Wednesday, June 29, 2011

What Does Microsoft Have Up its Sleeve?

By Eric Jackson06/29/11 - 07:00 AM EDT

NEW YORK (TheStreet) -- The price action in Microsoft(MSFT_) this week has been unusual to say the least.

The stock jumped 4.5% on Monday. That would be equivalent to Sina(SINA_) jumping 45% in one day. That just doesn't happen for Microsoft.

The stock also followed through nicely yesterday moving up another 1%. There wasn't any real news to explain the move in Microsoft, although some pointed to a Tuesday cloud-computing conference Microsoft was hosting or a report that they would move up the release date of Windows 8.

That leads me to speculate on the real story behind the move which probably a few insiders are only privy to at the moment.

It could be that Steve Ballmer has said something to some close confidantes about leaving the CEO position. (And maybe he doesn't know them as well as he thinks he does, because they've now blabbed about it to some trader friends who are jumping on the news to buy anticipating a big relief rally.)

David Einhorn has said previously that he hopes to see Ballmer gone as CEO, as he thinks he's a weight on the stock. I don't disagree that there would be a rally on the news but I just don't believe Ballmer is ready to leave.

Ballmer has only been there 10 years but, more importantly, he owns 5% of the company. He's essentially a co-founder with Gates and Allen. That means he gets to leave when he wants and I just don't think he's ready to go out when some New York hedge fund manager tells him to.

The other possibility is that the U.S. government will let Microsoft and other big corporations repatriate all their offshore cash back home. Many people seem to believe this will be a boon for the domestic economy as corporations will be able to invest more back home.

Maybe that will happen. And maybe it will be good for the economy. And maybe that's why all stocks have been up this week. But if that is the reason behind Microsoft's jump in its stock price, why haven't we seen a similar move in Cisco(CSCO_) which also has a big cash hoard outside the U.S. There has to be something else.


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