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Does Microsoft Still Matter?

July 11, 2013

Is Microsoft still relevant?

That is a question being raised today after the unveiling of the “One Microsoft” re-org announced today.

It is a question that has been asked pretty much ever since Bill Gates stepped down from his CEO role in 2000, naming Steve Ballmer as his successor. It seems that ever since that point the firm has struggled to keep up with the rest of the world; its smartphone and tablet offerings are receiving rave reviews in the tech publications, but these offerings have arrived years (literally) after the like of Amazon, Google, and of course Apple, have already staked their claims to the “new tech market”

Even its Xbox gaming system has struggled to gain traction – while immensely popular, and the platform of choice for many hit games, it has only recently been able to consistently turn a profit. In short, the firm has been living on the products and services that were invented and put into action by Bill Gates when he ran the company. I am not knocking those products – this post is being written in Microsoft Word, all of my work with both accounting and financial analysis takes place in Microsoft Excel, and my presentations have always, and still are, done in Microsoft PowerPoint.

Microsoft has been able to generate incredible profits and cash flows from maximizing their enterprise and server products/services, and have used these profits to subsidize their entry into the gaming/tablet/smartphone markets. Microsoft, as of their last earnings release, had generated $22 BILLION in cash flow from operations. Firms would do anything to replicate that kind of earnings power, but the stock has pretty much been flat for a better part of a decade (coinciding when Gates left the CEO role).

Below are several links discussing the announcement, Microsoft’s earnings, and a stock ticker showing the stock performance over the last 10 years, so feel free to read them – quite interesting.

My question is…with all of the talent, expertise, and piles of cash that Microsoft has…is it really fair to declare them irrelevant? Is this re-org, which is a gigantic shake up, the kick in the pants that the company needed to restart its growth and product development? They have the tools, and the opportunity – Apple is weaker than it was, and Samsung just had a disappointing earnings release, so this could be a great opportunity for Microsoft to recapture market share.

It will be interesting to watch!

Thoughts?

http://www.nbcnews.com/business/microsoft-ceo-unveils-one-microsoft-broad-shakeup-6C10599661

http://www.forbes.com/sites/matthickey/2013/04/18/microsofts-2013-q3-earnings-72-per-share-20-49-billion-in-revenue/

http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY13/Q3/default.aspx

http://www.google.com/finance?q=NASDAQ%3AMSFT&ei=WyzfUaDaFq6F0QGyjgE

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