This post continues from my previous post Microsoft Corp.'s CEO Steve Ballmer Admits Big Mistake on Vista.
Quite expectedly analysts were not impressed with the play of words by Microsoft's CEO. Analysts sense that Microsoft's investments in new businesses are outgrowing the returns the company is getting from its existing cash generators (Windows and Office) and therefore the stock is getting punished. In a report by Stacy Cowley in CRN:
The company took a Big Bang approach and tried to overhaul all of its operating system's core components simultaneously, an approach that eventually led to a fiery development crash....
Ballmer's blunt assessment of Vista's development problems came in response to analysts' skepticism about how well Microsoft can execute on its ambitious visions. Cranky about Vista's protracted incubation and the challenges a company Microsoft's size faces in trying to fuel continued growth, Wall Street has kept Microsoft's share price stagnant through most of Ballmer's six-year reign as the company's CEO....
Trying to persuade analysts to trust Microsoft as it sinks billions into new "high growth" projects like Zune and its expanding unified communications and business intelligence software lines, Ballmer argued that the company won't repeat its Vista mistakes....
One money manager at the event said he had hoped Microsoft would do more to demystify its Live strategy, which he views as little understood on Wall Street.
Industry analyst Mike Gilpin, of Forrester Research, echoed that view, saying he thinks Microsoft hasn't yet explained how its Live services will better those of its rivals.
"I would like them to explain the differentiation they'll bring," he said. "How are they going to nail Google?"
Building out Live and Microsoft's array of other new projects will be a long, pricey commitment. That has some financial analysts nervous. "Microsoft's business mix shift is changing as its underperforming businesses are growing faster than its profitable segments," UBS analyst Heather Bellini noted in a report to her clients on the conference.
Killing one Netscape at one time may have been ok. But Mr. Ballmer is right on this time -- taking on Google, Yahoo!, Adobe all at the same time may not have been a wise idea. Maybe Microsoft will learn to give up its desperate itch of trying to eat others pies and bake some of its own new ones. The Tech world will be much better off that way, and truly benefit from the technical and marketing power of Microsoft.
