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Strategies & Market Trends : Buffettology
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To: James Clarke who wrote (482)10/22/1998 8:49:00 PM
From: Shane M  Read Replies (1) of 4690
 
Jim, your post brings up some good points.

But if you really want to look at it on an ROE basis, back out the cash on the balance sheet and you will find that the business has virtually no book value. What do you do with that?

I see what you're saying. In a sense it asks "MSFT earning are a return on what economic resource with alternative uses?" If equity is not a good measure, the question becomes how would we determine if MSFT is allocating its resources to maximize shareholder return, and how does this compare to other similar companies.

Thanks for making me think about this... and thanks for SWY comments.

Shane
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