Many investors are scared of Microsoft for a variety of reasons. It is very curious as to why, however. It is a good performer in a business, yet it’s stock shows none of it and portraits a failing company. It should be a definite buy and a huge money maker. Dividends are up, sales are consistently up, profits are up. Why is the stock low and not rising?
Some say that the number one reason is the CEO after Bill Gates left: Steve Ballmer. I tend to agree to an extent. Nothing personal against the guy, but he isn’t a nerd. He’s a salesman (and not a good one at that). New management would go a long way at Microsoft. In a previous news post, I mentioned some of the questionable treatment of the employees. This is a HUGE deal breaker at Microsoft and why people are flocking towards Apple and Google. Employees like to feel needed, wanted and valuable. At a place like Microsoft, they should be and they ARE extremely valuable to the company and to it’s products.
What do you think? Should Steve Ballmer be replaced by a more capable CEO candidate? Should they bring in a technical fellow rather than a salesman? Do you own Microsoft stock and feel let down, or are you holding out on buying the stock due to it’s stagnation? Let us know in the comments. Yes, I am a small stock holder in MSFT, and I am happy to own it, but I’d like to see it perform a bit better. I’m not too horribly disappointed as I haven’t lost any money and have gained some, but it just isn’t aiming too high. It’s more like a cruising Cessna than a jet heading for the clouds.
The reason Microsoft has been so successful stems from the basic nature of its business model, which for years has been relatively simple. Developing software requires large upfront costs for R&D, but after that, each unit sold is almost pure profit. Add in the fact that Microsoft had (or has, depending on who answers) a virtual monopoly on the PC market. This is why Microsoft has risen over 25,000% since its IPO in 1986. The business model worked almost perfectly, making billions for shareholders and Microsoft employees, all while changing the way the world works and plays.
But the stock has flatlined over the last decade, and the days of stellar returns are long gone. Why? It is because Microsoft’s business model is under attack from all sides. The very core of the company, desktop software, is slowly eroding.