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Last Day You Can Buy Microsoft Stock

Hmm, interesting article.

I don't know enough about finance to make much of an educated evaluation, but I found this particularly ironic:

If you are not an accountant, don't waste the time pretending you are, trust The Economist, the earnings are not real. Don't let yourself be intimidated or deceived by financial analysts, TV commentators, bullies on Internet forums or Microsoft's elaborate public relations campaign. Bill Gates trusts The Economist and you should too. (emphasis added)
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If you are not an accountant, don't waste the time pretending you are, trust The Economist, the earnings are not real.
Click to expand...

That's why accountants don't run companies. First lesson of finance is that "earnings" are an opinion, cash is fact. And considering Microsoft has $42 billion in the kitty and is adding about $3 billion per FQ, you can draw your own conclusions.
 
"This situation is not about stock valuation, product quality or whether or not Microsoft has monopoly power in its markets."

That seems to be what it is all about. Microsoft has huge earnings and a huge pile of cash because they have the best products and they exercise their monopoly power to crush competition. The article talks about earnings management. If anything, Microsoft manages their earnings so they show LESS profit, to avoid the scrutiny of antitrust officials. They smooth their earnings so that if they have a blockbuster quarter, they only recognize some of it and save the rest for later.
 
Ok... well could comebody explain to me what this means and how it fits in to your comments about MS's wealth?

Microsoft issues a massive amount of put options. During the same quarter ended 3/31/99, Microsoft sold put contracts on their own stock for $400 million, basically betting that the stock will not decline. They need not worry because they are allowed to ?cook the books.? Of Microsoft?s significant cash balance, it is also a financial fact that more than 65 percent of that cash did not originate from product sales but rather from tax benefits associated with the exercise of stock options, employees prepaying their own wages, and the sale of put contracts on its own stock.
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It's from about halfway down on the page, under this heading: 2) Speculating on their own stock.

note: I'm not trying to argue, I'm trying to learn. 🙂
 
Originally posted by: glenn1
If you are not an accountant, don't waste the time pretending you are, trust The Economist, the earnings are not real.
Click to expand...

That's why accountants don't run companies. First lesson of finance is that "earnings" are an opinion, cash is fact. And considering Microsoft has $42 billion in the kitty and is adding about $3 billion per FQ, you can draw your own conclusions.
Click to expand...

Ya college drop outs do😉

The only conclusoin to draw from MS own numbers is it's a pyramid scheme which relies on selling stock to get that cash you speak of. MS looses money every year if it wenrt for the selling to get rich quick thinkers and some day it will fall like all pyrmid schemes eventually do...Just hope no one i know is vested. .. Bill won't be.
 
how is this a pyramid scheme? I read the article and all the guy did was point the finger and call it a pyramid scheme w/o any evidence of a pyramid scheme. They are doing what every other large company in the US does, sells stock options. What's wrong with that and why is that so bad? Sure, they are doing it on a larger scale, but that does not mean it's a pyramid scheme. If major stockholders in GM were to sell their stock, GM would go under immediatly too. That's what stock is. That's how it works. This guy thinks he's a genius, but he is just looking at the downside to selling stock. Of course there's huge risk. The only way this will fall is if lots of people were to sell their stock in Microsoft and this applies to almost any company out there.
 
personally i bought the MIU met life preferred.. 2 dollar coupon, 1/8 bonus per share, splits 3-1 in 2 month
 
Originally posted by: XZeroII
how is this a pyramid scheme? I read the article and all the guy did was point the finger and call it a pyramid scheme w/o any evidence of a pyramid scheme. They are doing what every other large company in the US does, sells stock options. What's wrong with that and why is that so bad? Sure, they are doing it on a larger scale, but that does not mean it's a pyramid scheme. If major stockholders in GM were to sell their stock, GM would go under immediatly too. That's what stock is. That's how it works. This guy thinks he's a genius, but he is just looking at the downside to selling stock. Of course there's huge risk. The only way this will fall is if lots of people were to sell their stock in Microsoft and this applies to almost any company out there.
Click to expand...

Well it is a matter of perception is'nt it? To value investors like him and Buffet anything aroaching a P/E ratio of 10 starts to look like a pyramid scheme because to stock is usually inflated and on a buying frenzy by lots of sheep. SS funds will keep this type of thing going but once those initail funds run out and no more investors to dupe then MS and others will have to survive on it's own merit and profits and dividends. There's the problem, it can't return a sizeable return on your investment on it's profits. It's totally dependent the stock price going up. No different than recuiting more people for herbalife, once it's saturated and has to survive on it's own it collapses and is called a pyrmid.

 
Originally posted by: Carbonyl
Originally posted by: XZeroII
how is this a pyramid scheme? I read the article and all the guy did was point the finger and call it a pyramid scheme w/o any evidence of a pyramid scheme. They are doing what every other large company in the US does, sells stock options. What's wrong with that and why is that so bad? Sure, they are doing it on a larger scale, but that does not mean it's a pyramid scheme. If major stockholders in GM were to sell their stock, GM would go under immediatly too. That's what stock is. That's how it works. This guy thinks he's a genius, but he is just looking at the downside to selling stock. Of course there's huge risk. The only way this will fall is if lots of people were to sell their stock in Microsoft and this applies to almost any company out there.
Click to expand...

Well it is a matter of perception is'nt it? To value investors like him and Buffet anything aroaching a P/E ratio of 10 starts to look like a pyramid scheme because to stock is usually inflated and on a buying frenzy by lots of sheep. SS funds will keep this type of thing going but once those initail funds run out and no more investors to dupe then MS and others will have to survive on it's own merit and profits and dividends. There's the problem, it can't return a sizeable return on your investment on it's profits. It's totally dependent the stock price going up. No different than recuiting more people for herbalife, once it's saturated and has to survive on it's own it collapses and is called a pyrmid.
Click to expand...

I see, it's kinda like AOL.
 
Originally posted by: DeafeningSilence
Ok... well could comebody explain to me what this means and how it fits in to your comments about MS's wealth?

Microsoft issues a massive amount of put options. During the same quarter ended 3/31/99, Microsoft sold put contracts on their own stock for $400 million, basically betting that the stock will not decline. They need not worry because they are allowed to ?cook the books.? Of Microsoft?s significant cash balance, it is also a financial fact that more than 65 percent of that cash did not originate from product sales but rather from tax benefits associated with the exercise of stock options, employees prepaying their own wages, and the sale of put contracts on its own stock.
Click to expand...

It's from about halfway down on the page, under this heading: 2) Speculating on their own stock.

note: I'm not trying to argue, I'm trying to learn. 🙂
Click to expand...

If you sell put options, and the stock price goes down then you are obligated to buy the stock at the former higher price. So if Microsoft sold put options and the stock price went south, they would take a loss because they would have to buy at that high price and yet only be able to sell at the low market price.
What the article doesn't explain is that perhaps Microsoft is selling the puts to hedge other investments, in which case they wouldn't be affected on the whole if the stock price went up or down.

In any case you gotta figure, if this guy thinks he's right then he should be shorting Microsoft stock with every penny he's got.
He's not the only analyst out there, and the current price of Microsoft is the cumulative effect of the opinions of all analysts and investors out there. The fact of the matter is the other analysts don't see it the same way and hence the high valuation of Microsoft. It's hard to believe that a company that sells software that is on every computer out there is really generating a loss.

And BTW Warren Buffet and Bill Gates are buddies. If Bill was really running such a shady company, don't you think Buffet would say something.
 
vman..Buffent would'nt touch MS with a ten foot pole. I have no idea why they are friends...polly gates is try to convince that greedy bastard buffet to give some of his cash to charity like bill does🙂
 
Microsoft doesn't sell put option on itself to cook books. It sells options and then gives them to employees as PART of their compensation. If the stock stops increasing than they will have to actually raise the wages of their employees to keep them. This will cost additional money, but considering they take in 3billion a quarter in profit I don't really think that would hurt them that much. With a book value of over 40billion they are quite valuable.
 
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