If they keep failing at them and lose money, the shareholders wont like it, but if there really is a 20yr plan to lose a crap load of money to try and gain leadership of the living room, it may be worth it...
In one of my previous careers I worked a helpdesk that handled technical support questions from many service areas including Redmond region. Inevitably some Microsoft employees would call for help. I loved this job and was good at it with low Average Handle Time and excellent metrics. So when interesting people called I'd chat for a bit. One of them pointed out something funny about management. Since then I tend to be more observant of the administration at Redmond. The philosophy is to win even when losing. Brilliant!
Examples of this come from the Immersion Settlement Contract, Wistron Contract, Nvidia Xbox Contract, even my previous helpdesk contract, and Windows own piracy in China, etc. Microsoft writes up a contract that promises tons and tons of revenue. If you accomplish this, do this, rank like this among your competing vendors, etc. we give you Big Pile Of Cash! But in reality there are tons of penalty fees, and required discounts written into their contracts. It’s like working for the strictest least helpful teacher in school, who tells everyone they already have an A+ in the class. From this point it is up to them to maintain it. Then the teacher passes out surprise exams. Microsoft contracts are some of the least profitable contracts around, with some stipulations being completely subjective. If mismanaged, your business could easily wind up paying your employees and paying Microsoft for giving them something to do.
Coming back to you point of shareholders and stocks here is a funny example. It shows you are correct about the long view, but they are manipulating the short view as well.
http://blog.seattletimes.nwsource.c...news_summary_bach_sold_more_shares_offic.html
Before Microsoft announced the Billion dollars set aside for Xbox 360's inherent design defects, people such as Robbie Bach sold stock to buy it back later when they thought it would be cheaper. Bach sold off $12 Million dollars in personal MSFT stock before announcing this billion dollar plan and accidentally did not report his stock sales to the SEC until after the announcement because of an administrative error. Really just a case of coincidentally convenient "Plausible denial" on his part.
You see Bach and many people like him at Microsoft practice insider trading on a regular basis. Buying and selling their own stock to avoid loss and capitalize on anticipated growth. It's a human tendency. But on this scale an minor 8% change in value equals $1,000,000 dollars saved. Then bought back, it returns to the same value but grows 10% to get there. So if you sell 12 before it drops to 11, and you later buy 12 back. This then grows by 10% it gains you $1.2 Million dollars just by returning in value and not actually growing. While everyone else either lost $1 million or gained nothing.
In reality, Robbie Bach (and to some degree Biil Gates), and a few others traded and sold for nearly a 50% gain over current value, not the 10% example. Each buying and selling at MSFT’s troughs and peaks.
http://finance.yahoo.com/q/it?s=MSFT Furthermore you will notice that the value of the stock reflects some automatic caps from insider trading and not real business. The value is driven by hype and managerial purchase or sale. With the stock value reacting to insider trading once such trades are reported to the SEC. It you know the delay you can manipulate the value of the stock by anticipating disclosure dates and buying or selling based on those dates. For instance. While many people look at these charts and see Gates William H III and Bach Robbie selling $100’s of Million is not Billion$ in the case of Gates “retiring”, the truth is that they have set up funded living trusts (In Gates case a Foundation), that are buying back stock at the lowest value, but are not reported as insider, because to the SEC the trusts are legally separate entities.
http://finance.yahoo.com/q/bc?s=MSFT&t=1y&l=on&z=m&q=l&c=
Microsoft branding has grown to the point that people blindly buy the stock just because "My God, it is Microsoft." The most impressive thing about the company is its legal bureaucracy. They attract top level talent, then manipulate talent with vagueness, and administrative obfuscation until the talent doubts its own ability. An example of this was Vista and the PlayForSure DRM initiative they forgot to include in Vista compatibility. The lack of elegance in manipulating Vista is almost entirely due to administration. Then to cover up the bloated interface's slow response rate and horrible XP verses Vista benchmarks was for Microsoft’s latest release updates to tweaks your settings to run the CPU at 100% whether on battery or plugged in. Completely defeating battery life, PowerNow, and any other speed stepping your pc would use to save power. Costing consumers and Business millions of dollars in power bills. Not a programmer decision. Yet another administrative decision that manipulated the end user for the sake of its Corporate image. "It's not Vista's fault. Your PC was just too slow to support our redundant, redundant interface."
As for the share holder's their still "My God it is Microsoft" and stock is based purely on the subjective nature of value branding. Until few people are willing to pay asking price, the value will remain. Even while record profits hit shareholder dividends a meager and growth is null. Nov to January was good. But year over year shows the stock losing value. The new Windows OS goes into Alpa and Beta testing later this year or next.
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