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January 30, 2007

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Bruce Hamm

So Henry, I agree that Microsoft has not really grokked that they are not going to be able to build their way out of the current situation on search, but the display side remainds very strong and sizeable. What large scale moves would you make if you were in Ballmer's shoes? Move on Yahoo? 99 year deal with Google on monetization? Spin out the MSN/ad assets to claim some value there? You say it is over, but the co. has the means, motive and opportunity to take action. What is their best course and what actions should we all look out for as worthy pursuits?

Bruce Hamm

So Henry, I agree that Microsoft has not really grokked that they are not going to be able to build their way out of the current situation on search, but the display side remainds very strong and sizeable. What large scale moves would you make if you were in Ballmer's shoes? Move on Yahoo? 99 year deal with Google on monetization? Spin out the MSN/ad assets to claim some value there? You say it is over, but the co. has the means, motive and opportunity to take action. What is their best course and what actions should we all look out for as worthy pursuits?

Henry Blodget

Thanks, Bruce. I think they should spin all the web assets out. Create a separate company with a separate currency and separate stock option plan, one that is free of the sideline status the division will always have within Microsoft. Only as a stand-alone company will MSN et al be able to attract and motivate the people it needs to gain market share. The conflicts and second-fiddle status within a massive global software company are too much to expect the the best web folks to put up with.

Microsoft would surely view such a move as a defeat, but I don't think they need to see it that way. They (and their shareholders) would still hold the majority of the equity and would benefit from any upside. They would also, finally, be free of the mission of having to compete with everyone from IBM and Oracle on the enterprise software side, Apple in PCs and music, Sony, Nokia, Blackberry et al on the device side, and Google and Yahoo on the web. No company can do it all, not even Microsoft.

walt

Why anyone would pay 20X earnings for MSFT boggles.

John K

I think you are right about Microsoft having lost, and am surprised that few people see that.

The problem with spinning out MSN is that NO ONE would want to buy it. It's a giant web property that's not profitable and GETTING WORSE, margin-wise (see: http://gotads.blogspot.com/2007/01/woeful-q4-for-microsoft.html )

Besides, Ballmer is SO FAR from that kind of thinking, recently decrying the spin out of MSFT Sidewalk.

Stephane Rodriguez


Microsoft's Office itself is also dead.

Office 2007 moves toward collaboration, BI and file sharing (cms), but there are simple alternatives out there that are open, interoperable, powerful, thin, and sometimes free. The huge problem of Office 2007 is Office 2007 itself. No sane person would build on top of a bloated thing like that, instead of building for the future.

Neal S. Lachman

It is tiring to see people claiming that the web war is over, and that a particular winner has surfaced. I am still of the opinion that the web war has just begun, and that while Google may have won a few battles it may not win the war.

There are raving reviews on the latest Live development: Microsoft Live Earth. All respect due to Google, but this is Microsoft we are talking about. I can't imagine that Balmer and Gates would roll over and let themself get screwed royally. I think MS is getting stronger now, that it is building a real strategy, and that it will be more aggressive in 2007.

One thing I am sure of: The war is not over.

NSL

PS: Henry, tell us how you feel about your triangle-issue with Cramer and David Weidner. Post an article about it, here. Come on!

The Smartest Guy in the Room

Blodgets Quick Slide Into Blog Irrelevance!

Dan Rathers

Ha HA...

If Quattrone's rehabilitation is a signal that the boom is back, the re-emergence of Blodget might suggest that it's also about to be over. Blodget has somehow made a career of dubious stock picks that were intended to serve as leads for the Merrill Lynch & Co.
It is a sad commentary that Blodget is allowed to espouse his opinion on public companies such as Yahoo on his blog, and that people actually post comments there. It is embarrassing that some press called AtlasBooks was willing to print and distribute his new book. And it is shameful that Slate, Newsweek and New York magazine would print his pap when there must be an honest, hardworking analyst or journalist out there who could use the work.
But the coup de grace and sign of the apocalypse must be Blodget's Jan. 9 commentary, in which he rails against six personal-finance publications for publishing stock picks for the new year. Note: One of the magazines mentioned by Blodget is Smart Money, which is owned, in part, by Dow Jones & Co., which also owns MarketWatch.
"Professional magazine editors are probably worse at picking stocks than professional money managers," Blodget writes, "if only because money managers pick stocks for a living and magazine editors don't."
What Blodget says is true. But consider the source: an analyst drummed out of the profession for knowingly praising stocks he knew were, at best, extremely risky and, usually, terrible. Blodget himself lost a bundle in tech stocks.
Then again, bad picks are one thing Blodget knows very well.

Benjamin

Sliding out into a new company is well for strategy purposes.. in generall

But I think the current approach ist way good enough. All it takes ist faster developing. It seems Live.com is sleeping. You really do not want to have more than a week between a new release of fantastic online software and functionalities.

TannerShot

Here here on the Bloat that is Office, when I can open docs.google.com and create a spreadsheet and edit RTF word documents, half the requirements for office went out the window. Presentation and Databases still need solved. But that will happen soon...

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jimb12345

I think microsoft does a great job with this. Like they do with everything else. Keep up the good work.
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