Pondering Microsoft's 'Everett Dirksen moment'

Update at 7:00 a.m. July 19: Typo fixed in the senator's last name.

Illinois Sen. Everett Dirksen is remembered for the quip, "A billion here, a billion there, pretty soon, you're talking real money." (Truth be told, it's unclear whether those were his exact words, but he's got that tagline for posterity.)

I was thinking of the former senator after listening to Microsoft's chief financial officer explain to analysts why the company intends to continue to pour hundreds of millions of dollars into a business which still isn't producing much of a return. But the online advertising business is just too important to Microsoft's future to be penny wise and pound foolish. Of course, it helps when you're the CFO of a company with tens of billions of dollars in cash and marketable securities. For more, check out the conversation I had with my CNET News colleague, Ina Fried, earlier Friday.

[bob haring]

your item is interesting, but the senator's name was dirksen, not dirkson. bob haring

[Michichael]

Dirksen.

[t26l]

Don't you love people who try to act well-read and erudite and it all goes away when they misspell the name of the person they are trying to quote!

[saffroncapital]

'Penny wise and pound foolish' or 'damned if you do and damned if you don't'??

Microsoft is willing to pour billions of shareholders funds down to drain in order to just keep up - its a weak business model, but if they don't then the company would likely move into a slow decline. In fact slow decline may be the preferable option from a shareholders point of view - continue to eek out its Windows monopoly and let investors do the diversifying of their portfolios by buying into Google et al...

[Kwasiowusu]

Ummm..far from buying more Google stock, investors couldn?t get out of Google stock fast enough, as Google stock went down a massive 10% today due to investor disappointment with Google?s slowing sales and profits growth, which came in less than what the market had anticipated. For a firm with a p/e ratio of 36, sales/profits growth in the 30's is simply not good enough. The days when Google grew at 70/80% are gone for ever, and the stock can only go down as sales/profits growth continues to go down.

[RegCrowder]

There was a time when IBM more or less occupied the position that Microsoft does today. IBM could do no wrong. There was a saying in corporate IT (in those days called MIS - Management Information Systems) to the effect that "nobody ever lost their job by going with IBM." And that was true, then.

IBM truly DID invent the PC and then made it accessible to the world.

And then, IBM just sort of started fading away. IBM had all the advantages but it just didn't matter. Somehow, it just couldn't bring itself to stay in touch with reality.

Microsoft seems to be following (stumbling) along in the footsteps of IBM. Strange, isn't it? I think I can see WHAT is happening. But what I can't fathom is WHY it is happening.

But it sure is happening.

REG CROWDER
Freelance Finance and Investment Writer
London, UK & Brittany, France

[http://www.utalkmarketing.com/Blogs/UserBlogs.aspx?UserID=6304]

[http://www.journalistdirectory.com/journalist/TgTQ/REG-CROWDER]

[Penguinisto]

Actually, IBM didn't "fade" anywhere... it is still very much alive and a powerhouse, just that they make their bread-and-butter on services instead of mainframes (they still make serious dough on mainframes, just not as much as they do on services).

IBM managed to adapt and to re-invent itself. Question is, can Microsoft do the same?

[tundraboy]

Wrong. IBM did not fade away due to some nebulous notion of losing touch with reality.

IBM faded away in the PC market because of a singular all-time blunder: It did not acquire the exclusive rights to DOS when it picked it as the OS for the then new PC.

This allowed MS to sell DOS to the clone makers who subsequently outsold IBM, eventually leading to IBM ceding control of the PC industry to Microsoft. IBM tried to reassert control over the industry with OS2 but by then it was too late. MS had thoroughly outmaneuvered them.

If IBM had acquired exclusivity over DOS, IBM would probably still be in control of the PC industry and MS would be just another also-ran software vendor which, based on the quality of their current products, might not even be around today.

[Sumatra-Bosch]

MSFT is doomed as long as the Boy Fuhrer from Duncan Hines is running the show. IBM was able to reinvent itself. Ballmer thinks if you scream loud enough and throw enough chairs, you win. Or something.

[charlie cooper]

yes, it is. sloppy editing on my part. fixed now.

tx