Windows 7 - Should Microsoft become multiple mini-Microsofts?

JMH · 10-05-2010

Quote:

Every so often, the debate resurfaces as to whether Microsoft could or should be better off if the company were broken into two or three mini-Microsofts.

This week, thanks to a new Goldman Sachs report which is putting a hurt on Microsoft’s stock price, the issue has come to the fore again. Goldman Sachs has downgraded Microsoft to “neutral” from “buy” and analyst Sarah Friar has proposed a three-pronged plan to “unlock value” in Microsoft shares.

As some others have noted, Friar’s plan includes a couple of … fanciful… ideas, such as “become a cloud leader.” (Boom! You’re now a cloud leader, said the genie!) One of her ideas, however, is not quite so far-fetched. What about “divesting more peripheral assets such as gaming,” Friar suggests.

There have been as many different proposals for splitting up Microsoft as proposers of the concept. Split the company along Windows/Office lines was a favorite of at least one antitrust judge. How about an enterprise/consumer split? What about a consumer/enterprise/services break-up? Or a three-way split between Windows, Office and search?

Just last week, CEO Steve Ballmer named three new presidents. Instead of having a single president running both mobile and gaming, Ballmer opted to name two different presidents to head those units (even though mobile and gaming will continue to report as a single profit-and-loss center when the company details its earnings).

More -
Should Microsoft become multiple mini-Microsofts? | ZDNet

Lemur · 10-05-2010

Thanks for the article, Jan!

wilywombat · 10-06-2010

Is one microsoft not enough to contend with? LOL!!

IownAmoneyPit · 10-06-2010

And since Microsoft owns shares of Apple we could call a subsidiary, "Micro-McApple" TM

Layback Bear · 10-06-2010

If I remember correctly, when they broke up Standard Oil and Ma Bell both companies became wealthier and more powerful.

marsmimar · 10-06-2010

Global economy might improve if Microsoft had to out-source additional customer support to other countries.

jimbo45 · 10-06-2010

Hi there
Actually a "reasonably" stable MS stock price works wonders for all those into "Covered Call" writing -- this essentially means that say you buy 100 MS shares at 25 USD you can write a "Call" at say 26 USD a share for which someone pays you 0.60 cents a share.

Sy you get IMMEDIATELY 60 USD on your 100 shares.

If the price goes up then you'll get "Called'" but you've STILL made 1 USD a share plus your 60 USD.

Getting "called" means the shares have reached your Offer price of 26 USD and you have to sell them at 26 USD a share. I can't emphasize enough however YOU STILL KEEP THE COVERED CALL PREMIUM which is what effectively can turn this into a "Perpetual Motion Money machine". Nothing trick dicky here -- it's a simple contract saying you've offered to sell your 100 share as 26 dollars a share for which someone will pay you 60 cents a share for the option to buy.

(It's like selling a piece of real estate -- You have a Condo say worth 300,000 USD -- you offer someone the right to buy it say within 6 months at 310,000 USD for which you will get paid say 15,000 USD.
You keep the 15,000 USD whether or not the person who you have sold the option to actually takes up your offer. The real estate value might have bombed so he won't want it.

At the expiry of the contract it's all square again BUT YOU KEEP the premium).

This sort of trading isn't too well known about -- it's basically dealing in "Derivatives" - since you are trading not in the actual stock itself but options on it.

These contracts last for 1 month and you KEEP the premium whether or not you "get called".

If you DON'T get called you write ANOTHER covered call for the following month --another 60 USD in your Bank account.

Even if you DO "get called" you still keep the 60 USD. Just buy another 100 shares again and write a new Call -- might be this time the premium is 70 cents a share.

(In reverse it's called Writing Puts).

I like MS the way it is. This way even with a STABLE share price you can get per 100 shares FOR DOING NOTHING around 700 - 800 USD a year -- money for "Old rope" -- most fund managers would slice their hands off to get a return of around 2.75% a MONTH.

I know this is a technical forum but we shouldn't divorce ourselves away from the Financial aspects of these organisations totally either.

Anyway for the "Non Geeks" here this is an EASY explanation of what I've been posting about here.

covered calls writing

Enjoy

Cheers
jimbo

wilywombat · 10-06-2010

@Jimbo...just for info..did you know that the expression "money for old rope" comes from a custom in English history when the hangman supplied the rope for hangings. When the deed was done he used to cut up the rope into lengths and sell them off ...hence the expression..!!

jimbo45 · 10-06-2010

Quote: Originally Posted by wilywombat

@Jimbo...just for info..did you know that the expression "money for old rope" comes from a custom in English history when the hangman supplied the rope for hangings. When the deed was done he used to cut up the rope into lengths and sell them off ...hence the expression..!!

Hi there
Great stuff -- always nice to learn something new every day -- hopefully this will be a WINNER in a pub quiz.

Cheers
jimbo

Layback Bear · 10-06-2010

I read jimbo45 several times and still sounds like a Wall Street con job to me. From my understanding it's legal. Isn't that what got Wall Street in all the trouble there in. Then AIG insures them and we just loaned AIG hundreds of billions of dollars to cover there Bass on these tricky deals that they haven't paid us back. I'm confused how about you all?
If history proves it's self out the breaking up of Microsoft will make Microsoft and it's smaller companies richer and stronger. It lowers the chance of Microsoft being sued for being a monopoly. That just might be the reason Microsoft bought Apple stock to keep it afloat, there fore no monopoly.