Hi john rosser; Microsoft's growth rate has slowed a lot, from the point of view of the shareholder.
The best measurement of the size of a company, as seen by a shareholder, is the sales per share per year. The growth in that figure for MSFT has slowed steadily over the last couple decades.
This decrease in growth rate is inevitable as companies grow larger. It is a lot easier to double the size of a $100M company than to double the size of a $1B company.
There is another effect which, I believe, is under appreciated by the investment community, and that is regression towards mean.
Regression towards mean says that a subpopulation selected for its difference from the mean (having some property very much different from mean) will, over time, tend to drift (in average) back towards that mean. It does not say that the subpopulation will drift all the way back, the principle says only that it will drift some way back.
In other words, since MSFT was selected as a stock due to its past long term growth rate, which was much higher than the population average, it is quite likely that its future growth rate will be slower than the past growth rate that led to its selection. (Though its future growth rate is very likely to be above the average comany's growth rate.)
-- Carl |
