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Microsoft needs to accept that it’s not a big growth company, slash R&D, and give up on its silly online efforts, argues ex-Microsoft employee and current Google employee Don Dodge on his blog.Dodge makes his argument with an eye on Microsoft’s stock price, which has notoriously been flat for a decade now. Basically, he says it’s time for Microsoft to listen to investors, hike the dividend and accept facts:
Maybe Microsoft should accept Wall Street’s conclusion that it is really a Blue Chip stock and stop acting like it is a growth stock. Maybe they should listen to Mini-Microsoft and cut expenses significantly, focus their product development efforts, and increase their dividend.
Blunders like the Microsoft Kin phone that cost them $500M, and billions more poured into Bing search efforts, don’t contribute to growth or profits. Billions more spent on acquisitions that didn’t work out are another big drain on cash and profits. Microsoft doesn’t need to do anything fancy. Imagine what the financial results would be if they stripped away all the needless spending in pursuit of elusive growth. Imagine how much cash they would have available to pay dividends to investors if they didn’t keep spending billions on questionable acquisitions. Microsoft spends billions every year on pure research in labs all over the world. It is hard to trace any of that spending to commensurate revenue increases.
Wall Street has concluded that MSFT is a Blue Chip, and hasn’t changed its mind in 10 years. Microsoft is still investing and acting like it is a growth company. Something has got to change. Don’t bet on Wall Street changing. Your move Microsoft.