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AAPL Stock: 110.37 ( -1.97 )

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Microsoft bleeding cash?

updated 11:20 am EDT, Mon April 2, 2007

Microsoft Bleeding Cash

Microsoft's cash reserves are less than half what they were two years ago, according to a report. The Redmond developer, which once had as much as $64.4 billion in 2004, is now down to $29 billion at its most recent tally. The company claims that the shrink been a deliberate choice to buy into smaller companies and to reward investors.

"We're focused on striking the right balance between investing in the company's growth and returning capital to shareholders," said Microsoft's investor relations manager Colleen Healy.

However, the change may also be a reflection of the company's unappealing prospects, the article notes. The company has in recent years gained security by settling an antitrust trial for its Windows OS and has seen its share price largely unmoved, selling below $30 since 2001. Buying back shares, which the company plans to do until 2011, is a way of persuading the stock market that its shares are undervalued.

By contrast, the company's historical rival Apple has seen rapid growth of its at once diminutive stock, seeing a pair of 2-for-1 share splits while increasing to over $90 per share during the same five year period that saw Microsoft's stocks effectively remain stale.




by MacNN Staff

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  1. MacScientist

    Joined: Dec 1969

    0

    Microsoft Finances

    Despite what Microsoft claims, we know that less money is not a better situation than more money. However, the real test of business succcess is stock price. Hop over to MSN.com and take a look at Microsoft's stock performance versus Apple's performance since 1999. Long story short, Microsoft is lagging the NASDAQ index, whereas Apple is substantially ahead.

  1. Beechlady

    Joined: Dec 1969

    0

    LOL

    And there's a picture of the blockbuster ZUNE with the article!!!!!

    *snicker*

  1. testudo

    Joined: Dec 1969

    0

    Re: microsoft finances

    Sorry, but you're wrong. Less money is a better situation then more money. As a company (and esp. as investors), you don't want your company just piling up cash reserves. It does you very little. You get some interest income, but nothing like the return you can get if you invest it in R&D, other companies, etc. And since MS has been doing dividends of late (since their stock no longer shoots through the roof every quarter), that money also has to come from somewhere.

  1. macbones

    Joined: Dec 1969

    0

    Where to sink that cash

    Well, maybe they should buy 20 billion worth of Apple stock. I suspect that would benefit shareholders quite a bit. In fact they'd likely have to work a lot less hard to make a profit. In fact, if they'd ve sunk 60 bil into Apple when she was $11/ share, they'd be doing better that a dinosaur ever could.

  1. jhawk95

    Joined: Dec 1969

    0

    re: where to sink that c

    That is hilarious and oh so true.

    Sam Walton went to Ben Franklin 5 & Dime and asked him to franchise putting store in small towns.. they laughed and refused, so he made his own stores... WalMart.

    Who got the last laugh? Bill Gates should quit while he's behind and invest in a teu Innovative company that knows how to turn a profit in the 21st Century.

  1. MacnTX

    Joined: Dec 1969

    0

    Cash Burn

    Microsoft has been burning cash by the billions now for quite some time. Just take a look at the absolute ton of money they've lost on the Xbox, Zune, MSN, Tablet PC, Windows Mobile, etc.

    The only two money makers they have in their stable at all these days are Windows and Office. Everything else there is bleeding cash like there is no tomorrow.

    The day is definitely coming when this will catch up with them....

  1. jhorvatic

    Joined: Dec 1969

    0

    Cash on hand is always go

    I'm sorry but cash on hand is always good. It means the company can withstand bad times and still move forward. A company that is strapped for cash will just spiral down until it crashes and is gone. You can't do R&D with no money which means you can't move forward with new products to get you moving again.

  1. SubPop

    Joined: Dec 1969

    0

    operating vs stale cash

    I'm sorry but cash on hand is always good. It means the company can withstand bad times and still move forward. A company that is strapped for cash will just spiral down until it crashes and is gone. You can't do R&D with no money which means you can't move forward with new products to get you moving again.

    Absolutely. Categorically. Incorrect. A business is not a bank - stockholders do not give money to a business just to throw it under a mattress. Businesses are meant to take that money and invest it in making more money. Your argument, while making sense from a "safe investment" standpoint, makes no sense from a business standpoint, because you don't want the business that is holding your cash to use it to fund "down times". You want the business to be able to recover from the down times through operations and smart decision making.

    Yes - operating cash is good, but only good enough to combine with other current assets (ie receivables) to be able to cover current liabilities - you don't even want the business to hold on to enough cash to cover long-term liabilities because, again, you want the business to be able to leverage debt (other peoples money) to get a better return on YOUR money. You want the business to invest your money in furthering the business, or you want the business to return your money so that you can invest it yourself.

  1. SubPop

    Joined: Dec 1969

    0

    ...Stock price?

    However, the real test of business succcess is stock price.

    Except for the whole "Enron/WorldCom/Tyco/Global Crossing/Nortel" thing, you may be right.. Oh yeah, as long as you also make exceptions for those stocks that people invest in on speculation.. which is all of them.

  1. testudo

    Joined: Dec 1969

    0

    Re: ... stock price

    however, the real test of business succcess is stock price. Hop over to MSN.com and take a look at Microsoft's stock performance versus Apple's performance since 1999.

    Um, to go further on this, its really, really wrong. Stock price is only a test based on your perceived market and outlook. And since stock price is completely based on supply and demand, with demand based on perceived hope for large amounts of financial growth, a stock's price has really nothing to do with a company's value or its success. (Besides Enron, look at Apple. Several years ago, the stock price was so low, Apple's market value was less then its net worth!) h***, considering that analysts can easily manipulate a stock's value by just what list they stick it on should show you that it has no meaning at all.

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