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  • Why Isn't Microsoft's Strategy Working Anymore?  [View article]
    The comparison of MSFT to a utility is flawed because (a) utilities such as gas, water, and electricity are generally thought of as things that could not be innovated into obsolescence within a few years, (b) because utilities tend to have predictable and stable cash flows, and (c) because utilities are heavily regulated which makes them low-profit monopolies but also protects them from competition. The software industry resembles none of these attributes.

    A more valid comparison might be to an old-school land line telephone company like Qwest (Q) or Windstream, which will eventually be wound down as demand declines. Demand declines because of the emergence of new technologies that make the wire lines almost obsolete.


    On Jun 08 12:40 PM dybydx wrote:

    > i agree with the non-innovator opinion from the author. although
    > as someone else pointed out, MSFT is being bought as a utility company,
    > not a growth stock. its low P/E of 12.5 is inline with many utility
    > companies. (where as intc at 20, csco 16.5 and goog 32)
    >
    > although on the bright side i am glad that capital is being put to
    > companies that CAN innovate.
    Jun 09 12:33 pm |Rating: +2 -1
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