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  • #31
    An example of what?

    That statement is the flip side of the M&A coin. If shareholders get profits back they can decide where the best place to park them is.

    I don't know if it's obvious that you can pull the numbers out. but my suggestion would be to look at companies like MSFT that expanded till they reached the rational limit of size, then kept an enormous cash hoard and started buying companies all over the place. What is the marginal return on capital for them? How does it compare to market returns? Are they destroying value by holding on? If they're able to generate excess returns then why wouldn't they be able to get financing as a leaner company instead of hijacking it from lazy shareholders?
    12-17-10 Mohamed Bouazizi NEVER FORGET
    Stadtluft Macht Frei
    Killing it is the new killing it
    Ultima Ratio Regum

    Comment

    • #32
      Or even GOOG (I know you love 'em, but do they need to be buying **** like YouTube etc)? Why shouldn't they free up some of their stored capital? Do we really believe that what made them a great company to now will continue to make them a great company?
      12-17-10 Mohamed Bouazizi NEVER FORGET
      Stadtluft Macht Frei
      Killing it is the new killing it
      Ultima Ratio Regum

      Comment

      • #33
        MSFT is an interesting case. It may indeed make sense for MSFT to use M&A to maintain its monopoly margins.

        GOOG has a much smaller rock to hide behind.

        Edit: This was a cross-post, by the way.
        I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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        • #34
          It may indeed make sense for MSFT to use M&A to maintain its monopoly margins.


          ???

          As I understand it their major acquisitions are web content that has little to do with maintaining OS monopoly.
          12-17-10 Mohamed Bouazizi NEVER FORGET
          Stadtluft Macht Frei
          Killing it is the new killing it
          Ultima Ratio Regum

          Comment

          • #35
            Those major acquisitions are dogs, no doubt. My point is that among all acquisitions (MSFT and otherwise), M&A may make sense to maintain a monopoly position. In the case of MSFT, those areas are the Office productivity suite and the OS.
            I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

            Comment

            • #36
              They have such a lockdown on those I don't see them as needing much money to maintain. In the case of their two major competitors for OS (mac and *nix) they CAN'T buy the competition (for completely different reasons in each case).
              12-17-10 Mohamed Bouazizi NEVER FORGET
              Stadtluft Macht Frei
              Killing it is the new killing it
              Ultima Ratio Regum

              Comment

              • #37
                MSFT believes that the other potential OS and Office competitor is the internet browser. Seems dubious, but you never know.
                I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                Comment

                • #38
                  The other OS competitor is the internet browser.


                  Oh, I doubt that...

                  If it happens, it's decades away.
                  12-17-10 Mohamed Bouazizi NEVER FORGET
                  Stadtluft Macht Frei
                  Killing it is the new killing it
                  Ultima Ratio Regum

                  Comment

                  • #39
                    Seriously, MSFT probably should just fire all of its programmers. They don't do much to maintain the monopoly anyway.

                    I cross-edited you, by the way.
                    I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                    Comment

                    • #40
                      The online office software is much more reasonable than OS online.

                      Anyhow, like I said it doesn't appear that MSFT needs the ridiculous amount of cash on hand it has (had?) in order to maintain monopoly position. Its size is TREMENDOUS relative to competition.
                      12-17-10 Mohamed Bouazizi NEVER FORGET
                      Stadtluft Macht Frei
                      Killing it is the new killing it
                      Ultima Ratio Regum

                      Comment

                      • #41
                        Anyway, back to the real discussion is it obvious why execs would prefer growth to disbursement while shareholders (and efficiency!) would probably want things the other way around?
                        12-17-10 Mohamed Bouazizi NEVER FORGET
                        Stadtluft Macht Frei
                        Killing it is the new killing it
                        Ultima Ratio Regum

                        Comment

                        • #42
                          MSFT has paid out most of its cash in dividends.

                          GOOG seems like it's hoarding a little bit though. Scared of MSFT.
                          I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                          Comment

                          • #43
                            I'm not up on recent developments. Last I heard MSFT was sitting on an enormous war chest (this was many moons ago).
                            12-17-10 Mohamed Bouazizi NEVER FORGET
                            Stadtluft Macht Frei
                            Killing it is the new killing it
                            Ultima Ratio Regum

                            Comment

                            • #44
                              They had $50 billion+. Special dividends have reduced this to ~ $20 billion. Probably should be more in the range of $10 billion, but for a company of MSFT's size, that's more a quibble than a serious misalignment.

                              If they still had $50 billion+, then they probably would have bought Yahoo!
                              I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                              Comment

                              • #45
                                Originally posted by KrazyHorse
                                Anyway, back to the real discussion is it obvious why execs would prefer growth to disbursement while shareholders (and efficiency!) would probably want things the other way around?
                                Yes, I think this is obvious. This would seem to argue against running your company with financiers or salesmen, by the way.
                                I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                                Comment

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