tag:blogger.com,1999:blog-4815867514277794362.post8875678658722317895..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: Microsoft – an accounting geek’s summarizes his purpose and lessonsJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-4815867514277794362.post-16137895838272008192014-03-14T05:37:57.637+11:002014-03-14T05:37:57.637+11:00I wonder how much of Microsoft's revenue comes...<br />I wonder how much of Microsoft's revenue comes from their "CAL" model: whenever a corporation running exchange, office, windows hires a new staff member, they have to ship some money off to Microsoft for the network licenses for all of those products.<br /><br />And so Microsoft's revenue in a way should somewhat track the (white-collar) labour market as a whole: as people get hired, money is sent to Microsoft. As people get laid off, the already-paid-for CAL's can be recycled toward future hires.<br /><br />Jhttps://www.blogger.com/profile/01207770466454843265noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-61627266849795147442011-12-30T13:20:37.139+11:002011-12-30T13:20:37.139+11:00John, you made the comment:"arguably the best...John, you made the comment:"arguably the best business in the history of capitalism". That reminds of something I've read recently by another prominent fund manager (although he is not as successful as you). The statement is probably true, although there are some other contenders too (eg, Exxon). Anyway, the reason for this post is to suggest that you redouble your efforts in terms of avoiding group-think - if you are borrowing an expression from someone else, that might be because you are spending too much time reading other people's publicity and, frankly, your time can be better spent with your nose in annual reports. Remember, you have earned your success by doing your own work, not by following the croud. Cheers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-24774668758785338672010-08-18T09:15:43.995+10:002010-08-18T09:15:43.995+10:00Thanks to people are selling Microsoft to make roo...Thanks to people are selling Microsoft to make room for tech stocks Microsoft is now a value stock.David Neuberthttp://davidneubert.comnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-27278416560392982282010-08-14T17:21:10.629+10:002010-08-14T17:21:10.629+10:00I am not an economist, but I was a strategist at M...I am not an economist, but I was a strategist at MRM when we had the Microsoft account (I no longer work for MRM, & Microsoft has moved its online marketing to Wunderman). The following are a few reasons I don’t have much hope in the future of Microsoft:<br /><br />They are highly introverted and try to enforce their rules on the market. Plugins and Mashups are frowned upon, which has feed the phenomenal growth of Mozilla Firefox. Ironically they sponsor Mashable!<br /><br />Barriers to entry into the software market have greatly diminished making it vastly more competitive. <br /><br />Interoperatability issues (which once enabled their rapid growth through positive network benefits) virtually no longer exist between windows/mac & linux, and with the growth in SaaS the OS you run becomes even less important.<br /><br />Sharepoint is junk (too complex and rigid for fluid collaboration), evidence of this is the growth of companies such as Atlassian and 37Signals. File sharing is becoming a lot easier and accessible, just check out DropBox.<br /><br />Lastly, they have taken a defender strategy, ‘Its our market, we have to stop the interlopers’. The mindset of an old king. <br /><br />Obviously I don’t have much love for Microsoft today, but at one stage in my life I fought hard for a job in the agency that had their account.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-79196377967158383892010-08-14T16:25:20.167+10:002010-08-14T16:25:20.167+10:00Virtualization works well when the applications fo...Virtualization works well when the applications for different OS are compile for the same CPU instruction set(i.e. Intel based cpu). In this case, when you run say a windows app within linux, a large portion of the instruction can be directly executed by the CPU.<br /><br />On the other hand, if the app is compiled for one CPU but is ran on a CPU with a different instruction set the app will run much slower (up to an order of magnitude slower). The reason is the cpu running the app will need to emulate another CPU's instruction set one by one.<br /><br />This can be done and has been done Take a look at Multiple Arcade Machine Emulator (MAME). Today, I can run any coin-op arcade game from my youth on my PC. However, notice I am using a modern PC that is 100X or more faster than the original hardware of these arcade games.<br /><br />If you use one modern machine to emulate another modern machine with a different CPU instruction set, the performance will be very poor. Unless cell phones use CPUs that support intel instruction set, cell phones will probably never satisfactory emulate PC.<br /><br />Your theory that virtualization will make the OS less critical is theoretically correct for intel based machines. However, in practice, it is unlikely the average users will put up with the complexity of multiple OS and virtualization. <br /><br />To unseat microsoft, it cannot be accomplish by running today's fat client apps (e.g. ms office, adobe creative suite, etc.) using virtualization. The prevalence of this model needs to change.<br /><br />What really needs to happen is to move these fat client apps into the cloud. In which case, there is no need for virtualization. All that is needed is a browser. This is already happening with casual office apps (google doc, and many others). However, it is not yet clear cloud computing will work for the demanding users. Although I'd guess in 5 years or so, the odds are good. <br /><br />However, even than there are still problems for cloud computing.<br /><br />1. privacy - why should I trust my person data to a corporation? There hasn't been a major privacy event to put this issue into people's consciousness. The question of privacy is untested.<br /><br />2. cost - I could potentially be held hostage by the corporation that provide the cloud computing service. Why should I have to pay a monthly access fees for data that I've created and own.<br /><br />3. network - what if I don't have network access? We can store data and program in the local cache. When computing happens against the data and code in the local cache, than in affect we are still doing local computing. If the PC has to download both data and code locally for later use, why cloud computing again?<br /><br />4. there will always be some app, perhaps computing intensive apps, that will not work well in a cloud computing model.狂猪https://www.blogger.com/profile/16599529315620633684noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-42732498546883671562010-08-13T13:14:34.858+10:002010-08-13T13:14:34.858+10:00John,
A monopoly is always a good business to be ...John,<br /><br />A monopoly is always a good business to be in. <br /><br />Take a look at IBM's financial statements pre-1982. High margins with strong top and bottom-line growth, an investor's wet dream.<br /><br />Heck, even AT&T pre-1985 looks fantastic. Granted, growth was single-digits vis-a-vis MSFT's current low-teens growth, but AT&T was a much bigger company and look at all that free cashflow generated!<br /><br />Anyway, back to MSFT. It's still a buy because things can't get worse from here (Hey MSFT is still a big ship, and if a big ship is slow to turn, that also means it takes a very long time to sink) . And if MSFT turns out to be the next Eastman Kodak, I could always point to this http://brontecapital.blogspot.com/2009/12/kodak-bill-gates-and-efficient-markets.html<br /><br />;)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-44248175810814086472010-08-13T12:57:13.334+10:002010-08-13T12:57:13.334+10:00John, I have a slightly different set of threats t...John, I have a slightly different set of threats to MSFT. I believe they are:<br /><br />1) Not virtualization. Virtualization is annoying to MSFT, but every VM still requires a Windows license. So they don't lose much there, just the incremental cost that the virtualization vendors charge for their hypervisors. Hyper-V is "good enough" and will likely steal market share soon, and they will only get better.<br /><br />2) Not Linux. Linux is not a big threat anymore, because businesses pay just as much for Red Hat support as they do for MSFT. I think a free operating system was very scary at first, but in the end Linux has it's place in IT, and MSFT has it's place. I think we've reached steady state and both can coexist.<br /><br />3) Google. Google has a stream of revenue that is completely orthogonal to MSFT's which makes them very hard to kill. MSFT's usual modus operandi is to dilute their competitors products with just-barely-good-enough-but-free offerings. Because they can fund it with their Windows and Office revenues, they will eventually win due to a war of attrition. The only exception in software, I believe, is Quicken vs MS Money.<br /><br />However, Google has the ability to steal revenue from Microsoft, via Google Docs. This is why Bing has been so important, because they have started to make headway against stealing a bit of Google's revenue. This is also why MSFT is paying so much to their salespeople to get customers seated on Online Exchange vs gmail. They are doing whatever they can to cut off the revenue stream to Google so that they can start chipping away at it. Once Google's revenue stream starts getting impacted, they will cut back on perks, the spoiled Silicon Valley engineers will leave because "it sucks here", etc, and things unravel.<br /><br />Meanwhile Google is trying the same exact same thing, but it will be harder because MSFT has 4x the revenues and profits. However, as long as they maintain their dominance in the Internet, they will be largely untouchable and can keep jabbing MSFT but keep out of reach. Google Docs is getting better, and if they can make something really "good enough" to Office, then MSFT is in trouble. No one under the age of 18 will buy MS Office (the Student's edition of Office will disappear) and kids will grow up on Google Docs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-46194628813749098362010-08-13T05:56:42.819+10:002010-08-13T05:56:42.819+10:00"The stock price is so low relative to indisp..."The stock price is so low relative to indisputable current cash flows that Microsoft would really have to stuff it up from here not to make the stock a worse investment than say the current ten year bond."<br />That's all you need to know. It's a value stock with a margin of safety. Go ahead and add to your position.<br /><br />Absent Ballmer's departure, MS will never be a force in search or mobile OS's. Even if he did leave, I wouldn't bet on it happening.Stevehttp://www.magicformulainvesting.com/welcome.htmlnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-68009753412963589222010-08-13T01:31:08.999+10:002010-08-13T01:31:08.999+10:00a) One other threat is serious web-based business ...a) One other threat is serious web-based business applications which are neutral as to what platform the client uses.<br />b) two other success stories for Microsoft: Office Communications Server as a replacement for an aging PBX, and Sharepoint, which is already becoming entrenched in corporate America. - TZUnknownhttps://www.blogger.com/profile/06776002599975932429noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-67196770201773039932010-08-13T00:07:41.666+10:002010-08-13T00:07:41.666+10:00And I should add (I'm the last anonymous) - I&...And I should add (I'm the last anonymous) - I'd love to read anything on insurance. <br /><br />I hate insurers. I think the only sensible way to invest in them is if you know some industry insiders. Is there another way?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-75443314923188634622010-08-13T00:02:48.279+10:002010-08-13T00:02:48.279+10:00Hi John, read these comments with interest, you...Hi John, read these comments with interest, you've missed one important thing in the tech sector:<br /><br />The way it works is a cash flow generating machine which feeds a R&D machine. *The R&D machine is hit and miss.* It's not the case that Microsoft has better people or engineers than (say) Apple, Oracle, or Sun. It's just that some of these companies get lucky with a product every now and then.<br /><br />Don't look at Apple's successes - think about the many many failed Apple products that got released and died to understand why the iPod took off.<br /><br />The R&D process is hit and miss. Microsoft have had a few misses - they'll have a hit sooner or later. The question you've got to ask is - "what is the frequency of hits?" - and "how long will MS cashflows stay nicely positive until they have another hit?"<br /><br />"Hits" (i.e. original product lines which have massive ROI) seem to come every 3-5 years.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-44038103795104871042010-08-12T22:19:03.786+10:002010-08-12T22:19:03.786+10:00If you wish to look at a company where there is a ...If you wish to look at a company where there is a lot more in the accounts than the company would like then have a look at HPQ...very interesting for an accounting geek like yourself. The tax rate in particular bears scrutinyAnonymousnoreply@blogger.com