microsoft stock question.

[....]

I got some microsoft stock on monday, and it's been going down, just checked it this morning and it had a nearly 2.5% drop from purchase price.

From what I understand they reported excellent results, and they no longer have hardware losses. I don't recall any recent, bad news. So does anyone know why this is happening? Is it due to the market going down in general?(I've a few other dow stocks and they're going up, which is why I found it strange for microsoft to be going down.)




PS

Mods please move to appropriate forum, if this is not the right place for it.

 

[Sxotty]

That is why it is called playing the stock market. Stocks can be over priced so even though the company does well at making profits the stock will still go down.

 

[....]

That is why it is called playing the stock market. Stocks can be over priced so even though the company does well at making profits the stock will still go down.

But how can it be overpriced, last year they had hardware losses, defect rate news, etc. All of those bad news should have hit the stock and brought it down.

 

[epicstruggle]

Lots of things that you might not consider will effect your stocks. Competition, currency rates, monopoly issues, current stock market conditions.

I suggest you just forget about your stock for a while. MS is on the uptrack. I wouldnt worry too much unless your in a cash crunch right now.

 

[RussSchultz]

Lots of things that you might not consider will effect your stocks. Competition, currency rates, monopoly issues, current stock market conditions.

Or many other, completely irrational reasons.

 

[Sxotty]

But how can it be overpriced, last year they had hardware losses, defect rate news, etc. All of those bad news should have hit the stock and brought it down.

Stocks are often overpriced. That is why the market goes up and down. If everyone starts buying into the market even if companies are doing well the stock will become over valued. It will correct itself eventually. The point is you cannot just look at a company and say "Wow they are doing good so their stock will". If the stock is already highly valued because they are doing good you will not gain as much.

And as Russ said it is irational as well people get scared take money out of the market and the prices drop, they get confident and put money in and stock prices go up even if the company is not doing better or worse at those times.

 

[zed]

But how can it be overpriced, last year they had hardware losses, defect rate news, etc. All of those bad news should have hit the stock and brought it down.

u do realise the xbox has very little impact on how well microsoft is doing (im guessing ~1% of the company's worth is concerned with the xbox, windows/office are whats important to microsoft)
the sames true with sony something like ~10% of the companies tied up with gaming

nintendo OTOH gaming is the company

 

[Mintmaster]

..., you have some major misconceptions about the stock market.

First of all, as zed mentioned above, XBox is a tiny part of MS. Remember that huge $1B repair charge? It works out to 0.3% of the market cap, which is one dime off the stock price.

More importantly, the stock market is entirely about perceived value. A company can have a wildly successful quarter, but if people expected it to do even better, then the stock will go down.

Knowing this, there are really only three reasons that you can make money on the stock market:
1) Pure luck
2) The general trend over decades is positive, so the odds are that you will make money (but beware of the variance here, which is why people diversify)
3) At the time of investment, you are better at judging a company's value than the majority of those considering buying its stock, and eventually their collective opinion shifts inline with yours.

 

[Frank]

People don't research those companies, and if they did and knew juicy info on forehand, it would legally be considered fraud if they used that info to buy or sell those stocks.

In other words: legally it's seen as gambling, and so actions that make it predictable are illegal.

 

[RussSchultz]

Not true at all.

Trading on insider information is illegal.

Trading on publicly available information is perfectly legal, including researching the company, its suppliers, etc.

 

[Frank]

If you have a friend who works there, and he knows (like most everyone else who works there) that something major is going to happen, does that count as insider information?

 

[Sxotty]

If you have a friend who works there, and he knows (like most everyone else who works there) that something major is going to happen, does that count as insider information?

Yes

 

[....]

Yes

But in reality if he doesn't do any large deals, the guy's not a family member and there's no paper trace(no emails, faxes, etc an offhand comment in the car say.), I doubt it can be proven.

Btw the stock's still going down

 

[Sxotty]

But in reality if he doesn't do any large deals, the guy's not a family member and there's no paper trace(no emails, faxes, etc an offhand comment in the car say.), I doubt it can be proven.

Btw the stock's still going down

Dude, I was not directing it at you. I was just saying that is the definition of insider information really. You have a fried or contact who has inside knowledge not available to the public. Buying Yahoo stock would have been smarter given prior knowledge though.

 

[zed]

why does MS want to pay $44billion for yahoo?
i find it a crazy idea, its a lot of money, even for MS + i dont think they will topple the meaning of google as == search the internet (to much branding + baggage on both sides).

i believe a better idea is to create a totally new company/search engine (owned by MS) say $1billion on R+D + expenses for the first year + $9billion on advertising/hype/marketting (u cant even goto the khazi without seeing the new service advertised).

wouldnt that be cheaper + more likely to succeed

 

[Frank]

why does MS want to pay $44billion for yahoo?

That one is simple: it's one of their few competitors in some field. It's what MS does.

ANd while the amount of money might look excessive for just about any other company, for MS it's in their war chest.

 

[....]

That one is simple: it's one of their few competitors in some field. It's what MS does.

ANd while the amount of money might look excessive for just about any other company, for MS it's in their war chest.

Aren't they a monopoly, are they allowed to do such things?

 

[Sxotty]

Aren't they a monopoly, are they allowed to do such things?

Frank is just wrong on that topic. Yahoo is one of google's few competitors. Microsoft wants to compete with google. They already tried and failed. Also microsoft will borrow to make the deal happen. Google says they will throw their clout to support Yahoo staying independent b/c Google doesn't want any competition since they have a near monopoly themselves already.

 

[Carl B]

I got some microsoft stock on monday, and it's been going down, just checked it this morning and it had a nearly 2.5% drop from purchase price.

From what I understand they reported excellent results, and they no longer have hardware losses. I don't recall any recent, bad news. So does anyone know why this is happening? Is it due to the market going down in general?(I've a few other dow stocks and they're going up, which is why I found it strange for microsoft to be going down.)

Others have already mentioned it, but the problem I think may be that you're focused on the high-profile (media-wise) gaming efforts vs the core of the company operations. That said the truth is that overall, MS' growth prospects are in fact good in those core areas, and they've actually raised full year estimates.

But, the stock market is highly abstracted; people don't buy stocks for the most part for the ostensible reason of earnings (thus dividends) growth, but for the reason that they feel the stock itself will appreciate. Which is what you did as well.

Right now, there is a lot of uncertainty in the market as the US consumer is slammed with asset depreciation, escalated debt, and an murky jobs outlook. Whether it is or will be a recession or not, who knows, but it doesn't help the climate for stocks since stocks trade more or less on advance conjecture. The Yahoo situation just makes things that much wackier for MS. But, I would say you make your own decision on whether you think a Yahoo acquisition would make sense or not overall (there's a feeling it would get US regulatory approval at least), and then consider that indeed their earnings are set to improve. Rather than viewing the recent drop as a loss on your books, maybe consider it an opportunity to buy additional shares.

But really, it just depends on what you believe the 'right' course for MS is, whether they're on it, and how it will effect things in the long run. And for god's sake, read the financials and extensive business/competitive synopsis of any company you're going to acquire before you do so... because if you're buying Microsoft based on its manufacturing the XBox, you're reading too much Gamespot and too little Marketwatch!

 

[Frank]

Frank is just wrong on that topic. Yahoo is one of google's few competitors. Microsoft wants to compete with google. They already tried and failed. Also microsoft will borrow to make the deal happen. Google says they will throw their clout to support Yahoo staying independent b/c Google doesn't want any competition since they have a near monopoly themselves already.

MSN search/Live, Hotmail, etc?

But I agree that they want to compete with Google, and that in this case it's Google with the near monopoly.