Goldman Sachs: Split up Microsoft

[her209]

Goldman Sachs was allowed to hide their losses through the changes of the mark-to-market accounting rules.

 

[Nerva]

the xbox was built to counter the threat to the PC in the form of the PS2 (which sony claimed would be a do everything center of the house box). the whole point of xbox is to protect windows.


iirc, goldman didn't want taxpayer $ to begin with and paid everything back as soon as they could.

give this man a cookie

 

[Nerva]

Goldman Sachs was allowed to hide their losses through the changes of the mark-to-market accounting rules.

suggest you do some research and then comment on the subject

 

[BeauJangles]

Goldman Sachs was allowed to hide their losses through the changes of the mark-to-market accounting rules.

Nobody is arguing that Goldman had a bad year, but they never needed, nor wanted, the TARP money.

Anyway, this thread isn't really about Goldman's financial situation, it's about Goldman's assessment of Microsoft.

 

[LegendKiller]

They're a financial institution. Their recommendation comes from a finance perspective, not from anywhere else. Accusing them being sneaky is just stupid. They don't have a hidden agenda... it's right in front of your face.

Plus, I don't see why people are so surprised that Goldman thinks they know better (financially) than a company in a given industry. They were at the forefront of buying up life insurance policies and making a killing predicting with greater accuracy than the insurance companies when old people would die.

As I said above, business history is rife with examples of how companies with disparate, or even related, product lines are spun off at a greater valuation than if they had stayed a part of the company. That's because much of the market won't give full credit to revenues of an operating entity because they feel that the upside is limited by the constraints of the entire company, among many other reasons.

In general, the market doesn't like conglomerates or companies that operate out of their core competencies. The non-core business may be great, but generally it is viewed as better off as an independent business.

It's a jack of all trades, master of none, viewpoint.

 

[Perknose]

Goldman Sachs should shut the fuck up.

And perish in an incendiary conflagration of some sort, i.e. DIAF.

 

[yllus]

Microsoft fully understands that the Xbox division is a money loser, but they're in it for the long haul as it becomes a valuable entry point into the living rooms of the world. The analyst seems to be a little short-sighted in his thinking. Or maybe the terminology for "spin off" isn't what I think it is.

Edit: Oh, okay, read his comments in full. That's not that bad an idea but it still seems a little unrealistic.

 

[Narmer]

This is an investment bank. They profit from mergers and acquisations. Do you guys really think they care about MS? They'd split Ballmer in half if they could profit from it. Ignore them.

 

[her209]

suggest you do some research and then comment on the subject

/facepalm

Why do you think mark-to-market accounting rules was changed for toxic assets?

 

[LegendKiller]

Goldman Sachs was allowed to hide their losses through the changes of the mark-to-market accounting rules.

I have a new regulation for you. As a part of all new loans (mortgages, vehicles...etc), you're required to post new collateral if the valuation of the asset is below a certain threshold.

The valuation is independent of market conditions and can be set based upon uncomparable assets, sudden price movements, or anything else.

So, for example, if your neighbor dies and his widow must unload their house at a depressed price because she can't afford it, you now owe the bank more money. Or how about they build a nuclear plant next door and your valuation drops, now you owe a lot more money to the bank.

Naturally, this is completely independent of actual value, including actual cashflows that may be received. In fact, you may recoup all of your money in the end, but it is completely dependent on comps.

In fact, the only reason why the price may go down is because the mark to market is based upon a new present value calculation whereby the old spread of the loan was 4%, based upon a 4% discount, and now the new discount is 20% (based upon current market interest rates for that type of loan/asset). That means that your asset now has a -16% PV differential, which results in an reduction to principal from the mark.

How does that deal sound?

 

[satyajitmenon]

<-- grabs lawnchair + popcorn + beer :whiste:

 

[lupi]

Sounds like a good idea. Bunch of money has been pumped into that division attempting to not be the last place console to negligible effect.

Maybe they could sell it to apple since xbox users seem to like paying extra for required additional peripherals and online access.

Not to mention this would make the anti-pc stance by the xbox division not seem so absurd once no longer under a PC brandname.

 

[MJinZ]

lol GS.

You are laughing with GS, 'cuz they bend you over and pound you, then take your money like they do everybody and everything else right?

Otherwise, not sure what you're laughing at?

 

[RavenSEAL]

WP7 and and xbox line? wtf is that?

 

[PingSpike]

Naw, Goldman was the one telling everyone else how great these toxic assets were while simultaneously hedging their bets against them.

Goldman Sachs makes Microsoft look like Jesus Christ. I recommend splitting up the leaders of goldman Sachs with a band saw. Fuck those assholes.

 

[jman19]

A lot of people in this thread who either can't read or don't know the facts.

 

[rockyct]

I bet they shorted Microsoft and now they want to drive down the price.

 

[jman19]

/facepalm

Why do you think mark-to-market accounting rules was changed for toxic assets?

Because MTM accounting fails during periods of distressed asset prices?

 

[darkswordsman17]

The Xbox has helped Microsoft far beyond just what they've gotten out of the division. It has helped their development of Windows. It definitely helped them with DirectX and Windows Media Center. Live is definitely going to pay big dividends for them while developing cloud-based computing. Stuff like Kinect should also help in developing other things.

I can see the reasoning from the financial aspect, but its very shortsighted and would hurt the company overall.

 

[sdifox]

So, no other company has had questionable ethics at any point in their existence? I'd like for you to name any major company that hasn't done a single thing "questionable" in their past.

I mean, really, this type of character assasination of an individual for things he didn't even do, is just moronic.

You might as well not go to any doctors, mechanics, dentists, because they, or their work, have killed people in the past. What about car companies? All of them have had recalls that have killed people. So don't buy a car. I'm sure bike companies have had the same thing.

Don't drink or any eat food at all. All have had products that have harmed countries or killed people through product recalls.

What a great way to live...er...I mean...die.

You understand GS is MS's IPO firm right? Are you going to tell me everyone should take GS verbatim without looking at it a bit closer due to pass records?

And at what point did I say GS is the only one I am watching like a hawk?

You know what really hurt world economy? shit like this. Creating "value" out of thin air.

 

[LegendKiller]

You understand GS is MS's IPO firm right? Are you going to tell me everyone should take GS verbatim without looking at it a bit closer due to pass records?

And at what point did I say GS is the only one I am watching like a hawk?

You know what really hurt world economy? shit like this. Creating "value" out of thin air.

Who exactly is "everyone". This doesn't have done damn thing to do with you and you don't really care if you're an MS investor, unless you're major and can come up with a counter to the argument. In that case, go ahead and do a DROE or DCF analysis, then, in your infinite financial knowledge, release that info to your major investors as a recommendation on how to maximize their investments. Because, after all, you likely have your CFA charter (and have gone to Oxford (masters in engineering) and Stanford (MBA), and hired by McKinsey as a corporate consultant, like the Managing Director at GS who led the report) and know how to value companies? You know the ins and outs of the industry and have access to massive mutual fund investors who do the same analysis. Add yours in there to determine what they do/do-not want to hold?

Right?

This wasn't a directive or an opinion of, or for, the government. This was a stock analyst giving her opinion to his clients, the institutional investor side that uses GS research (and obviously like it). In fact, this wasn't even meant for you, really. Who gives a flying fuck through a rolling donut what you think about this, because, really, you weren't the target market.

As far as your ridiculous tangential strawman "point". This wasn't completely about unlocking "value". Blaming it on that is ridiculous and insipid.

Watch yourself like a hawk because everything I see above shows that you guys need to do more research yourself. You'd likely do better by hiring GS than you would in stoking your internet faux rage.

 

[sdifox]

Who exactly is "everybody". This doesn't have done damn thing to do with you and you don't really care if you're an MS investor, unless you're major and can come up with a counter to the argument. In that case, go ahead and do a DROE or DCF analysis, then, in your infinite financial knowledge, release that info to your major investors as a recommendation on how to maximize their investments. Because, after all, you likely have your CFA charter (and have gone to Oxford (masters in engineering) and Stanford (MBA), and hired by McKinsey as a corporate consultant, like the Managing Director at GS who led the report) and know how to value companies? You know the ins and outs of the industry and have access to massive mutual fund investors who do the same analysis. Add yours in there to determine what they do/do-not want to hold?

Right?

This wasn't a directive or an opinion of, or for, the government. This was a stock analyst giving his opinion to his clients, the institutional investor side that uses GS research (and obviously like it). In fact, this wasn't even meant for you, really. Who gives a flying fuck through a rolling donut what you think about this, because, really, you weren't the target market.

As far as your ridiculous tangential strawman "point". This wasn't completely about unlocking "value". Blaming it on that is ridiculous and insipid.

Watch yourself like a hawk because everything I see above shows that you guys need to do more research yourself. You'd likely do better by hiring GS than you would in stoking your internet faux rage.

What would you say is the motive behind a split other than creating a perception that somehow 1 divided into 2 is worth more than 1?

You seem to care an awful lot about opinions of people that (in your opinion) don't matter.


PS, this is a line I copy and pasted from the linked article

"A break-up of the consumer businesses could potentially unlock hidden value"

 

[LegendKiller]

Ohh, and sdifox, while we're villifying careers and those in them, why don't we villify accountants. After all, they were the ones that let Enron, Worldcom, Adelphia, and others happen. Right?

Did you ever work for Arthur Andersen, or know anybody who did. They must all be crooks also, because, guilt by association is naturally the lay of the land.

Amirite?

 

[sdifox]

Ohh, and sdifox, while we're villifying careers and those in them, why don't we villify accountants. After all, they were the ones that let Enron, Worldcom, Adelphia, and others happen. Right?

Did you ever work for Arthur Andersen, or know anybody who did. They must all be crooks also, because, guilt by association is naturally the lay of the land.

Amirite?

Where did you see me vilify the author? All I am saying it given their track record, it is best to study it carefully. Where did you see me attack the analyst in question at all? All my comment was directed at GS. Cool down, read carefully and you might not increase your blood pressure.

 

[Perknose]

PS, this is a line I copy and pasted from the linked article

"A break-up of the consumer businesses could potentially unlock hidden value"

Excuse me, but I'm calling that an empty air bag of portentious sounding horse manure unless you wish to tell us specifically WHAT value would be unlocked and WHY said value (be specific) would be unlocked only after the division was spun off and not before.

It's straight-up, Financial Guru bullcrap: "The strategically decoupled paradigm vector would leverage a proactive, out of the box, realignment that would engender a vibrant sea change going forward.

Now sign here."