The price action in Microsoft (MSFT) this week has been unusual, to say the least.The stock jumped 4.5% on Monday. That would be equivalent to Sina (SINA) jumping 45% in one day. That just doesn’t happen for Microsoft.
The stock also followed through nicely yesterday moving up another 1%.
There wasn’t any real news to explain the move in Microsoft, although some pointed to a Tuesday cloud-computing conference Microsoft was hosting or a report that they would move up the release date of Windows 8.
That leads me to speculate on the real story behind the move, which probably a few insiders are only privy to at the moment.
It could be that Steve Ballmer has said something to some close confidantes about leaving the CEO position. (And maybe he doesn’t know them as well as he thinks he does, because they’ve now blabbed about it to some trader friends who are jumping on the news to buy anticipating a big relief rally.)
David Einhorn has said previously that he hopes to see Ballmer gone as CEO, as he thinks he’s a weight on the stock. I don’t disagree that there would be a rally on the news, but I just don’t believe Ballmer is ready to leave.
Ballmer has only been there 10 years but, more importantly, he owns 5% of the company.
He’s essentially a co-founder with Gates and Allen. That means he gets to leave when he wants, and I just don’t think he’s ready to go out when some New York hedge fund manager tells him to.
The other possibility is that the U.S. government will let Microsoft and other big corporations repatriate all their offshore cash back home. Many people seem to believe this will be a boon for the domestic economy as corporations will be able to invest more back home.
Maybe that will happen. And maybe it will be good for the economy. And maybe that’s why all stocks have been up this week.
But if that is the reason behind Microsoft’s jump in its stock price, why haven’t we seen a similar move in Cisco (CSCO), which also has a big cash hoard outside the U.S.? There has to be something else.
So, it makes me speculate that Steve is about to unload some more cash in the form of acquisitions.
After some initial gulps at the price, I would say most observers have spoken positively about the Microsoft acquisition of Skype for $8.5 billion a few weeks ago.
Not only can Microsoft make money off of it in the enterprise and consumer spaces (which Google (GOOG) couldn’t), Microsoft got to use its significant offshore cash pile to pay for the Luxembourg-based company.
Not only did it use the cash, but it got back a great asset for Microsoft.
There is also the possibility that Microsoft might take a look at Alibaba Group as an investment vehicle for ambitions of expanding its exposure to China. If Microsoft were to do that, it might help Alibaba close its difficult relationship with Yahoo! (YHOO).
We might not know for several more weeks the answer to why this stock has moved so much this week. But I don’t think it’s because of a cloud-computing conference. My bet is that someone knows something about the wheels being in motion.
We will just have to wait and find out.
I also bet Steve Ballmer is looking at the stock price and smiling—thinking about how he can go out on top.
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