Goldman Sachs: Split up Microsoft

[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?

Did I say every single one of them must be crooks? All I said was look closer and evaluate carefully. Or are you denying GS wronged its clients?

 

[sdifox]

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."

And that was why I am not buying this article. Reason I quoted that line is so LegendKiller understand that I did not pull that out of thin air and accuse the author.

 

[a123456]

Eh, really? I thought it was common practice to spin off unprofitable divisions. Sure, the toxic stuff will stink. However, the profitable stuff left over improves its various ratios quite a bit and would then trade at a higher relative price compared to its earnings. In this case, it doesn't make sense because the Xbox division is a loss leader type product that is also a pet product so management wants to keep all their fingers in the pie.

I haven't really studied the company in any depth, though.

Of course, GS would stand to make a lot of money if MS were to do a spinoff but pretty much all the financial analysts out there are really in the sales & marketing business so it's nothing unusual.

 

[LOFBenson]

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.

True, they didn't need the TARP money directly. They just needed all the other companies on the losing side of their bets to get bailed out.

"Goldman Sachs ultimately received about $8 billion from taxpayers via AIG. Goldman posted a $1.3 billion profit for 2008."

 

[a123456]

True, they didn't need the TARP money directly. They just needed all the other companies on the losing side of their bets to get bailed out.

"Goldman Sachs ultimately received about $8 billion from taxpayers via AIG. Goldman posted a $1.3 billion profit for 2008."

This.

Goldman was in *a lot* of trouble that year. Their actual balance sheet wasn't that big a deal but it more a crisis of confidence, similar to a bank run. They were in real danger of having to fold because they're so highly leveraged. With all the banks around them dying, if things had continued a little more, they wouldn't have been able to roll over their positions.

One of the reasons they got in so much trouble was from having tons of positions with AIG as the counterparty. They got saved by a combination of things, but having the government fully pay off the AIG positions was huge for confidence. That and maybe having Buffett infuse them for 5B helped to pull them out. By the time TARP came around, they were fine again and Buffett had made huge returns on his money.