>>What will MSFT do with all that cash<<
First, even if MSFT loses the antitrust suit, which is becoming ever more likely, they still will be making lots of money. Losing the suit could result in one-time damage payments to the various companies that claim to have been hurt - still a drop in the cash bucket. The court might force the company to divide into two separate, independent firms, one for systems, and the other for applications, in order that other application software firms would be on a more even keel. Even so, it is likely that both new companies would make money, though possibly a little less than now, from the existing businesses.
What worries me, however, is that MSFT has been trying to buy its way into a lot of new areas, without much success from the profit point of view. Consider web TV, MSNBC, MS Network, photo archives, Windows CE for wireless access, appliance controls, etc. What is the return on investment in these new businesses? I suspect it is not all that great, even with the kind of persuasion that MSFT has in the marketplace. Certainly, the return on investment in these new areas does not justify the kind of price-earnings ratios we see now. In fact, the main reason MSFT is so high priced, relatively speaking, is that it is one of the most widely held stocks by institutional investors, who adore the stock because the debt is so low. |
