[LINK] Microsoft gets away with one

[Frank O'Connor]

Yo All,

For what its worth my take on the situation is as follows:

1. MS has HUGE cash reserves ... monies not distributed to 
shareholders, and held against a rainy day.

2. Like any software distributor with a high software stock turnover, 
their profit margins are extremely high. After development, you only 
really have to factor in packaging and distribution and (I suppose) 
support as product related out-goings.

3. Add to that the fact that their capital expenditure is low 
(comparatively speaking to say a hardware manufacturer), that much of 
their product can be (and is) produced (burned and copied) by 
authorised out-sourced third parties and their major fixed costs are 
salaries and employee entitlements and I suppose the rent on Redmond 
and a few small premises in overseas locations and they don't have 
too many worries.

4. They own a brand that is effectively priceless, and completely 
dominate the market.

Sure, they've had the odd hiccup (!!!) over the last year or so, and 
their new licensing scheme remains to be proven as a goer ... and 
some of the hardware initiatives they've got into (X-Box, MS-TV etc), 
as well as some of the software initiatives (IE, Outlook, MSN, etc) 
are bleeding money ... but they contribute to market share and 
provide (hopefully) new opportunities for market growth in the future.

The fundamentals for MS are good ... and I think that's what the 
market price reflects. The share value has descended form unrealistic 
highs, but there's a good case to be made that it's effectively 
undervalued at the moment. I mean, just taking into account their 
cash reserves, their valuation of other capital assets and the like 
the share value could possibly be higher. I mean, if MS was 
liquidated tomorrow ("Be still my beating heart!" says Rachel), 
shareholders would probably get much more than the share price when 
distributions were made.

Now if they got sued a few times for losses incurred as a result of 
poor software design or security, or their licensing schemes fell in 
a heap, or the US Supreme Court curtailed their bundling activities 
my assessment might change ... but at the moment I think the price 
represents value - stock splits, employee options and the like 
included.

Just my 2 cents worth.

			Regards,

At 1:51 PM +1000 15/9/02, Rachel Polanskis wrote:
>On Sat, 14 Sep 2002, Viveka wrote:
>
>>  I believe that Microsoft stock is still strong because they're
>>  fighting the open movement very effectively. They've realised that
>>  Free Software has several market advantages in the current
>>  environment, so they're working on changing the environment. In the
>>  name of "levelling the playing field", they're lobbying governments,
>>  putting together various astroturf campaigns, and associating
>>  themselves with Democracy, Freedom and Security in order to make it
>  > seem like anything that damages MS would damage the US, and must
>  > therefore not be allowed to happen. They've always been a friend of
>>  the copyright extension lobby, and they're unquestionably providing
>>  useful back doors to the three-letter agencies, so they have powerful
>>  friends. Microsoft is not going anywhere in a hurry, so I'm not
>>  surprised that their stock is holding up.
>
>(some paraphrasing from a private post I sent to someone off-list...):
>
>Rergardless of my supposed "error" regarding the stock prices,  I believe
>there is still something quite wrong somewhere.
>The prices are being artifically pumped by MS somehow and
>should by rights be worth far less than what they currently are.
>
>Microsoft employees in the US have a good percentage of their salaries
>paid as stock options.  A lot of US super and pension plans are reliant
>on investments in MS stocks.  Stock options are not included in taxable
>revenues in parts of the US, which MS is taking advatage of.  They have
>paid very little to no tax in the last few years.  Anytime MS wants
>to pass out more options, they just print more stock.  Anytime they
>want to up the price they do a "split".   These are not my observations
>but those of Bill Parrish and others.  It is quite a very shakey
>way of doing business - it's bound to come undone sooner or later.
>I am just surprised that the mainstream media hasn't investigated this
>further.
>
>I am not at all an expert on stocks & shares but I do watch MS very closely..
>When the corrupt scheme that is holding them up is exposed, it's 
>going to be bigger
>than Enron, Worldcom, AOL and Xerox combined, which is probably why it is
>such a dead dog in the mainstream media.   I don't subscribe to conspiracy
>theories, but there is something very wrong here......
>
>
>rachel
>
>--
>Rachel Polanskis                 Kingswood, Greater Western Sydney, Australia
>grove@zeta.org.au                http://www.zeta.org.au/~grove/grove.html
>       "People don't say sorry in this country" - Max Connors (Seachange)
>
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