Wednesday, October 06, 2010

A Case of the Microsoft Downgrade Blues

Oh, great, we've hit a case of the downgrades as a sequel to the quarterly results that no-one bought.

Specifically, Ms. Friar at Goldman Sachs downgraded us with a variety of reasons and expectations. From Mr. Todd Bishop: Goldman downgrades Microsoft, makes case for major overhaul. Snippet of some gold Goldman Sachs from there:

Flashbacks to MSFTExtremeMakeover's last blog entry: Eight Years of Wrongness. Upgrade the "Eight" to a "Ten".

The more interesting follow-up by Mr. Bishop is adding up the numbers in Goldman Sachs' assessment comes up with a $30 share price vs. Goldman Sachs' downgrade to $28: Numbers How Goldman Sachs values each Microsoft division.

Now then, if this report was dated, say, 2006 I would be remarking at the exceptional smarts and bravery of Goldman Sachs to step forward from the meek institutional investor crowd that have been giving Microsoft a free ride. Instead, now that the farm's barn doors have been wide opened for a while, Ms. Friar is walking around saying "Without preventative re-enforcement and diligence of door utilization, it's possible for the horses to escape from here."

The timing is just peculiar, and is resulting in the resumption of resignation requests for Mr. Ballmer: CNBC's Fast Money Microsoft's Steve Ballmer Needs to Go Analyst. Also, Ms. Victoria Barret follows-up with Goldman to Microsoft Do Something - and reflects on her summer story Time to Break Up Microsoft.

Sorry Mr. Institutional Investor, your voice was needed years ago. You have been complicit and ineffective during the worst of it. What's the agenda here? It would have been better for a coalition of institutional investors to speak with one voice, vs. Goldman Sachs. Because... given how Goldman Sachs has proven itself untrustworthy in attempting to destroy the American economy for its own fortune (cue their extended pinky touching edge of mouth), you have to wonder if they have their own greedy agenda - are they betting against the Microsoft stock and expect to benefit from its near-term decline? Or hope to force in a Neutron-Jack CEO to wipe out half the employees and all non-profitable groups?

Or do they expect within a year for Microsoft to have had a very successful consumer cycle and then reward that with an upgrade, in the meantime having had bought up a good bit of cheap stock? Are they looking for quick short-term gains vs. a thoughtful consideration of long-term growth? I feel a baleful gaze cast on us.

And mainly: it's a very poor matter of timing for a break-up. We're about to have a mobile phone come out that actually binds the companies divisions far closer than ever before: Office, Windows Live, Xbox Live, Bing, and Dev Div: this damn thing is the antidote for break-up talk. WP7 wouldn't be impossible to create with a break-up, but it'd be exceptionally difficult. WP7 is pulling together huge resources that none of our direct competitors have.

Now then: stepping back to Classic-Mini mode. Would I like to spin off parts of Microsoft. Oh yes. Less money wasted and less people? It's a Win-Win two-fer. How about our health solutions group to start with? Other Fools: Online Services Division: Microsoft Time for a Break-Up?

I think it would be healthy to actually encourage spin offs. Give new groups funding for two years and then assess whether this will continue to be a Microsoft endeavor or not. If not, the group can spin off as their own new company, with Microsoft as a stake-holder, and go their own way. So if Midori is not in our future then tip the hat to them and let them take off on their own.

Back to Mr. Ballmer. If you want to end on a high-note, now's the time. Mr. Ballmer can declare victory in the continued success of Windows 7, the innovation of Bing that's rattled Google, the alignment of products around the cloud, Kinect, and Windows Phone 7. It's going to be a while until the stars set themselves up like this again. Better to go out with victory than be chased out of Salmonberg by a bunch of fed-up institutional investors wanting real dividends and stock performance. You know: shareholder value.


-- Comments

128 comments:

Anonymous said...

Mini, as a long time reader and supporter I am a little disappointed at your petulant outburst on Goldman Sachs' analysis. I think reaching for the paranoia pills WRT their motives, or plain old ad hominem is not very constructive.

I do not find it surprising that it has taken this long for Mr. Ballmer's chickens to come home to roost. Perhaps they could not make it thru the cash-cow traffic jam :)

IMO it took the subsequent blows from iPhone, iPad, Android, Firefox, Chrome and a bitch-slapping from Google Apps to penetrate the craniums of Wall Street that things are not well in Redmond. Hence the delay in raising the flag.

The time to break up Microsoft was in 1999, it's too late now. It's not too late to exit unprofitable businesses, stop senseless spending on "R&D" which returns much less than competitors' investment dollar-for-dollar, stop trying to dominate every market, and terminate the Gates-era Darwinian lets-have-multiple-groups-do-the-same-thing foolishness.

Anonymous said...

Mini,
Your paranoia over Goldman's dark motives is understandable. Their motives are dark - always. Let's just acknowledge that and get it out of the way. However, let's also acknowledge that their motives are beside the point.

Ms Friar's analysis is very late in coming, but it's also correct.
-The tens of billions Ballmer has burned over the past decade is a crime.
-The destruction of MSFT's reputation with customers, partners and investors (and basically the whole world) over the past decade is a crime.
-The loss of competitive positioning over the past decade is a crime.
-The massive continuing losses in markets where the competition is minting money is a crime.
-The perpetual re-orgs, the promotion of failed executives, the utter lack of accountability for management is a crime.

And the list goes on.

It is probably just a coincidence, but Goldman is on the right side of this argument.

Anonymous said...

I suspect that with Ballmer, his leaving on his own will all be about a climate of face-saving on his behalf. Pull down the "Mission Accomplished" banner and have everybody tell him what a great job he did.

Otherwise, it'll end up being done like a Soviet-era coup.

Hmm. Either scenario could be entertaining.

Anonymous said...

As a former Softie I must repeat what others have said. There is life on the outside. If you are tired of this roller coaster then don't be afraid to poke your head up and see what's there.

Both Facebook and Salesforce opened their doors to Seattle last year. Not to mention Amazon and Google.

One of my friends posted this link for a recruiting event going on next week. If you're tired of the drama and stupidity like I was, maybe check it out.

http://www.eventbrite.com/event/896466355

Anonymous said...

Similar thoughts by Mary-Jo and her commenters:

Should Microsoft become multiple mini-Microsofts?

Anonymous said...

The Online Services Division (BPOS, etc) is a dud. I see us preaching that we are all in with the Cloud. However, this is FAR from Cloud Services. Don't competitors preach buy as you go (instant gratification) type services? It is basically just a hosting division for exchange that still requires a lead time of about 3 months for GFS to PURCHASE...I repeat PURCHASE the hardware. Just a joke in my mind and it is amazing that something executed so poorly is still a mystery to me.

It just seems like we are just blowing through cash because we are afraid of customers going to google. Sound business sense?

Anonymous said...

"Ms Friar's analysis is very late in coming, but it's also correct." AND "little disappointed at your petulant outburst on Goldman Sachs' analysis"
- Couldn't agree more with you both. Mini I am disappointed that you spent three fourth of latest comment on aggfavating about GS, I know they are evil but here you have to give them some credit. Obviously this was late, GS and others should have done this YEARS ago.

Ballmer has overstayed at least by 6 years I would say, actually he was a wrong choice to begin with, having a salesy guy run the software company which also was trying to enter the new markets such as search/smartphones (back then) was a joke. This must have been decided over at Friday night beer party at Gates house with Ballmer getting him drunk.

To unlock hidden value completely spin off the units as below (not as a subsidiary or under MSFT umbrella rather sell or spin off altogether) to unlock $30 or even higher value that analysts have been talking about:
- Ballmer and his buddies (spun off with a value of zero and assigned all the shareholder lawsuits)
- MSFT Software entity: let's not get overly aggressive here with breakup put all the software that can compete with IBM here i.e. Windows OS (both client/server), Enterprise software (SQL, Office, tablet, Servers etc etc.)
- MSFT Web: search, portal, live, MSN and all the social stuff
- MSFT Gaming: all the XBox related stuff
- Phone: kill it, stop the bleeding and save shareholders some money since it has a negative value probably, so no body will buy it anyway

Anonymous said...

Former Softie, could you re-submit that URL? It got truncated.

Anonymous said...

Is not "everything great" anymore Mini? i guess this is the hangover from the kool aid overdose at the company meeting. Reality is quite stubborn, it always sinks in.

Anonymous said...

The "Neutron Jack" reference struck a cord with me. I've long believed that when Ballmer leaves, no mattyer what the circumstances are, his replacement will do a massive hack and slash job.

Anonymous said...

>Former Softie, could you re-submit that URL? It got truncated.

Works for me. Maybe you copy/pasted incorrectly.

Anonymous said...

>So if Midori is not in our future then tip the hat to them and let them take off on their own.

Amen. Time to spinoff Edu labs, Office Labs, Live Labs to sink or swim. I bet a lot of them will sink as their main skill is political manipulation.

Anonymous said...

From earlier poster, never answered ... would love to see an answer:

1) I heard about a colleague who knew she was getting a "U" but quit just beforehand, her logic being that her U would never be part of her permanent record and therefore would not hurt future job possibilities here at MS. Is that true?

2) Anyone heard of a scenario where a "U" received a severance package or does a "U" mean you get nothing just have to wait for the goons to dump you on the street one day?

3) As I understand it, when contacted by employers seeking references, MSFT will only confirm the dates that you worked here and will not releae any details about the circumstances of your termination. True?

Anonymous said...

1) not sure

2) Yes, a U can (sometimes?) get a severance package, although the verbiage of the agreement if you take the money is SEVERELY restricting, including forcing you to agree under contract that you will not sue for any reason including Age Discrimination, nor badmouth Microsoft in any fashion. My husband had 3 U's in a row. I firmly believe they were trying to force him to quit beginning 2 years ago (he'd been with the company since the late 1990s) and when he didn't quit, they created scenarios in which he was guaranteed to fail and "earn" the U. Well, he got a severance offer, with SEVERE restrictions. I don't know if it had to do with his years at the company or not.

3) Apparently true: they will neither give references, nor report the reason for discontinuation of employment (quit, fired, for cause or not, etc). They will just give dates of employment. They also don't fight unemployment claims, but leave that up to the State to determine.

Anonymous said...

Look at the downgrade in perspective. Ballmer has been reduced to openly begging for the government to take away money from Linux and Android users and give it to Microsoft.

Goldman Sachs knows that government largesse is over-committed to propping up insolvent banks and pretending they are not insolvent. Protecting MSFT is a distraction the government can not afford, and will antagonize foreign companies and successful American companies that use free software. Not going to happen.

Anonymous said...

How many partners are at MSR? Craig Mundie's org is a massive black hole.

Hohm, Health Solutions Group, busines accelerator...etc. They suck up alot of people and $$.

Where is Ozzie? Mundie always talks of big dreams way into the future while the house is on fire!

Anonymous said...

If not, the group can spin off as their own new company, with Microsoft as a stake-holder, and go their own way.

Wish they'd done that with Flight Simulator instead of nuking it. Idiots.

Anonymous said...

Mini this comment on phone struck me as coming from way to low of a view:

come out that actually binds the companies divisions far closer than ever before.........

You know we could have been doing this for years WITHOUT the phone OS right? If we weren't so cloisted & scared of optimizing our best services and apps on a non-MS mobile platforms where would we be?

Another 50-100 million paying customers using xbox live? zune? others?

Instead we created our own dependancy on the OS and watched the game from the sidelines.

BTW - Agree on Goldman distrust. Doesn't mean they're wrong though. Probably just the first major player to say out loud what everyone is thinking. Just enough time before the board meeting to get the chatter going, not so much as people will forget.
Also kind of interesting that they would know this would likely poison our relationship with them. Which means our relationship with them isn't worth anything to them. That's sad in it's editorial toward our relevancy.

Anonymous said...

Launching WP7 40 months after the iphone is nothing to crow about. Is mini actually a Ballmer fanboy or was this a sarcastic post? Looks like Mini just earned a huge bonus/promo in this review cycle

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Anonymous said...

I have some different opinions, yes, we can say we are very successful in windows 7, office 2007, etc.
but those are the past. and their future growth is very limited and may decline in the very near future. What I am worrying is that for our current two biggest business, windows and office, they have peaked, look at how the ipad and android tablets changed the market, in the future, especially when people are changing to the cloud, pc and notebook will not increase in U.S., the tablets marketshare are the one that will increase dramatically. for office suite, it has peaked at office 2007, this year, the only decline division is MBD, when we changed to cloud, we'll definitely earn less, if we earn more, then whey do our customers change to cloud if they are more expensive? they want to pay less and with competitor's pressure like google, cisco, oracle, etc. our profit margin will drop, no doubt about that. Without the two biggest cash machine, how can we expect our stock price to increase, the bing and windows phone 7 will do that? let's pray for that. I'm not surprised at the downgrade, it reflects the company's performance. you can say market is wrong, but did you look at the 10 year performance of msft? are you saying that the market is wrong about microsoft for 10 years?

Richard J Green said...

I am a avid Microsoft fan and I do what I can to spread the love, yet I find it entertaining to an extent (worrying to the rest) that there are so many people complaining about the state of Microsoft whilst working their, yet people with a genuine interest in the company and people (like myself) with technical talent fail to get opportunities.

Good luck Microsoft.

Anonymous said...

I have some different opinions, yes, we can say we are very successful in windows 7, office 2007, etc.
but those are the past. ... What I am worrying is that for our current two biggest business, windows and office, they have peaked, look at how the ipad and android tablets changed the market,


Sadly correct.

The future is in desktop operating systems since they are now driving phone and tablet development--OS X in Apple's case and Linux in Google's case. Apple's desktop operating system has now propelled them to become the 2nd biggest company in the world and Google is saying that Android is already profitable and could soon be a $10B business for them.

Of course, even though Microsoft's MAIN BUSINESS is selling a desktop operating system, years of bureaucracy and bloat and mismanagement and poor engineering and bad design decisions have resulted in a product (Windows) which is laughably unsuited to participate in the future.

Michael Campbell said...

> the innovation of Bing that's rattled Google,

Wait, what? What Google-rattling innovation are we talking about here; pretty background images?

Anonymous said...

"Back to Mr. Ballmer. If you want to end on a high-note, now's the time" - sorry mini I have to disagree, this won't be high-note rather a very very low note. The best thing that can happen to microsoft now is if Ballmer as a true man leaves with a concession that it's time for a change (and as a byproduct may even save gates/ballmer as buddies). But alas that wont happen and it's on a path to get ugly with the board (assuming they as a group do their job)...

Anonymous said...

"The timing is just peculiar"

I'd credit the recent dividend decision for that. Institutions had been pushing for a double as recently as September, when Klein and Koefoed met privately with them in New York. Goldman was almost certainly included. Several were probably calling for Ballmer’s removal as well given business developments and the resulting stock performance this year especially, but also over the decade. Instead, the board gave them 23% and the Ballmer bonus "rebuke", which in the face of losing mobile and then a shockingly similar loss in tablets is almost tragic in its ridiculousness. I suspect that was the final straw, because it removed the last possible catalysts for the stock in the short term.

But moving from the timing to the content, the concerns are 100% valid (though I don't agree with all the suggested solutions). And notice that nobody from MS has refuted it, which is highly unusual given Goldman’s stature and the extensive and blunt nature of the criticisms.

Anonymous said...

Now it looks like Microsoft might buy Adobe! Because Microsoft isn't already bloated enough and its record of success with multi-billion dollar acquisitions is so good. Or maybe it's because Flash is the future? Two wrongs make a right?

Say goodbye to the cash.

Someone really needs to get Ballmer under control. Microsoft was saved by Jerry Yang's stupidity when Ballmer tried to massively overpay for Yahoo. What stroke of luck will save the company from Ballmer's now?

I'm sure Steve Jobs and Eric Schmidt are laughing their asses off right now.

Probably Ballmer is doing this just so he can give the huge banking fees for the acquisition to someone other than Goldman.

Seriously, *every single MSFT employee* needs to write an email to Ballmer and the board telling them NO.

Watching Ballmer destroy Microsoft from the inside out would be funny if it weren't so sad.

Anonymous said...

Another random acquisition by Microsoft in the works?

Microsoft Considers Buying Adobe To Fight Apple

Anonymous said...

Things like this is why we were downgraded:

http://news.cnet.com/8301-30686_3-20018844-266.html?tag=nl.e703

What more evidence do we need to prove that MBA's dominating leadership positions cannont innovate in a technology company.

I saw this ten years ago when job descriptions on the career site started listing MBA preferred or required for leading an engineering team. Just look at how many job descriptions say that today.

MBA's focus on cost/risk analysis and punt cool innovative features that don't generate X amount of revenue.

Suggestion for the next round on layoffs: Look at everyone in the company who has an MBA, and if they are oustide of Finance or Sales - punt them. Especially if they dabble in war room / feature triage.

Anonymous said...

Microsoft buying Adobe reeks of so much desperation. Really, Ballmer? Microsoft can't offer anything compelling on its own? That's a slap in the face to everyone who works at Microsoft. The fact that Microsoft can't compete with a company that was almost bankrupt ten years ago says a lot.

Adobe, like Yahoo, is a dying asset. An acquisition will be a windfall for Adobe executives and employees and a disaster for everyone else.

Being a long-term shareholder with Ballmer as CEO has been extremely maddening and painful. At least MSFT employees are paid each year.

Anonymous said...

Acquisition of Adobe being discussed. That's a game changer

http://www.reuters.com/article/idUS127585554920101007

Anonymous said...

Will Microsoft get bigger and maybe acquire Adobe?
http://bits.blogs.nytimes.com/2010/10/07/microsoft-and-adobe-chiefs-meet-to-discuss-partnerships/

skc said...

>>Wait, what? What Google-rattling innovation are we talking about here; pretty background images<<

Considering Google shamelessly copied it...I'd say one, for one. In case you haven;t noticed Google has lifted quite a few ideas from Bing. Have you seen their recent changes to their image search?

Yeah.

Anonymous said...

Since buying Adobe would be the absolute opposite of what everyone in the world has been recommending for Microsoft for the last 5 years I'm going to say that the rumors are true and that is Ballmer's eventual direction because how could Flash not be worth the $25-30 billion that would cost after markup?

Anonymous said...

I've been trying to get out of OSD for a while as I'm pretty sure someone high-up in MS is going to cut bait in the next 2 years. Fun while it lasted (there are talented people here and I liked the accelerated product cycle) but I'm ready to do something else.

Anonymous said...

UH OH - meeting on Friday about "updates" to U.S. Benefits. Shareholders "win" again.

Anonymous said...

Mini, take a look at the proxy statement. Blakrock now owns over 5% of the company. Maybe there is hope of an external voice having an impact.

Anonymous said...

Friar is a sell-side research analyst - not an investor. Her job is to advise her clients on whether she thinks they should sell, hold or buy the names that she covers (and no, Goldman Sachs is not her only client). If she has a buy rating on a stock than she has to justify why she thinks the stock will appreciate from here. If she can't, she has to rate it a hold (or in some cases a sell).

Anonymous said...

Oh, goodie, surprise Town Hall Friday morning to reveal the evolution of Microsoft benefits.

I don't know how much benefits weigh in on recruiting, but now that we've dropped 20 points in student interest, I hope they don't make it any worse to - sorry Mini - hire new people.

Don't take my towel, Sis!

Anonymous said...

Anyone with any idea about the "evolution" of our benefits tomorrow at the town hall?

Anonymous said...

And speaking of our "super-duper" IE9 with so much touted GPU acceleration - latest FF 4 beta and Chromium dev builds already support that as well. I bet they will be released much earlier than IE9.

Anonymous said...

Let's see if the latest round of "This will bolster the stock price works." IEB re-org and benefit changes. Doubt it.

Anonymous said...

Surprise town hall tomorrow? Let me make a prediction. Not only will they make your health benefits a lot less competitive, but they'll also blame Obama for it. You guys are so screwed.

Anonymous said...

Any guesses what tomorrow's "evolution of US benefits" will bring? Tweaks to accomodate Obamacare?

Anonymous said...

"Launching WP7 40 months after the iphone is nothing to crow about."

Yeah, but look on the bright side. That was 8 months less than it took the Office team to respond to Gdocs, and 80 months less than it took the Server team to respond to VMware. So comparatively speaking we kicked butt.

/sarcasm

Anonymous said...

In case you haven;t noticed Google has lifted quite a few ideas from Bing. Have you seen their recent changes to their image search?

Yes and I hate it. Google image search used to be laid out nicely with good information about each image that you didn't have to hover over to see. And now with their new page scrolling nonsense it's easy to lose track of where you are and harder to give somebody a link to an image search page.

So, great, Bing is an inferior product to start with and for some reason despite having dominating market share Google decided to copy the inferiority. Does not speak highly of Microsoft or Google.

Same with the nonsense links at the left of the Google search page now. What was wrong with keeping the links at the top, like they were and still are.

It is painful to watch Google copy Microsoft's bad design decisions and painful to hear Microsoft people tout that as some kind of victory.

Anonymous said...

"Ms Friar's analysis is very late in coming, but it's also correct....."

10/10 on your whole comment.

Anonymous said...

"As a former Softie I must repeat what others have said."

No, you really musn't. Everyone here already knows they have other options. So take your "I left and have self actualized except that I'm back here trolling the MS site" bs and go away.

Anonymous said...

"Wish they'd done that with Flight Simulator instead of nuking it."

Good example. There are probably dozens of others and a hundred lessor known ones. All of which could be spun out along with interested employees and collectively might end up being worth something some day. Can't do any worse than Ballmer's "investments" have.

Anonymous said...

"You know we could have been doing this for years WITHOUT the phone OS right? If we weren't so cloisted & scared of optimizing our best services and apps on a non-MS mobile platforms where would we be?"

Great question, only delete mobile and just make it non-MS platforms. Worlds of possibilities, especially in the cloud.

Anonymous said...

"Shareholders "win" again."

Shareholders haven't won in 12 years. You must have the stock chart upside down.

Anonymous said...

re:

1) I heard about a colleague who knew she was getting a "U" but quit just beforehand, her logic being that her U would never be part of her permanent record and therefore would not hurt future job possibilities here at MS. Is that true?

Does anyone know? Will receiving a U, and/or being involuntarilty terminated hurt your chances of returning to MS as a CSG, vendor, or FTE?

Also, a U can get a severance package? Say what? I thought severance was only for those "still good MS employess who we want to fire" not those who are deemed unworthy (U).

Does the SEVERE agreements for accepting severance include never working at MS again, in any capacity, as an earlier poster said they had in the exit offer, in writing??

Lastly, I've never heard of anyone getting more than one U ... or even surviving the PIP. Has anyone else?

Great to have real-world examples posted here of the choices/consequences we are offered once we get to that final mtg w/ HR.

Thank you

Anonymous said...

How much does Cobra cost for a family (one child) on the PPO program?

Anonymous said...

Oh, goodie, surprise Town Hall Friday morning to reveal the evolution of Microsoft benefits.

Ballmer's got a fever and the prescription is more cost cutting.

It is so much easier than accomplishing anything and is fast unlike a Microsoft product cycle.

I've Got A Fever...

Anonymous said...

Goldman Sachs is good at managing risk which makes it even more odd that they finally got around to noticing that Microsoft's stock hasn't gone anywhere in the last few years.

MSFT Chart - 5 years

Goldman Sachs managed to float to the top during the financial crisis but didn't notice what was going on with Microsoft's stock?

Ballmer will cut health benefits and lay off more employees across product groups to make the quarterly bean counters in Wall Street happy before he cuts money losing businesses.

Cutting those businesses would mean he failed and as long as he "plays the game" he hasn't failed so he keeps playing or puttering.

Anonymous said...

forcing you to agree under contract that you will not sue for any reason including Age Discrimination

This is your irregularly scheduled public service announcement that regardless of what you agreed to in severance paperwork, you can file a Federal EEOC charge against that employer and then sue against it when given the right to sue letter by the EEOC. Your charges WILL NOT be nullified by the existence of that clause in the severance agreement. It's the law.

I know less about the state statutes, so I can't speak to those. But for Federal, I'm absolutely certain that you cannot "sign away" your right to pursue an EEOC charge as part of a severance contract.

Microsoft, however, has a rather obvious vested interest in making ex-employees or soon-to-be ex-employees think that signing their severance agreement closes off that avenue, and to an extent they rely on those receiving severance agreements not questioning that and discovering otherwise. It's not illegal for them to mislead you in that manner, and probably saves them money, so there's little disincentive for them or any employer to do otherwise.

You have 3 years after the action to make your complaint to the Federal EEOC. It's not that difficult an exercise, and there are sources on the web that provide hints on what to include.

If you want to sue on other items, the severance agreement may preclude that, so investigate your possible claims and venues (state vs. Federal court) before you sign.

Anonymous said...

I remember the TechReady when Steve told us not to express concerns about the Yahoo bid - he paid a lot of executives a lot of money to advise him, and we shouldn't try to second guess their expertise.

That worked well, didn't it?

Now he wants to buy the biggest POS application on the Windows stack? The smartest thing Jobs ever did was ban that bug-ridden performance killing Acrobat from his new platforms. Heck, even MSIT had to wrap it in VDI to stop it causing problems on our internal platforms.

Perhaps he'll listen to the field this time. We're smarter than his million dollar dream teams, and we're MUCH more cost effective.

Anonymous said...

So an acquisition of Adobe means what for Silverlight? Not exactly a ringing endorsement of your own products.

Anonymous said...

Re: MSFTextrememakeover

I mostly agree with him, but since he wrote his post, Windows 7 came out.
In that -very important- point Microsoft has achieved a much needed recovery. It still has not stopped the erosion of market share completely. According to netmarketshare.com, over the last two years Windows' has dropped from
94.91% (Oct 2008) to
91.08% (Oct 2010).

But without Windows 7, I believe things would have been much worse for Microsoft.

Anonymous said...

"And speaking of our "super-duper" IE9 with so much touted GPU acceleration - latest FF 4 beta and Chromium dev builds already support that as well. I bet they will be released much earlier than IE9."

But, but, in no way did Google copy what Microsoft did first! No they would never do that!

Anonymous said...

Adobe? Really? Can't we just resurrect pets.com, acquire it for $80b or so and go into receivership directly?

Anonymous said...

Interesting assertion that MSFT should buy RIM:

http://seekingalpha.com/article/228902-why-microsoft-should-buy-research-in-motion?

Goes on to say that Lazaridis will make a great MSFT CEO

Anonymous said...

>> did Google copy what Microsoft did first

Um, no. Mozilla did it first. And Google's (and Mozilla's) cross-platform implementation is not a copy.

skc said...

>>It is painful to watch Google copy Microsoft's bad design decisions and painful to hear Microsoft people tout that as some kind of victory.<<

Except, thats not the point is it?

This comments section puts Google very high up on a pedestal as a company that innovates.

I'm just pointing out the hypocricy.

Anonymous said...

I have always told my Microsoft-bashing friends that while Microsoft isn't always rainbows and sunshine, at least you can count on us to produce better software than crap like Flash and Acrobat. I may soon stand corrected.

Anonymous said...

If we want smartphone market leadership why not buy Nokia? At least they make money and understand wireless. Makes more sense than Aquantive.

Adobe is insanity. There is not a single major acquisition that has been successful - ill-fated forays in to ERP/CRM leading to a multitude of brands and no cohesive strategy- or Softricity, Aquantive, Whale Communications (yes, really), arguably Visio. Or the $5billion of AT&T stock that returned $2.5billion of Comcast stock 5 years later.

And what about the billions poured into domestic and foreign telcos - Korea Telecom, Globo Cabo, Telstra, Qwest - with no return whatsoever. And still the imbecility continues in courting the likes of Telus, Bell Canada and the domestic wireless carriers.

So don't be looking for ulterior motives on the Goldman Sachs front. Ballmer's "leadership" aka brain farts are the common thread in these events. As for his 'bonus being cut in half' as breathlessly reported by various media lackeys, he makes $250mill a year in dividends so I am sure he will live thru it.

Anonymous said...

Mini you are completely right about Goldman, they are criminals of the worst sort and they have willfully destructed the American economy. It is obvious that they need to bring down Microsoft as well one of our last leading companies. Wonder how they can make a profit from it? Let's write an artice with analysis saying they should be broken up since the courts couldn't do it. Anyone who istens to anything they have to say is either a shill or a fool. Now the chickens of socialized healthcare slap in the face to the constitution and to capitalism come home to roost at Microsoft based on escalating health care costs drive up my inflation ofthe currency caused by the federal reserve and we act suprised. I plan on moving offshore in 2 years by then the greatest depression will be evident and microsoft will be a changed nuetuered or chinese/goldman sax owned company. They are sounding their bell weather alarm now. I have worked for Ms for 10 years love the company but we cant expect it to stay the same as America accepts its third world status.

Anonymous said...

Yahoo 'partnership' leaves something to be desired. How much did this cost again?

For the the four weeks ended Oct. 2, 2010, Bing accounted for 10.10 percent of U.S. searches — up from 9.87 percent in August, while Yahoo accounted for 13.54 percent — down from 14.28 percent. Taken together, those two metrics mean that 23.64 percent ... that’s less than the combined 24.2 percent the companies had last month (thanks Yahoo!) and pales beside the 72.15 percent share controlled by rival Google, which doesn’t seem to be suffering much at the hands of Bing-powered search at all. According to Hitwise its share in August was 71.59 percent, which means it saw 1 percent month-over-month growth from August to September.

http://digitaldaily.allthingsd.com/20101008/bing-powered-search-at-nearly-24-percent-for-first-month/?reflink=ATD_yahoo_ticker

Anonymous said...

When might we see a post about today's disastrous benefits announcements? (!!!)

More accurately, when might we expect the mass exodus of Microsoft employees headed to higher paying jobs with much better stock performance and now, equivalent medical benefits?

I mean, really? Are they trying to break the company? What's left of it after laughable merit increases this year and none the year before?

Oh hey! The giving campaign kicked off this week! Everyone feeling generous now that we will have co-pays and annual deductibles to deal with?

Anonymous said...

Warning: MSFT.SteveB.malware

- 20% chance you'll win big (better odds on Blackjack in Vegas)

- monopolizes your time all year and then tells you you're average

- convinces 10% of you that you're unworthy every year

- Developers! Developers! Developers! I'm going to lay off more developers! Money in the bank baby!

Anonymous said...

On Techflash...Health care: Microsoft ending 100% coverage for employees. http://bit.ly/aXijGP
Wow. I remember the severe reaction when Microsoft took away the towels. I wonder what the reaction will be on this? I'm seeking to come back to MSFT, one reason health care benefits. Well, Microsoft just became less attractive. I wonder how big of a factor "Obamacare" plays into this?

Anonymous said...

Steve Ballmer thinks, with the help of the Chinese government, he can get more Chinese businesses to pay for the Microsoft software they use.

This isn't going to end well.

Microsoft boss decries software piracy by China firms

MADRID — Microsoft chief executive Steve Ballmer on Friday decried the use of pirated software by Chinese businesses.

"One of the things that has improved a lot around the world is business piracy, and yet when we look at China today business piracy is more extreme than consumer piracy," he told a business forum in Madrid.

"We are working hard with the support of the Chinese government to improve the situation but it is a real problem," the head of the world's largest software maker added.

Anonymous said...

Another acquisition that did not work out (Massive):

http://mediamemo.allthingsd.com/20101008/massive-isnt-microsoft-reportedly-shuttering-in-game-ad-unit/?reflink=ATD_yahoo_ticker

Anonymous said...

IPad, Fastest-Selling Electronic Device Ever

http://www.cio.com/article/621921/IPad_Fastest_Selling_Electronic_Device_8230_Ever

Anonymous said...

How much does Cobra cost for a family (one child) on the PPO program?

I can't seem to come up with numbers for a family with one child. For my family (1 ex-MSFTie, 1 spouse, 4 children under age of 14), we are now paying $1711.00/mo for 100% coverage of in-plan providers+prescriptions, including basic dental care (20% co-pay on dental care other than cleanings).

Before some of you choke on that price tag, that's actually fabulous compared to everything else I looked at. The MicrosoftAlumni.com page points you to four possible plans, all of which have hefty deductibles *and* a co-pay (except for certain things like emergency care), besides at least $900/mo flat payment. Some don't cover prescriptions at all. If you have any chronic condition that requires medication, even heartburn that requires something like Nexium, you might be best off with COBRA. At least then you know you won't have any surprises in the form of unexpected bills. You can budget when you know what you're facing.

And, let's face it. If you're one of the 40-somethings facing layoff or already laid off, you've probably been under enough stress to create some kind of medical problem or other....besides simply being older and not as quick to snap back as you were in your 20s or even 30s.

A word of warning: it may take 2 weeks from the time you make your first payment to COBRA, to the time you are activated. And the Medco side of the activation may delay another day or so, so make sure you call the Premera benefits line to make sure you're active and eligible, including on the Medco side. If you miss one COBRA payment, you will lose coverage and cannot get it again through COBRA, no exceptions.

If you accrue any medical bills, including prescriptions, during your uninsured period and before COBRA becomes active, you can submit them for reimbursement after you have paid and become retroactively covered. However, medical and dental reimbursement requests go to one address with one form, and prescription reimbursement requests go to another address with another form. You can get these sent or faxed to you by the folks at the Premera help line.

It's been a nightmare, getting signed up and activated. There's very little guidance, and nobody to tell you what questions you need to ask, although the Premera line folks are helpful if you ask the right questions. But I think we've got it managed now finally.

Anonymous said...

For me -- it is about leadership acknowleding we need to change and do things differently. Hey 99 year old IBM did it:

http://www.bloomberg.com/news/2010-10-07/ibm-rises-to-highest-closing-price-since-computer-company-s-1915-offering.html

Anonymous said...

So take your "I left and have self actualized except that I'm back here trolling the MS site" bs and go away.

Microsoft is under pressure from a number of directions, and its attempts to address these issues, some of which could prove mortal in their own right, have been nothing short of farcical. I'm not the OP, but I would have thought that trolling on this site would be the very least of a Microsoft employee's worries. If I were you, I'd be busy planning my exit strategy, lest I get caught up in the ugliness when this whole mess finally implodes.

Anonymous said...

"Better to go out with victory than be chased out of Salmonberg by a bunch of fed-up institutional investors wanting real dividends and stock performance. You know: shareholder value."

Going out with victory, especially after this year, is no longer an option. But I agree with the sentiment. Leaving now, voluntarily, is better for him and the company than being forced out by investors and replaced by a CEO of their choosing. Unfortunately, while Steve finally seems to acknowledge MS might have some "health" problems, which for him is huge progress following half a decade or more of denial, he still identifies himself as the solution instead of a major part of the problem:

Q: How long do you plan to stay in your position as CEO?

A: I don't know. I'm working away doing the best job I know how to do. The company continues to grow. Outside my family, this is my baby. I want to make sure that, whenever I go, the baby's in great health. It's not a baby, it must be at least a teenager by now, young adult. I want to make sure the place is in very good shape.

Anonymous said...

More Ballmer madness. Still what's $200million - chump change:

Looks like Microsoft has a Massive failure on its hands.

The software giant will shutter its in-game advertising unit Massive Inc. before the end of this month, according to sources close to the company.


...according to sources, Massive’s ad sales efforts were never fully integrated within the Xbox team. In fact, at the time of the acquisition, several Xbox executives were said to be against the deal, but ex-Microsoft executive Cory Van Arsdale and other members of the company’s business development team had pushed hard to buy Massive, citing the fast-growing interest in the gaming space among brands.

http://www.mediaweek.com/mw/content_display/news/digital-downloads/gaming/e3i09837ee3d3a16facb6204304f9840ec2

Anonymous said...

So mini, are you going to spin a new post about the benefit changes?

Anonymous said...

>It is painful to watch Google copy Microsoft's bad design decisions and painful to hear Microsoft people tout that as some kind of victory.

It's almost as if the entire world doesn't consist of people exactly like you who think that Bing's ideas are terrible...funny that.

Anonymous said...

>Not only will they make your health benefits a lot less competitive, but they'll also blame Obama for it. You guys are so screwed.

Anyone know if the execs have the same health plan as the 'rank and file'? Or are the austerity measures just for the peons?

jl7 said...

I don't really buy into all the "Microsoft is dead" stuff, but after today one phrase keeps ringing through my head.

Microsoft is dying. Be sure to collect the copay!

For the first time in a while I'm optimistic about Microsoft's future, but I don't like the downgrade in healthcare benefits at all. I didn't mind the towels or any of the smaller things. There's so many extraneous benefits. Health care is such a core benefit. It feels like Microsoft has violated a sacred trust.

I understand the economic climate, and the increasing health care costs. I don't think it's necessarily dumb or unforeseen. I do think it's sad, and one of those things that makes Microsoft a little less appealing, which there are becoming more and more of.

Thank God for the good company meeting, and the upcoming releases that made it possible. That keeps me hopeful.

Anonymous said...

Adobe? Really?

Really! Just bought boat load of ADBE to hedge my MSFT.

BTW, Qi Lu is nice person, but he failed Yahoo with Panama, and my gut feeling is he will fail Bing too.

Anonymous said...

So, today LisaB announced that employee benefits will be cut in order to save money. About 2 hours later the company announces that we are shutting down the Massive product for which we paid $280 MILLION several years ago and dumped another couple of hundred MILLION into. How much healthcare could $500 MILLION buy for our employees. Or how much could the $1 BILLION that we dumped into Kin/Danger buy? Or how about the $400 MILLION that we spent on AdECN that we just shut down? I could go on....and on....and on....

Anonymous said...

Ahead of the inevitable stream of empty threats by people to leave as a result of today's benefits announcement, I'd like to take a moment to encourage them to make MS a better place by following through. Your colleagues will thank you and so will I.

Anonymous said...

"Um, no. Mozilla did it first."

Um, no. They didn't. Maybe you should learn what it means and the different levels of support that are possible.

Anonymous said...

Copays? Paying a share of your medical? Welcome to the real world, 'softies. The average family contributes a thousand dollars a month in premiums, has copays, has to pay a percentage of the bill and doesn't make near what you do.

If Y'all don't get moving and invent something new this will be the least of your worries. We're going to mobile with or without you.

Anonymous said...

It makes me wonder what the changes will be to those of us now using post-MSFT COBRA? I imagine we'll be changed along with the rest of you, but when is this new austerity program supposed to kick in? What are the details for those of us who, not being at MSFT anymore, didn't get the memo? What price, what deductible, what % copay, what other details (prescriptions, etc)?

Anonymous said...

Cutting health cost is necessary, and I think we should start now. But I do have concern that a sizable chunk of the money saved will become the fat bonus of those incompetent vps and partners.

Anonymous said...

"I'd like to take a moment to encourage them to make MS a better place by following through"

Agreed... the whining is unbearable. Rising healthcare costs is a serious issue that won't go away if we pretend it doesn't exist. Obamacare did absolutely nothing to address it. You can scream about free sodas all day if you want but the cost is orders of magnitude less than the medical benefit.

Anonymous said...

In her defense:

9/30/08

Sarah Friar - Goldman Sachs

Why shouldn't Microsoft be thinking about margin expansion, just given your size, the fact we're going into a downturn, it really gives companies an ability to go back in and cut not just kind of semi discretionary, but really kind of cut back and think what a new operating model could look like with a slower top-line growth for a couple of years.

Liddell politely blew her off, the company didn’t cut back, the impossibly unrealistic earnings forecast was maintained, and he and Ballmer sailed MS full steam into a recessionary iceberg. In fact they were still adding headcount in December of that year, a month after Intel’s “dire” warning. Everyone knows the rest: Huge miss. First official layoffs in MS history. Cutbacks ever since.

Friar had a better handle on MS's business and its prospects than the people charged with running it did. Maybe she still does.

Anonymous said...

Wish they'd done that with Flight Simulator instead of nuking it. Idiots.

Ballmer doesn't have any imagination.

Imagine Flight Simulator as part of the game engine of Halo on XBox Live - live multi-player battles in space and in the air.

Anonymous said...

>It still has not stopped the erosion of market share completely. According to netmarketshare.com, over the last two years Windows' has dropped from
94.91% (Oct 2008) to
91.08% (Oct 2010).

What Sinkovsky got promoted for losing market share?

Anonymous said...

The evolution of my performance will be:
2011: Keep working hard.
2012: Start to slow down. Start to give a serious look at the offers I've received from competitors. Only stay if nothing else is really interesting to work with. Benefits no longer make a difference.
2013: If still at Microsoft, work 9 to 5, with at least 1 hour for lunch or exercises at the ProClub. Engage more in useless things like the giving campaign, or committees like the one to sponsor arts (by the way, see the Picasso paintings that the company is helping to bring to the region this year). No longer stress about anything: stress brings diseases, and I have to stay healthy!

Anonymous said...

Speaking as an AAPL shareholder, I can't tell you how much I want to see Ballmer piss away fourteen billion dollars of MSFT's shareholders' money buying out Adobe. Once that happens, Apple can take the gloves off and ship a decent image editor to replace Photoshop.

What would MS do with Adobe's product line? Probably drive away the handful of decent software engineers they have left, watch their customer base melt away, and then spin their dried-out carcass back out with a market cap of 1/4 what they paid for it.

Anonymous said...

"For me -- it is about leadership acknowleding we need to change and do things differently. Hey 99 year old IBM did it:"

That's one ingredient. There are many others.

It took a near death experience for IBM to wake up and decide to do that, along with a very talented new CEO from the outside. Even then it was tough, painful, and a closely won affair. MS would be wise not to let it get that bad before acting. For every IBM miracle recovery there are a hundred Digital Equipment dead and buried.

Anonymous said...

In 10 years, cost of healthcare per employee goes up $26,000 to $37k. Do the math on incremental cost to MS, assuming flat headcount:

90,000*26,000= $2.34 Billion dollars. Per year.

That is $0.27 per share, gone. Or 7.8% of our annual profit (today).

I guess they were worried that shareholders would drive the stock down to ~22 over time if we didn't act...

Anonymous said...

It's almost as if the entire world doesn't consist of people exactly like you who think that Bing's ideas are terrible...funny that.

Bing's image search is definitely "cooler" and "slicker" than Google's old image search. It has s*** that pops out at you and it just keeps scrolling! But that doesn't make it better. From an HCI perspective it's inferior and from an engineering perspective it's unnecessarily complex. Personally I would rather use products from a company that will forgo some slickness in favor of better usability and engineering.

Anonymous said...

I think Ballmer will be gone by January. The nails in his coffin will be the lack of tablet/IPad momentum, shrinking Bing search share and a marginal, expensive and unprofitable launch for the windows phone.

restated: taking your eye off the ball and getting lapped where you had a big lead (phone, tablet) and spending a ton of money chasing things (Danger, Aquantive, Bing) without discipline.

The interesting, fun over beer thing to speculate about is what would happen apres Ballmer. First, note that he has let two divisional presidents go in the last six months leaving Qi Lu, Muglia and Sinofsky as his bench from the product side. Let's all just ponder for a minute that life cannot conspire to make Craig Mundie (douchebag) CEO. And I think even the most cynical person would agree KT would be a bad choice (for a company that makes things. Qi Lu is out as would be Muglia, leaving Sinofsky as the only viable internal candidate. (Mattrick and Lees could be CEO of much smaller companies but probably wouldn't get a look here).

So that leaves three scenarios: Sinfosky, someone outside, or Gates. I'd rule out the Gates one just based on the fact the guy has been gone for so long and probably is more interested in winning the noble peace prize.

Under a sinofsky scenario, i think we'd all be "sinoskified" which it seems like everyone in Windows likes anyway. Boring but probably good for the company.

The fun thing to think about is what would happen if we brought in an outsider. First, I'd love to see us spin off a ton of things right away in some kind of MS Capital formation: like the examples above about Office labs, Amit (political) Mittal's whole org, Hohm, Tag. Things that might be viable if they were not part of the big barge but would benefit from the clarity of the market, not the vicissitudes of redmond.

Second, i think any outsider would look at net cash flow across the company and come the the following realizations.

1. Return on R&D is the worst in the industry, we spend the most as a % of sales and have the weakest PE and growth. So i think you would quickly see a change of org in R&D and a much more streamlined research group.

2. Increase the dividend. Nuff said.

3. Coalesce the company around three future Microsofts - the "enterprise" one and the "consumer" one - and the "advertising" one. Interestingly, Phone will end up in the enterprise one and consumer will be gaming, zune, consumer hw etc.

Discuss amongst yourselves, i am a bit verklempt thinking about it.

Anonymous said...

I have always told my Microsoft-bashing friends that while Microsoft isn't always rainbows and sunshine, at least you can count on us to produce better software than crap like Flash and Acrobat. I may soon stand corrected.

The features of the software are getting better but they haven't learned how to use Debugging Tools for Windows or Valgrind yet.

Either that, or they fired the people that were using those tools to find and fix memory bugs for not writing enough code.

Anonymous said...

Microsoft is under pressure from a number of directions, and its attempts to address these issues, some of which could prove mortal in their own right, have been nothing short of farcical.

Microsoft has the revenue from Windows and Office to prop up whatever dysfunction Steve Ballmer likes to wallow in.

Steve can plot the demise of the iPhone with his Walmart brain trust without worrying about going out of business.

The farce will continue for a long time.

Anonymous said...

If you read Cityboy: Fear and Loathing in the City, you will get an idea of what stock recommendations are.

Anonymous said...

Here's why the medical cuts upset me so much. I'm a CSG who does admin support (no $40/hour for me).

Cut out free sodas (which make you fat and give you diabetes), give a flat gym fee to pick the one of your choice (not the obscenely overpriced Pro Club), no more towel service, Prime Club, etc. Give FTEs 100% coverage, and make any copay/ deductibles for dependents and spouses.

One good thing? Any temptation I had to come back as an FTE is gone. If MS is going to destroy your health with a messed up review system, 24/7 work schedule, incompetent management, backstabbing, and "throw your teammates under the bus to not land in the bottom 10%", the least they can do is pay the medical costs for it.

Anonymous said...

> Anyone know if the execs have the same health plan as the 'rank and file'? Or are the austerity measures just for the peons?

Exactly the same thought has crossed my mind today - wondering if SLT has benefits more appropriate for their ranks - no wonder Lisa had that smile on her face when people were asking questions

Anonymous said...

OK, I just watched the Health Care Town Hall replay. Hard thing to do early on a Saturday morning.

Let's see if I have this straight. If I go with the Health Savings Plan:

1. All my preventive care is still free (to me). Annual physicals, dental checkups, immunizations, etc. - no charge. Wellness programs are actually beefed up even more.

2. For a family of 3+, the most we would have to pay out of pocket annually is $2500.00.

3. At the beginning of each year, MS will themselves add $3725 or thereabouts to my Health Savings Account...so MS is more than covering my $2500 obligation anyway.

4. Even if I have a catastrophic illness or injury, I'm still ahead $1225.

I hope more insightful minds will follow up to correct any misunderstandings I have about this, but my takeaways from LisaB's deck are:

1. Switch to HSP.
2. Lose both legs in a snowboarding accident.
3. Profit!

Anonymous said...

"Um, no. They didn't. Maybe you should learn what it means and the different levels of support that are possible."

Who cares who did that first - "good artists copy, great artists steal". The point being is that IE market share is below 50% now and by the time IE9 (or Win 8) ships it'll be 1/3 of the market or so, the other major players are Chrome and FF.

Anonymous said...

The healthcare changes are not that big a deal for the vast majority of employees... there are exceptions (I am one of those exceptions given my genetic health conditions so I understand the risks) but most will be just fine and probably end up with large HSP account 5 years from now. This will be yet another blown out of proportion benefits change by most employees and the media who barely understand the details but comment on the changes as if they were experts.

HSP are not perfect but they do build greater accountability for employees who make poor health and lifestyle choices and then expect our healthcare system to pay for their problems as a result.

Anonymous said...

Ever since having joined only a few years ago, I’ve witnessed a steady and strong decline in benefits, culture, and morale.

- Dysfunctional Culture: nauseating performance reviews, who-can-we-blame-now politics, deep-rooted insecurities, not-invented-here syndrome, terrible work-life balance...

- Bean Counters Galore: disgraceful raises even when promoted, ongoing stealth layoffs, year over year cuts to benefits, a seemingly constant focus on the bottom line instead of growing revenue in real, meaningful ways...

- Zero Accountability: terrible mismanagement at the hands of executives, millions in wasted money and time, total self-deception in terms of our competition (e.g. Linux vs. Windows, Google vs. Bing), bloated layers of bureaucratic management, destroyed relationships with partners and OEM’s, scorched mindshare among our customers...

And yet, Microsoft had one of its best years financially! It has billions in the bank, only issues debt to award shareholders, and has an extremely dedicated and diligent workforce willing to sacrifice their weekends, their families, and their health for the organization.

For all of this, the end result is benefit cuts, no clear vision, no clear leadership, and having to fight just for the mediocrity of an A/70. Disgusting!

Anonymous said...

I'm not suprised at the flatness of stock price over the last few years. Am I the only one who remembers BillG sells off large chunks of his stock like clockwork? With supply vs. demand determining the stock price, what did you expect?

Anonymous said...

Check out http://blogs.msdn.com/b/michkap/archive/2010/10/09/10073622.aspx

Microsoft did want to be like everyone else, and not be special.

Congratulations Microsoft. Now you are.


We are not special anymore.

Anonymous said...

I'd like to see a post on the healthcare issue as well.

Anonymous said...

In 10 years, cost of healthcare per employee goes up $26,000 to $37k. Do the math on incremental cost to MS, assuming flat headcount:

90,000*26,000= $2.34 Billion dollars. Per year.


Just one thing ... not all employees work in the US, less than half in fact. In most other countries health insurance is an employee responsibility, and has nothing to do with Microsoft. That said in those countries health insurance is available to all at an affordable rate. So you math is fine, just reduce the impact by 55% and you're there.

Anonymous said...

The evolution of my performance will be:...

I can't agree more. When we historically work longer than 40 hour per week and our company start cutting our benefit.

I wonder how much can it save if we all start working 40 hour per week and start charging our company overtime.

Anonymous said...

Agreed... the whining is unbearable. Rising healthcare costs is a serious issue that won't go away if we pretend it doesn't exist. Obamacare did absolutely nothing to address it. You can scream about free sodas all day if you want but the cost is orders of magnitude less than the medical benefit.

Insurance only works if most people don't need to use it often.

The U.S. has an obese aging population.

The food industry hires lobbyists to make sure they can sell the crap that is making everyone fat. They even have the government recommend it.

For example, the FDA regulations on trans fat allow a food company to list 0 grams per serving if the serving contains less than 0.5 grams of trans fat. It is easy to exceed the "safe" limit on trans fat specified by the American Heart Association by eating food that claims 0 grams of trans fat per serving (the company picks the serving size).

Trans Fats Q&A

The American Heart Association recommends limiting the amount of trans fats you eat to less than 1 percent of your total daily calories. That means if you need 2,000 calories a day, no more than 20 of those calories should come from trans fats. That’s less than 2 grams of trans fats a day. Given the amount of naturally occurring trans fats you probably eat every day, this leaves virtually no room at all for industrially manufactured trans fats.

Anonymous said...

Not quite right on the healthcare costs. Worse case scenario for family of 3 is:

* All your preventive care costs are covered 100% by MSFT

* You pay 100% of the first $3,750 in non-preventive costs. This is your deductible.

* After your deductible is paid, you pay 10% of non-preventive costs. This is your co-pay. You pay a max of $2,500 in co-pays per year.

* So your max annual costs are $3,750 + $2,500 = $6,250

* MSFT will pay $2,500 into your Health Savings Account each year, so your net out of pocket cost is $3,750. If you sign up for the HSP account in 2011-2013, then MSFT will contribute an additional "early adopter incentive" of $1,250. But after 2013, your max out-of-pocket costs are presumably back to $3,750

* You could pay that $3,750 out of tax-free contributions you make to your own HSA account, but then that money is locked away and can only be used for health expenses. If you don't want your money locked away then you have to pay with after-tax dollars.

* In order to come up with $3,750 in after-tax dollars, you'll need to earn about $5,000 in pre-tax dollars.

So, in the worse-case scenario this is equivalent to a pay cut of $5,000 per year. Maybe not too bad for someone making $200k, but that would be a 10% pay cut for someone making $50k.

Anonymous said...

It's true that the SLT gets much better treatment than us peons, but I don't think they care much if they have to pay $2500 a year for health care. They can drop that like it's nothing. I'd imagine they pay more in boat taxes.

So while I thought this too, I think the answer is probably no, my guess is they don't get special treatment.

Anonymous said...

wolframalpha - MSFT,+ADBE,+AAPL,+YHOO

revenue / employee

| Apple.......| $ 1.488 million
| Microsoft..| $ 702100
| Adobe......| $ 376000
| Yahoo!......|


net income / employee

| Apple.......| $308967.39
| Microsoft..| $210786.52
| Adobe......| $43856.81
| Yahoo!......|

Anonymous said...

My understanding with the health care changes for a family of three or more...If you sign up this year or next, Microsoft drops 3750 into an account. Any copays, prescrptions, etc. are covered by that 3750. After that 3750 is gone (catastropic injuries resulting in metal plates everywhere) You are responsible for any additional copays up to 2500. After that, everything is 100% covered. So the most you would be out over the course of the year is that 2500.

Minor nit-pick of Lisa's presentation. She kept using that 3750 as the amount that is covered. That is ONLY the amount if you sign up this year or next. If you wait until 2013, you only get 2500 dropped into that account. If would have been nice if she was clearer that the 3750 was a limited time offer. I don't know if you sign up now, if you are locked into 3750 forever, or only for the next 2 years...at which point it drops down to where everyone else is...at the 2000.

Anonymous said...

What would MS do with Adobe's product line? Probably drive away the handful of decent software engineers they have left, watch their customer base melt away, and then spin their dried-out carcass back out with a market cap of 1/4 what they paid for it.

It is interesting to think about. Flash and Acrobat can jump in a lake, but Adobe makes several products that many (millions?) of professionals depend on, like Photoshop.

Once Microsoft ruins Photoshop, what will those people do? Rely on the last pre-Microsoft release as it becomes increasingly outdated? Will new competitors see an opportunity? Very exciting times. One thing is for sure, Microsoft's product development process will produce versions of Photoshop that are unsuitable for any purpose. Can you imagine? First order of business would be to have a bunch of college hire PMs who aren't graphic designers come up with ways to make Photoshop more accessible to the general public... imagine the hilarity that ensues.

Anonymous said...

Good lord.....please name the all split MS entities as below:

MS White elephant 1/2/3..

so the general people have some clue about the their costs and hence can estimate the stock price more accurately.

Anonymous said...

>Personally I would rather use products from a company that will forgo some slickness in favor of better usability and engineering.

The great thing about capitalism and free markets is you can do that. Now if there was only Google (cause they are the awesome!!) and they decided to follow a course you didn't like what would be your options again? Ohh, yeah, you wouldn't have any. The people decrying Microsoft for competing with Google, Apple, or anyone else are, quite frankly, stupid. As a consumer more competition is better. If you don't like what Microsoft is doing don't use their products. If you don't like what they are doing don't buy their stock, or sell it if you currently own it. Pretty simple really. Or you could do neither, come to an anonymous message board and post whiny rants about how terrible Microsoft is. That will accomplish all of nothing.

Anonymous said...

>The interesting, fun over beer thing to speculate about is what would happen apres Ballmer. First, note that he has let two divisional presidents go in the last six months leaving Qi Lu, Muglia and Sinofsky as his bench from the product side. Let's all just ponder for a minute that life cannot conspire to make Craig Mundie (douchebag) CEO. And I think even the most cynical person would agree KT would be a bad choice (for a company that makes things. Qi Lu is out as would be Muglia, leaving Sinofsky as the only viable internal candidate. (Mattrick and Lees could be CEO of much smaller companies but probably wouldn't get a look here).

If a new CEO comes in, the entire SLT including Sinovsky will have to be fired. But it is only the beginning. Then the reports of the SLT and their chains will have to be cleaned up too.

You can start with HR. When Google went public, the cost of Google R&D was lower than that of our entire HR group.

Anonymous said...

>It's true that the SLT gets much better treatment than us peons, but I don't think they care much if they have to pay $2500 a year for health care.

OP here, yes I realize the 2500 is a drop in the bucket to them and by that logic they should have the same coverage. Then again in the last few years when raises and bonuses were either non-exitant or extremely low in the rank and file the execs still netted huge bonuses and rewards for continued failures. None of those people need any more money, they could all easily say 'I will take $1 in salary this year and refuse all bonuses' as a show of being serious about actual accountability and show that rewards are actually, you know, for people that accomplish shit. If everyone gets a reward it becomes meaningless, but worse if people that DON'T deserve one get one, and people that DO deserve one don't, well that just becomes an evil system.

tl;dr: While management can best afford changes in health care benefits don't assume it will hit them, they are special after all, and in charge of these decisions. People rarely vote to apply restrictions to themselves.

Anonymous said...

Deck chairs on the titanic my friends...

Anonymous said...

I don't think it's nearly as bad as some are saying. There are a few things that seem clear to me:

1. Faaaarrrrr too many PM's. We need more engineers, not folks to run around and think stuff up, so they can saddle the folks that actually do the work, with more noise to deal with. Yahoo thinks they had it bad... Geesh!

2. Ballmer, not good. I've seen a sea change since Gates left. What is clear is Ballmer was riding on Bills coat tails. Anyone see him whiteboard the cloud? My head hurt after watching that.

3. In relation to 1, since we're cleaning house, let's get rid of the 34 layers of management.

4. Benefits changes, death from a thousand cuts. I'm half thinking they are just testing the waters here. If I'm wrong, MS just lost a whole lot of reason for me to stay.

5. If meetings are held, the only two groups that should be talking are the UX designers, and the developers/Engineers.

6. Get rid of all of marketing. They used to be annoying, but they were smart, funny and had some great campaigns. Now all they do is manage contracts for outside agencies.

7. GM's of Products should be ex-techie's. That means they were executives of something more cutting edge than a hack fried chicken stand.

8. The deadlines are now business based (in other words, based on coordinated dates) and need to go back to quality based.

9. Refocus on the customer. If it were not for them, there would be no us. We need to remember that, and go to extreme lengths to satify them. Which means an acceptable response is not cut a bug and we'll look it. It means you'll take the issue and solve it regardless of your station.

10. I have friends that do and did work for Adobe. It's an incredibly limited niche market. They are floundering and cutting all their people and IP in favor of Indian outsourcing. If we buy them, whoever helped make it happen should be fired.

11. Gut GFS and burn their process books.

Anonymous said...

Want fully paid healthcare? Become a housekeeper at the Hilton.

http://www.msnbc.msn.com/id/39704210/ns/business-us_business/

Anonymous said...

Hi Mini,

Apple earned $5.5 billion in pre-tax income in its most recent quarter.

Microsoft earned $5.3 billion two quarters ago in pre-tax income.

Is the unthinkable about to occur over the next year or so?

Will it be more profitable as a business to create "pretty gadgets", than what Microsoft has accomplished over the past decades?

Apple has $50 billion in cash and no debt. It could buy 25% of Microsoft if it so desired. In cash.

This is so sickening...