Best of the Week
Most Popular
1.Stock Market Continues Defying Gravity, Dow New All Time High - Nadeem_Walayat
2.America Superpower 2016 - Ian Bremmer
3.The US Dollar and the Precious Metals Complex - Rambus_Chartology
4.UK Immigration Crisis Could Prompt BREXIT, Propelling Britain Out of EU Despite German Factor - Nadeem_Walayat
5.The “Real Flash Crash” Will Scare You to Death - Shah Gilani
6.Gold Price Trend Forecast - Bob_Louka
7.UK Deflation Warning - Bank of England Economic Propaganda to Print and Inflate Debt - Nadeem_Walayat
8.Gold Lifeboat to Global Economies “Titanic Problem” Warn HSBC - GoldCore
9.Will Interest Rates Ever Rise? - BATR
10.Who’s Killing the Stock Market? - Shah Gilani
Last 5 days
Stock Market Choppy Uptrend May Have Topped - 30th May 15
Options Pricing - Covert Gamma, Portfolio Insurance, and STDs - 30th May 15
U.S. Crude Oil Production Sets New Modern Record - 30th May 15
Gold Still Waiting - 30th May 15
Investing’s Great Struggle - 29th May 15
How Rich Countries Get Rich - Freedom, Global Poverty, and the Failure of Foreign Aid - 29th May 15
Goldman Sachs Warns “Too Much Debt” Threatens World Economy - 29th May 15
Skunk Works Engineers Supersonic Profits - 29th May 15
Gold, Silver and US Dollar Strength - 29th May 15
This New Currency Could Wipe Out the Euro - 28th May 15
US Housing Market - Something Smells Fishy - 28th May 15
US Economy – Semi b2b Amps Up its Trend - 28th May 15
U.S. Fed Exported QE Travesty: Meet The BLICS Nations - 28th May 15
World War D—Deflation - Secular Bear Markets Analysis - 28th May 15
George Soros Warns of “Third World War” - 28th May 15
Why You Shouldn't Try to Invest Like Warren Buffett - 28th May 15
Stock Markets Buy and Hold is Back! - 28th May 15
We're Now Frighteningly Vulnerable to a Bond Market Crash - 28th May 15
Austerity, Economics and Religion - 28th May 15
National Holidays London and the Magic of Legoland UK Review - 27th May 15
Imminent Stocks Bear Market Signaled by Dow Theory ... - 27th May 15
Gold Price Has Bottomed – More Evidence - 27th May 15
Three Reasons You Shouldn’t Try to Invest Like Warren Buffett - 27th May 15
Gold Is “100% Guarantee from Legal and Political Risks” States Russian Central Bank - 27th May 15
Don't Drown in the Sea of Global Debt - 27th May 15
Three Reasons Why Carl Icahn Is Wrong About Apple Stock - 27th May 15
Crude Oil Price Stochastic Signals - 26th May 15
Why the Stock Market Will Crash - 26th May 15
GDP, Inflation, Employment Economic Statistics: It’s All a Lie - 26th May 15
Introduction to Peak Food - 26th May 15
Should We Dump the Euro? - 26th May 15
A Geopolitical Net Assessment of Europe - 26th May 15
Stock Market Top in Place? - 26th May 15
Best Cash ISA SBI 2.3% - 2.8 Year Fix, UK Interest Rates 2016 - 26th May 15
China Sets Up Gold Bullion Fund For Central Banks - 25th May 15
Is The Silver Trade Getting Crowded? - 25th May 15
Money Murder Mystery: Who Killed the Stock Market? - 25th May 15
Why Do We Celebrate Rising U.S. House Prices? - 24th May 15
Mario Draghi’s Slippery Downward Slope - 24th May 15
Gold : Truth is Stranger than Fiction - 24th May 15
Facebook Stock Price Forecast - 24th May 15
Make a Killing on the Coming Energy "Debt Bubble" - 24th May 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Biggest Debt Bomb in History

Microsoft: Look at This Chart Before You Decide to Invest

Companies / Microsoft Sep 03, 2013 - 11:54 AM GMT

By: Money_Morning

Companies

Keith Fitz-Gerald writes: Judging from the 7.28% "Ballmer Bounce" that followed his announcement, the markets love the idea of long-suffering Microsoft CEO Steve Ballmer stepping down.

So do a lot of investors who believe now - finally - it's time to buy Microsoft.


But is it?

Can the company bring in a new CEO with vision? Can it finally begin to understand content? And is it willing to jettison employees and products that aren't "worth" what the legacy suggests?

I could write you some long, eloquent essay on the merits of corporate turnarounds.

Instead, I'm going to show you one simple chart...

To me, it's clear: All good brands have their day.

As recently as March 2009, the Redmond-based behemoth enjoyed a 90% market share in connected devices running Microsoft systems.

Today that's shrunk to less than 25%, which leads me to believe that Microsoft has had its day.

Some could argue that's because the number of devices has increased dramatically over the same time frame. But remember, there are going to be 7 billion interconnected devices on the planet by the end of this year and roughly 50 billion by 2020 - seven for every person alive on the planet today.

Apple recognized this early and changed the game with its tablets and its iPhones. Ballmer misjudged their impact and was dismissive. So did Palm, RIM, Dell, Gateway, Wang... and we know where they are today, after watching their share of interactive utilization and connected devices plummet.

Apple stock shot up more than 5,300% since January 2001. And Microsoft...

Well, let's just say that to call it "stagnant" is an insult to truly stagnant stocks. It's returned 24.26% over the same time period - and that only comes after a 23% rally since the top of 2013 alone.

As for the previously mentioned Ballmer Bounce...

The market quickly gave most of it back, dropping 5% over the following three trading sessions. It looks like the Street doesn't believe a new CEO will have any more luck righting the listless Microsoft ship.

My good friend Barry Ritholtz, CEO of Fusion Capital, put it this way during a recent conversation: "Microsoft stopped setting the agenda 18 years ago."

I agree. Windows was its defining moment, and the company has been playing a game of "me too" ever since.

The real question: Can the stock recover now that Ballmer is going out the door? I wouldn't bet on it.

The Numbers Are Going in the Wrong Direction

About all the company has going for it is legacy contracts that keep Windows and Microsoft Office alive - but only if you're a clod like me who simply cannot work with Google Docs and who finds the Appleware not broadly enough used to warrant a shift away from windows. Or a government contractor who's contractually restricted from any logical alternatives.

If you want to talk devices, the story is the same. Droid phones now account for 79% of worldwide shipments, which is a 14.49% increase in just 12 months. Microsoft is a puny 4% of the market, and Blackberry - remember them? - is a mere 3%. Even Apple is losing share, so I wouldn't bet on a Cupertino comeback either, while we're on the topic.

Still, diehard fans insist that Microsoft can recover.

I don't see how.

The company has to make up ground in just about every category I can think of - smart devices, tablets, desktop computing, cloud computing, form hardware... even office productivity, where substitutes are supplanting the spinning blue Windows "wheel of death" we used to see when a Microsoft-based system crashes.

This is not the 1990s, and consumers are not discovering technology for the first time. Today they're cautious, cynical, and, perhaps most importantly, fickle. Brand loyalty is going by the wayside as devices become platform insensitive. Just ask the "dude, you're getting a Dell" guy.

What's more, Microsoft's business model of small incremental improvements doesn't cut it in an era of instant updates. People just don't give a hoot about a few more farkles on the desktop.

If anything, they've become resistant to too much change. The tiles in Window's latest edition are a great example and the primary reason why my company hasn't upgraded. I don't want to have to figure out how to use software that should be instinctive. We, like many other companies I am familiar with, are moving away byte by byte from Windows and from Office, too, even if we can't let go entirely... yet.

And finally, Microsoft has long pursued everything under the sun, using its size as a weapon. Now it's a liability. Microsoft, despite trying to continually position itself as a growth company, is now a sad version of its former self. At best, Microsoft has transitioned into a value company, although even that's debatable.

As the old Japanese proverb goes, to begin is easy - to continue is hard.

Timeless Insights: Eight Reasons Mimi Would Sell Microsoft...

Source :http://moneymorning.com/2013/09/03/microsoft-look-at-this-chart-before-you-decide/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History