Coffeehouse Thread

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The sharks smell blood

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  • User profile image
    wastingtime​withforums

    Looks like Microsoft's Apple-envy course and the resulting hit-products like Windows 8 and the "beloved" triple-the-cost Office 2013 attracted the sharks:

    http://www.neowin.net/news/valueact-takes-2-billion-stake-in-microsoft-is-it-targeting-steve-ballmer

    CNBC, a business network on cable TV, reports ValueAct Capital is planning to buy a $2 billion stake in Microsoft, which would be about one percent of the company's total worth.

    ValueAct Capital was formed in 2000 and is run by Jeffrey Ubben, who will apparently reveal more about his intentions later today at an investment conference. StreetInsider.com reports that speculation has centered on Ballmer. It's possible that Ubben may try to use his stake in Microsoft to lead other investors in an effort to get rid of the chief executive.

    There's also speculation that Ubben might try to convince shareholders to break up Microsoft. Microsoft's stock price has gone up more than four percent since the news of ValueAct Capital's stock purchase broke.

  • User profile image
    PopeDai

    Hahahahahahaha.

     

    No.

  • User profile image
    wastingtime​withforums

    @PopeDai:

    It's a hoax?

    By the way:

    ValueAct describes its management as being experts in "sourcing investments in companies they believe to be fundamentally undervalued, and then working with management and the company's board to implement strategies that generate superior returns on invested capital."

    Most recently, ValueAct was involved in pushing industrial machinery maker Gardner Denver Inc to sell itself, an effort that culminated in a $3.74 billion deal with private equity firm KKR.

    http://news.yahoo.com/valueact-takes-2-billion-microsoft-stake-cnbc-133929890--sector.html

    That's pure shark-talk..

    I admit it, I had my beefs with MS lately, but this is real yucky.

    edit, maybe not so sharky:

    http://blogs.wsj.com/moneybeat/2013/04/22/valueact-takes-2-billion-stake-in-microsoft/

    Ubben, at the Active-Passive Investors Summit, called his investment similar to ValueAct's investment in Adobe Systems Inc. ADBE -0.47% In particular, he sees value in Microsoft's enterprise products that garner a majority of the profits.

    The enterprise business can thrive independent of personal-computer sales, Ubben said. They are in part, he said, driven by employee count, number of business applications, quantity of data and system complexity/management.

    Could be maybe even a good thing. Maybe this will put brakes into Microsoft's consumerification zeal.

    But on the other hand..

    http://blogs.barrons.com/focusonfunds/2013/04/22/microsoft-up-4-valueact-would-like-to-see-lower-focus-on-office-windows-says-cnbc/?mod=wsjde_finanzen_wsj_barron_tickers

    Reports Faber, ValueAct "Typically takes a position for long period of time. Ubben is focused on fundamentals, hoping that the company can be persuaded to focus less on its Office and Windows, and more on other businesses that may produce more value."

    Adds Faber, "If it doesn't go the way they [ValueAct] want, there is the prospect of activism."

    "It is one of the largest investments that have been made in Microsoft, when so many funds are in the stock through index funds."

  • User profile image
    wastingtime​withforums

    http://buzz.money.cnn.com/2013/04/22/microsoft-hedge-fund/

    "We see Microsoft's consumer strategy challenges and say who cares," said Ubben, speaking Monday at the Active-Passive Investor Summit in New York.

    Microsoft provides the plumbing that helps large and small businesses function, he explained. While many have derided Microsoft's inability to innovate, Ubben said that's not such a bad thing. "IT managers don't want constant change."

    Microsoft should continue to capitalize on new enterprise businesses, such as instant messaging application Lync and web portal service SharePoint.

    Microsoft is not good at consumer devices, but that's not the relevant lens to view the company," he said.

    The changes Ubben is pushing for seem to be operational. Windows might have made Microsoft what it is today but it's not the future of the business he calls a "national treasure."

    "Microsoft must consider strongly in the not too distant future making Office available outside Windows," he told attendees at the summit.

    I see a HUGE conflict with Microsoft's Apple-envy mentality of the past few years here. Good that Sinofsky left in time...

  • User profile image
    figuerres

    so what does 1% get them?  I am not big on stock market tech but I would think that to really do anything you would need a lot more than 1% of the stock ?

  • User profile image
    Jim Young

    Microsoft is not good at consumer devices, but that's not the relevant lens to view the company," he said.

    Apparently this Ubben character never heard of Xbox. The idea that by purchasing  < 1% stake in a Microsoft allows him to steer its course is laughable.

  • User profile image
    cbae

    The Chairman still holds about 5% of the shares, and his influence still carries quite a bit of weight amongst the institutional holders.

    I think this "Apple-envy" within Microsoft stems largely from the market capitalization of the respective companies, and lately there's been less and less to be envious of. Maybe they'll be a new-found appreciation for what Microsoft is already good at instead of focusing so hard to do what others are good at. 

    Of course, it's possible that tomorrow AAPL announces blow-out earnings as it usually does, and then all bets are off.

  • User profile image
    GoddersUK

    , wastingtime​withforums wrote

    ... which would be about one percent of the company's total worth.

    ...It's possible that Ubben may try to use his stake in Microsoft to lead other investors in an effort to get rid of the chief executive.

    There's also speculation that Ubben might try to convince shareholders to break up Microsoft...

    ROFLMAOCOPTERLOLS

    Unless the "other investors" are planning to do that anyway they'll need a lot more than 1% and if they're planning to do it anyway I'm not sure that 1% will make a whole lot of difference.

  • User profile image
    SteveRichter

    , GoddersUK wrote

    *snip*

    ROFLMAOCOPTERLOLS

    Unless the "other investors" are planning to do that anyway they'll need a lot more than 1% and if they're planning to do it anyway I'm not sure that 1% will make a whole lot of difference.

    you don't invest $1 Billion unless you have a plan. Maybe the investor has reason to believe other non Bill / non Ballmer shareholders are ready to push Ballmer out.  It is not like the current management team has shown any ability to grow the business.

     

     

  • User profile image
    evildictait​or

    , SteveRichter wrote

    It is not like the current management team has shown any ability to grow the business. 

    Revenues have nearly tripled from $25.3bn (£16.6bn) in 2001 to $74.3bn in 2012, and operating income has risen from $11.7bn to $25.3bn.

  • User profile image
    evildictait​or

    There's also speculation that Ubben might try to convince shareholders to break up Microsoft.

    How does breaking up the business add value to it?

    Microsoft's stock price has gone up more than four percent since the news of ValueAct Capital's stock purchase broke.

    When someone comes out and buys $1bn of shares, the share price increases. That doesn't mean that the person buying it is clever or right.

  • User profile image
    Hometoy

    So with a 1% stake in shares, they hope to incite a revolt against Ballmer and his (dropped to) 95% support from the Board? He's got some spinning to do. The problem with trying to be more like Apple is that Apple still hasn't come out with anything really "new" or "innovative" since Jobs died. Each work is building on a Jobs-era product and that is only going to last "so" long. Microsoft seems to suffer from "two-steps forward, one step back" syndrome and I am not sure a new chief would change that.

  • User profile image
    SteveRichter

    , evildictait​or wrote

    *snip*

    Revenues have nearly tripled from $25.3bn (£16.6bn) in 2001 to $74.3bn in 2012, and operating income has risen from $11.7bn to $25.3bn.

    Ballmer has not grown the scope of the business.  Media center has gone nowhere in terms of integrating with the cable box.  My windows phone has nothing from the user perspective that makes it stand out.  A windows tablet should have been to market before the iPad. A windows mobile should be running on any phone with a cpu. And now MSFT is nowhere with robots.

     

  • User profile image
    cbae

    , SteveRichter wrote

    *snip*

    Ballmer has not grown the scope of the business.  Media center has gone nowhere in terms of integrating with the cable box.  My windows phone has nothing from the user perspective that makes it stand out.  A windows tablet should have been to market before the iPad. A windows mobile should be running on any phone with a cpu. And now MSFT is nowhere with robots.

    • Cloud computing (Azure)
    • Devices (Xbox console, Surface RT/Pro)
    • Online services (search, mapping, music, etc.)
    • Content networks (MSN, Xbox Live)
    • ERP/CRM (Dynamics ERP, Dynamics CRM)
    • Virtualization (Hyper-V, System Center)

    None of these business lines existed at Microsoft before Ballmer. Microsoft has grown a forest, and you're looking at the weeds. B1tching about Media Center? Seriously?

  • User profile image
    MasterPi

    , cbae wrote

    None of these business lines existed at Microsoft before Ballmer. Microsoft has grown a forest, and you're looking at the weeds. B1tching about Media Center? Seriously?

    It's basically this mindset that MS only operates in a few industries that causes people to miss alot of these business lines. Now, the media is so fixated on the "cool" tech, which is anything wearable and mobile, and so MS's success in mobile somehow becomes an accurate measure of its success as a whole. Yeah, let's completely ignore the concept of a diverse portfolio and how it reduces risk. Heck, just forget about the relation between risk and return. Sure MS' stock price hasn't risen considerably in the past couple of years, but it hasn't dropped, even with the many failures so called analysts tend to pin on them. It's stable, and should the stock price be a reliable indicator of anything, it shows how solid MS is.

    So no, Ballmer shouldn't go. If anything, they should add/promote people who are willing to take risks in product groups - given a diverse portfolio, MS should be able to tolerate a lot of failures in the short term in order to grow success in the long.

  • User profile image
    Ray7

    HomeToy said:
    So with a 1% stake in shares, they hope to incite a revolt against Ballmer and his (dropped to) 95% support from the Board? He's got some spinning to do. The problem with trying to be more like Apple is that Apple still hasn't come out with anything really "new" or "innovative" since Jobs died. Each work is building on a Jobs-era product and that is only going to last "so" long. Microsoft seems to suffer from "two-steps forward, one step back" syndrome and I am not sure a new chief would change that.

    Quick timeline for you here: 

    Between Jobs return and the iPod: Five years

    Between the iPod and the iPhone: Five years

    Between the iPhone and the iPad: Four years (though that is a little misleading because the iPad was actually developed before the iPhone).

    Apple works on a four-to-five year product cycle, so they're not actually 'due' to for a new product line for another year or two. And when they do, the chances are it will be based on something that already exists (like the music player, like the phone, like the tablet), but done better.

    As to the Ballmer ousting: sounds like a small company trying to make a few quid with a bit of stock price manipulation.

  • User profile image
    RLO

    I don't know whether ousting Ballmer is the answer.  If you were just looking at stock prices, then someone could make the argument.  The problem is, the stock market makes no sense when thinking about it from the theoretical point of view.

    Typically you buy a stock, the company makes a profit, you make money.  Unfortunately, today's stock market is rife with speculation. People don't buy stock to share in profit, they buy stock for the market price of the stock.  If it's sexy it sells.  That's why GOOG and AAPL are raking in the dough, it's the stock price not the fundamentals of the company.

    I will be honest, when I was in systems administration and planning, I looked at the Apple stack as an alternative to Microsoft.  Apple has nothing for the enterprise, in fact all of their moves lately shows they are running away from enterprise business.  If enterprise wants to deploy Apple, they are on their own.  No management system for iPad or iPhone, no real server product, no central system for software management.  Have you ever looked at the logistics of upgrading or downgrading the latest Apple products?  We had a few Macs, and when we ordered a MacBook with Lion with known issues with Adobe, there was no way we could downgrade.

    Microsoft is still the best for enterprise at this moment.  With open source trying to chase them down, they may not hold forever.

    As far as the Zune, Kin, etc.  Kin was a reject from the get go, and an example of a bad acquisition.  Taking an open source product and trying to make it a Microsoft product, throw on top of that the Intellectual Asset of the founder of Danger running to your rival made it a disaster from the get go.

    Zune on the other hand succeeded too late.  It was far superior to it's competition, yet could not gain market traction.  This comes back to the one thing Microsoft has always lacked, and that's sexy marketing.  Could the Zune product succeed? Yes, but the marketing strategies and the commitment of the company had to be there.

    So what does that mean for now?  I think Ballmer needs good technical leadership if he is to remain.  He needs to stay back, let the tech person lead with vision, and Ballmer needs to handle the numbers. 

    Does Microsoft need to pay attention to it's enterprise customers? YES. 

    With the rumors about the start button and boot to desktop, I believe they are.  It's these two things that gives me hope.  No, the start button doesn't bring back the start menu, but it's a beginning.  Honestly, that bloody button is the one thing that could make me think about deploying Windows 8 with minimal training. Listening to feedback from the admins of enterprise systems would go a long way towards cementing Microsoft permanently as the OS or business.

    (Side Rant: If I had known that Customer Experience would be used to determine the life of the start menu, I would have skipped ever single setting that pinned programs to the taskbar and placed icons on the desktop in my answer files when I deployed 700 machines year before last.  Instead of making things convenient for my users, I would have made sure they would have to go to the start menu for every program they launched.  If the decisions to remove the start menu were based on Customer feedback instead of a data point saying that customers didn't use it, then we would never have had this hullabaloo in the first place.  END RANT)

    Ok back to topic.  So, let's say that Ballmer is thrown out.....Who in the heck would you replace him with?  Would he be business focused?  Would she be marketing focused?  Would they be tech focused?

    I think business wise, Ballmer is doing a good job, but he needs someone there that can provide the input for the tech side, and argue why losing money on a tech product is better for the long run.  God knows he could use someone savvy in marketing for sure.

  • User profile image
    Bas

    , cbae wrote

    *snip*

    B1tching about Media Center? Seriously?

    The thing about Media Center is that it lead the way in many ways for the Xbox as an allround entertainment device instead of just a games console. Even just the interface lays at the base of many product products out there nowadays. Sure, it would've been cool if it had been the standard on set top boxes or smart tv's, but markets change. You can either doggedly hold on to your vision for the product, or adapt. Instead of selling software for set top boxes, they decided to sell their software, the set top box and the services themselves. Judging from the success of the 360, that sounds like a good move.

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