What MSFT Must Say Today
Microsoft (MSFT) is the Ebay (EBAY) of a month and a half ago. Tossed to the trash heap by the market, thought of as a has-been.
That was where EBAY say in early March, yet it's now up over 60% in 6 weeks or so. What changed for EBAY? They held an analyst day in late March and did a much better job that previously in laying out the case for the future growth of their businesses -- especially for PayPal. They also delivered some solid earnings yesterday to back up the talk that there's a real future here
Which brings us to MSFT. They've done a terrible job in selling the growth prospects of their 5 business segments. Because of their ham-handed handling of it, they've made investors think that MSFT's future prospects hinge on whether they can do a deal (any deal) with Yahoo (YHOO) -- they don't.
It's tough to do in an earnings call, but MSFT tonight (at 5:30pm ET) needs to retell its long-term story again, which can include significant growth from here. This isn't a dinosaur (at least, it doesn't have to be). This is a company with one of the best balance sheets in business which it could use to make some very interesting acquisitions -- yet they've been gun-shy to do so and, when they have (think aQuantive or the Facebook investment), they've overpaid. Steve Ballmer needs get us excited with a real story and a real strategy.
Their decision to withdraw guidance at last January's earnings call further reinforced perceptions that this is a company that is no longer growing -- it is and it will. More than most companies, MSFT does have pretty good visibility into its businesses for the next couple of quarters. It should provide guidance during today's call to give investors more comfort. That will be a bullish sign for the stock.
It goes without saying (given some other comments I've made in this column) that Steve Ballmer should be on the call -- and I'd be shocked if he wasn't, given investor concerns these days.
Of course the most important thing they can do is deliver some strong numbers and guidance for the rest of the year. With some of the positive PC numbers out of IDC last week, it would be nice to hear them talk up the June quarter for Client.
Originally published in RealMoney.com on 4/23/2009 2:49 PM EDT
