Steve Ballmer cashes $1.3B in Microsoft shares, Apple was given first - Page 7

Golly, those do seem to be completely unbiased sources.

If I link to the American Communist Party's web page is it proof that capitalism is doomed to fall?

The extremely poor pay no federal income tax, the poor and the middle class pay a disproportionate amount of their income in taxes in absolute dollars compared to the rich. They also pay regressive sales taxes that, again, affect them disproportionately compared to the rich. The ill-gotten gains I referred to are the tax cuts the rich received that they didn't need and which haven't helped anyone else one bit*. And that 50% pay no taxes, you obviously made that up.

* There's no proof that tax cuts for the rich do anything to "create jobs" nor that they have any of the other magical powers the right wing claims. Tax cuts for the middle class, however, do stimulate the economy, ultimately creating jobs. The rich already have all the money they need and those tax cuts just go straight into the bank for them. The whole tax cut philosophy of the right wing is intellectually and morally bankrupt.

No, but it will be up to him to prove that is isn't.

Why don't you read my other posts in this thread? You might gain more context. Regardless, I'll respond to you directly. So by your logic no-one can ever question our corporate overlords, is that right? So it's OK for Microsoft to have a policy of firing it's lowest performing 10%, but an under-performing manager / CEO only gets their bonus (ie not even their usual salary) of millions only cut by 50%? Oh yeah right, sorry I'm not allowed to question anything or make a suggestion of double standards or anything like that. Whatever.

The Federal budget was not only "closest" to balanced, it ran an enormous surplus. It was unexpectedly large and occurred unexpectedly earlier than anyone imagined. The excess revenue was so large that the Treasury was genuinely concerned about what to do with their enormous revenue - an internal battle was fought over spending it on ever-increasing government programs versus cutting tax rates even more (read Alan Greenspan's book for an interesting narrative regarding that time).

The perpetual war on terror that ensued after 2001 brought a quick resolution to that issue.

Don't be too quick to credit Clinton for this surplus - his 1994 proposed budget called for $200 billion in deficits, in perpetuity. It was rejected by the Republican - dominated Congress, who proposed the tax cuts you referenced and led to the "unexpected" surplus. Facing declining public approval ratings, in 1996 Clinton finally proclaimed "the era of big government is over" and signed Congress's budget proposal. The Treasury ran its first surplus in 1998. As I recall, this was at least two years before it was anticipated.

Strange how that word "unexpected" comes up so often with government's predictions about anything.

If the capital gain on that transaction is set to increase by 21.5%, it makes perfect sense for Balmer to trigger the capital gain now...obviously. What remains to be seen however is if, or how much of that stock he will buy back. That will be the acid test of Balmer's confidence in the company. If you're still not sure, ask Warren Buffet what he would do?

"Appearing on the PBS show Money World in 1993, Buffett was asked what investment advice he would give a money manager just starting out. “I’d tell him to do exactly what I did 40-odd years ago, which is to learn about every company in the United States that has publicly traded securities.”
Moderator Adam Smith protested, “But there’s 27,000 public companies.”
“Well,” said Buffett, “start with the A’s.

I know a certain company that starts with an "A" Ballmer might come across and it would probably comply with Buffet's margin of safety. Microsoft on the other hand is not a good proposition.

There's a lot of uncertainty in it though, Buffet's main return has been from buying early into companies that were likely to rise in value and then using that to invest in products everyone is going to want or need like clothing, drinks, insurance, electricity/gas, transport. The insurance side is yet another of those money-making-money schemes.

He's made a lot of losses and the big gains come from very few wise choices that paid off big-time over a long period of time (40+ years). That decision process isn't blind luck and has involved purchasing and managing companies but it's a far cry from from someone like Steve Jobs who has repeatedly taken companies from nothing up to billion-dollar businesses based on a quality-driven motivation.

Microsoft goes for market saturation - low profitability and low quality but volume to ensure wide acceptance. They have hit saturation point with Windows because they got in at the right time. In the mobile space, they have gotten lazy and quite honestly I think they're screwed. They haven't a hope in hell of getting close to the market dominance they had on the desktop side because the end to end experience is extremely important in mobile devices and tablets, especially with touch input and they don't have it.

They have major problems in the mobile space - they only have just over 1,000 apps (like the HP/Palm Pre) and they are now running into an issue with their .net development method that allows decompilation like Flash binaries:

http://www.engadget.com/2010/11/12/p...compile-nativ/

A lot of new devs aren't using code obfuscators so there's a possibility that the source code of popular apps (like bejewelled) can be stolen and cloned into a competing app. This will put loads of developers off making apps for Windows Phones if Microsoft doesn't do something about it. Stealing binaries for jailbroken iOS is one thing but the source code is very different and this could turn out to be a major disaster.

If they make screw ups this big and this regularly, selling stock and getting out is the most sensible thing to do. What is interesting is that big companies like Microsoft and Adobe don't seem to get how the dynamic nature of technology is going to ruin them unless they keep up. It took 3 years for Adobe to wake up and get Flash on a mobile platform and it's as good as dead in the water now.

Take a look at your desktop or laptop and then look at your phone. One day that desktop/laptop will disappear and your phone will still be there. The iPad proves this because when you take it apart, it's the same as a phone yet people can make it fulfil most of the needed daily functions of a laptop. Just a phone and a screen dock will suffice. Throw in some cloud computing and most consumers will have everything they need. With multi-core phones eventually, even content creators can turn to this setup. Whoever wins the mobile race or at least stays in it will succeed in the long term. Microsoft is losing.

Microsoft didn't get to saturation point, they started at saturation, for reasons we don't need to go into here. Consequently, they rode the PC wave during the 1980s and '90s, and a perception by the public as being the only serious alternative, again for reasons we don't need to go into. The point being, when the growth in the PC business slowed, so did the growth of Microsoft. No mystery there at all. As for other product markets, Microsoft has failed to be dominant in them because they did not start with the same advantages right out of the gate. Leveraging Windows into mobile devices simply has not worked, and they've been conspicuously lost trying to figure out how else to win.

You are absolutely correct Marvin, but Buffet does not buy technology companies. In his characteristically spare language, he claims he does not understand them.

I don't believe that's literally the case, since he is perfectly capable of evaluating Apple or any other company on its fundamentals. So, I've chosen to interpret his statement that he doesn't understand how Apple can grow a business that requires constant innovation - in other words, how do you convince the market to buy a product today, with complete knowledge that those same products will become less expensive and better tomorrow? That never bothered me about Apple, since their potential market had been under-appreciated for years. I think it's more appreciated today, but there remains plenty of room for growth.


Buffett didn't exactly buy Gillette or KO when they were startups. People had already been wearing underwear and shaving and drinking Coke for years, and Acme Brick (later Justin) was a hundred years old when Berkshire acquired the company. These several are textbook examples of the kinds of companies he bought. They were already reliable, staid, well-managed, but underappreciated money machines. Totally boring, not likely to shoot to the stratosphere overnight, but certain to rise in value. Furthermore, it's easy to understand bricks, and underwear, and as Buffet has said, he likes waking up in the morning with the assurance that he and another 100 million American men have to shave.

Berkshire's insurance business (the Government Employees Insurance Company, known to most by the little green guy) preceded these acquisitions by many years. An insurance company is even less sexy but even easier to value.

Another thing to bear in mind was that KO's stock declined a miserable 50% after Berkshire's acquisition. It didn't bother him, since his fundamental reasons for investing in the company remained sound. For those same reasons, it didn't bother me either when AAPL declined 50% at various points in its history. I liked it at $24, and I liked it twice as much at $12 (and I think it split twice since then)


Precisely. They don't have it. Adobe, which used to be a great innovator, also lost "it" as well. Apple has long been recognized for their product quality, have enjoyed high margins on them, and has only recently focused on market saturation. As a company, they're expertly managed, fiscally frugal to the extreme, and enjoy a corporate culture that can't be bought, sold, or implemented at someone's whim.

Based on all that I know about Buffet's investment philosophy, which I've tried to emulate, is that Apple would fit his criteria quite nicely. Except... he doesn't buy tech. I do.

Based on this same philosophy, I have avoided MSFT.


QFT. We all know who's winning. It's not as if AAPL has no competition, but they're behind the curve and are likely to stay there, just close enough to keep Apple on its toes. Competition is always a good thing - I'm glad it's there.

MSFT was never an innovation company at all. They never had much in common with Apple, and became fat and lazy after Gates left. They've missed whatever opportunity they may have had to become a competitor. They're not going away - they'll have a reliable revenue stream for a long time based upon enormous corporate deployment - but MSFT's future is going to resemble IBM's or UIS at best. They'll have to get their management act together for even that much. What is their business plan anyway? Does anyone know?

Edit: As a company, MSFT's business is fundamentally flawed in that they don't design the hardware that runs the products it sells. How this philosophy can succeed in the market when MSFT partners with any number of hardware vendors - whose main focus is to build whatever complies with their spec as cheaply as possible - is something that never made sense to me. Given this flaw there's no way MSFT can enjoy end-to-end consistency and quality control. Apple has long been criticized for their "closed" philosophy but that's yet another reason for success. Besides, the App Store essentially opened up their previously closed world to hundreds of thousands of vendors, all of whom work for free (as far as Apple's concerned - and they get to skim a piece of their revenue as well). Their iAds will add to this. As a business model, it's ingenious.

a dying company..... what makes you think they are dying? their profit was just as high as apple last quarter, and apple has insane profit for what they sell.

or do you think apple is dying too?