I've been a Microsoft stock booster this year, arguing that the company was heading into the strongest product cycle in recent memory, driven by Windows, Office, and SQL Server upgrades, plus, plus.Couple this view with the lower-than-expected earnings announced today, and it explains a bit more (to me, anyway) why so many investors seemed to be voting with their feet and heading towards the exits. Just to make it more interesting, he has another later post titled "Black Days in Microsoft History". In that post he shows the 10 worst trading days in Microsoft's stock history. The two worst were of course from Black October 1987. He has a little contest going on where you get to guess what event was associated with the other seven he has on his chart.
But this latest news kills the story. By, in effect, diverting all the windfall profits from these new product releases into much more questionable businesses -- Xbox, Windows Live, etc. -- Microsoft is asking shareholders to buy a pig in a poke. It wants people to ignore how poorly it has done in retooling itself in recent years, and then let it burn an entire product cycle's profits in pursuit of Google, as well as the gaming market.
No mas. Some may buy this, but most thinking shareholders are going to say no way. There are many things you can say about Microsoft, but one thing is relatively certain: The further it gets from its Windows hegemony the worse it does. And by chasing after Google in search and ad serving, and after Sony et al., in games, Microsoft could hardly be further from home turf.
I never realized VCs had such a sense of humor.