoft, then their behavior should be to be taking risks and innovating. Not sitting on their heels and counting the money.
To be fair, Live Mesh is a BHAG - but it's only 1. It's a big platform play that could win or lose - and that's what they need: big plays. But I think that they need more than this one, solo idea.
And if they are taking their cash and giving it back to investors - instead of investing it in ideas and risks and gambles that could generate revenue, I think that's a bad idea. Doing this, suggests that Microsoft has more money than ideas. That's a problem.
Links & Disclaimers
- Reuters News Item: http://www.reuters.com/article/businessNews/idUSN2226843020080922
- Ars Technica graphs US search market share:
http://arstechnica.com/news.ars/post/20080813-18-month-beatdown-google-search-crushing-microsoft-yahoo.html - I don't own any Microsoft stock.
- I have several friends who work there and to them I say "No, this is not usual anti-Microsoft sentiment."
- This move might signal that they believe it is at a low - true. That's a good thing: if they believe it that their stock is going to head upwards, this is a good move. It might be part of a move to bolster in confidence in their stock today's market (they are current sideways [up 3%] for the day and trending down this year so far).
- Related Posts:
- Microsoft brand in younger kids minds - "What is Microsoft known for?": http://jeffreypriebe.blogspot.com/2008/03/guy-kawasaki-interviewing-microsofts.html
- My run down of cloud services (including Live Mesh): http://jeffreypriebe.blogspot.com/2008/05/cloud-computing-comparison-of-current.html
- Further thoughts on Live Mesh: http://jeffreypriebe.blogspot.com/2008/06/microsoft-live-mesh-too-little-too-late.html
