R
Tilted
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Could explain the 11% stock price drop and the big job cuts at MS this week.
That might have something to do with the fact that Microsoft missed (already deflated) earnings estimates on Thursday, while the other two most important tech players (i.e. Apple and Google) both beat estimates. Apple was particularly impressive, establishing new revenue and earnings records at a time when so many big companies are floundering. In addition to tremendous success with the IPod product line, they are making major inroads attracting new computer customers (read 'used to be PC' customers). Microsoft continues to lag the real innovators in the industry.
Microsoft only really ever did one thing right. They recognized very early, before the rest of the industry, that it was software, and not hardware, that was going to drive the revenue engine for the computer age. That realization, at that time, was enormous. It was a goldmine for them, and that singular act lead to the conditions that made them the behemoth they are today.
In terms of business practices, innovation and general competence, they've done little since then that should be considered stand-out. But that early recognition on their part made them such a dominant force in the industry, that they were able to leverage their size and power in ways that allowed them to continue growing and become a major player in new tech sectors as they were created (e.g. the internet). I'm not criticizing them for that, just pointing out what it is that makes them what they are, as contrasted with a company like Apple, which is what it is for entirely different reasons.
Pretty much all of their earning power and market relevance has been a residual of that one brilliant stroke of insight early on. And that residual effect is slowly diminishing. They've never been an innovator, and going forward their relevance will only decline.
BoyGenius
Cyber Bully Victim
I'm sure you realized I was being facetious with that comment.
I was gonna hit you up in the stock thread though about this very topic, in regards to what you said about listening to conference calls. From what I saw in the news this week, MS basically blind-sided everybody. Personally, I don't put much faith in conference calls. And what's relevant, you'll hear on the news and save the effort/time.
Tilted
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Yeah, I was just elaborating a little on the degree to which Microsoft is giving up ground to the stars of the tech sector.
I was gonna hit you up in the stock thread though about this very topic, in regards to what you said about listening to conference calls. From what I saw in the news this week, MS basically blind-sided everybody. Personally, I don't put much faith in conference calls. And what's relevant, you'll hear on the news and save the effort/time.
Microsoft just announced in the morning instead of the afternoon. They indicated it was simply for logistical reasons - they had human resource people who needed to start informing people that they were being laid off, so they didn't want to wait to the end of the day to release the earnings and the layoff news. They said they wanted to let people know as soon as possible. Could there have been other motivations for the early earnings release? Possibly, but I suspect they were probably mostly sincere about their reasons. The layoffs in general were expected though.
About conference calls - I don't listen to a lot of them, but for some companies and in some instances I think it's important. There are some important metrics and business details that don't get reported - the news reporting on such things can be fairly superficial and limited to certain benchmarks that don't always tell the whole story. And, when trading, its best to know the information as soon as possible, so that you can trade now on information that other people might be trading on tomorrow, or in an hour.
Since everyone has access to the same information (or is supposed to), there are only three things that can make that information trade-able: (1) you have a more accurate interpretation of what it means, (2) you can figure out sooner what other people might interpret it to mean later, or (3) you have the information before some other people do.
As far as putting much faith in what you hear in a conference call, you're right - sometimes the subjective comments from the COOs and CEOs can be mostly fluff. However, if you listen to enough you can tell pretty well what's just smoke being blown up your butt, and what provides meaningful insight. And, some company's track records justify putting a lot of faith in what they tell you.
Personally, I think it's a mistake for people to invest in specific stocks, if they don't have the time to keep up with what's going on with the underlying company, beyond that which they can read or hear in the news. That doesn't have to mean doing research everyday, but a couple of hours a quarter as a minimum would seem reasonable.