Microsoft's $40 Billion On Hand 965
eMilkshake writes "CNN/Money magazine report here that Microsoft has more liquid reserves than 'Ford, ExxonMobil and Wal-Mart have combined' and 'enough to buy the entire airline industry -- twice. Or all the gold in Fort Knox, four times over. It is enough to buy 23 space shuttles or every major professional baseball, basketball, football and hockey team in America.' This is thanks to (according to WinInfo Update) the fact that 'Microsoft handles its investments with an inhouse software application called--seriously--the Catastrophe Hedging Program 2.5.' I wonder what I would do with $40 billion?"
Ralph Nader (Score:2, Insightful)
S
this oughta prove it.. (Score:1, Insightful)
$40 billion? (Score:5, Insightful)
If I had $40 billion in CASH, an infallibility complex, and a slowly-dawning-realization that a) I'm not going to be able to take it with me and b) everyone doesn't love me as much as I think they do I'd sure use that money for something significant.
I don't mean "feeding the poor" significant. They'll forget it tomorrow. I mean like building the first moon base, or a space elevator, mine the first asteroid or some such thing. Be the person that really sparked civilian development in space, and you will be remembered forever (besides doing a good turn for humanity in the really-long-view).
My $0.02, so that leaves room for another 39,999,999,999.98 more good ideas.
Re:It's about tax evasion... (Score:3, Insightful)
The money has already been spent. (Score:2, Insightful)
http://www.billparish.com/msftfraudfacts.html [billparish.com]
(did originally find this link here?)
Re:What to do with $40e9? (Score:5, Insightful)
Or feed all the hungry on this planet...
And what do you do the next day once the money's gone? Oh my god! The hungry are still there!
When you realize that the reason people are hungry is not lack of food, you will be Enlightened.
The reason people are hungry is not unequal distribution of wealth, it's because of unequal distribution of capitalism and freedom. Lack of food and money is a symptom, not a root cause.
Re:It's about tax evasion... (Score:4, Insightful)
I guess I don't see how not paying taxes you don't owe (your "legally avoiding taxes") is "screwing over the American public". The rules were set by representatives YOU (not MSFT) elected, and if you don't like the rules, lobby to get them changed ... but don't accuse the people and corporations who actually follow the rules of being tax cheats.
Let me put this another way: Do YOU give the government more tax revenue than you are required to do by law? If not, you hardly have a right to complain about others doing exactly what you are doing....
Re:It's about tax evasion... (Score:5, Insightful)
representatives YOU (not MSFT) elected
This is a joke right. It's gotta be. You can't possibly think for a second that you have more of a voice in government than Microsoft (any large corp actually).
Re:bankrupt the world (Score:5, Insightful)
You are either a 1) liberal that believes in a finite amount of money. 2) Never taken econ classes. The latter is forgivable, the former isn't. :)
MS has to have their 40b deposited in banks. Those banks don't just pay interest for fun; they take that 40b and loan it to others (you, me, etc.) and we use that money to build houses, buy cars, and do other things that stimulate the economy and create more wealth. The banks take the interest we pay, take their cut, and pay interest to those that have deposited their money with the banks (MS, IBM, you and me, etc.).
It's all a nice little system called capitalism and banks allow wealth to be PRODUCED, not confiscated by a single individual or company.
Don't worry; MS really ought to pay dividends with that money, but they're not hurting you or me by doing it. In fact, they're making more money available that banks can loan us to buy cars and houses.
if you're holding cash, that's a bad sign (Score:2, Insightful)
When any firm chooses to hold cash rather than reinvest, it's a clear signal that the firm is not optimistic about its business outlook.
That $40Bn could have been spent on developing new business (improving XP, etc), but apparently, the expected return there was worse than cash, which is particularly bad in this interest rate climate.
To use an analogy, consider this cash holding as a huge 'escape pod' for the death star, which is drawing resources away from building more planet-crushing lasers.
If MS believed in itself, it would invest in itself.
Re:It's about tax evasion... (Score:2, Insightful)
If you were a legislator, who would you listen to? Some guy who will vote for you once, or the guy who will send out an email to his thousands of workers saying that Uncle Bill wants you to vote for X, because that will make your stock options value go up, and backs that up with big donations of soft money so you can run ads saying Vote for Me.
The view that the representatives serve the will of the people is short-sighted and overly simplistic. Don't believe everything they teach you in grade school.
Not in the stock market I play. . . (Score:4, Insightful)
The value of a share of stock is whatever people will pay for it, same as everything else. There are a lot of factors going into that, but I think anyone who follows the stock market would agree that the prime determinant of a share price is far more random than the one you suggest. The amount someone will pay for stocks today is related to how likely they think it will be that the stock will be worth more tomorrow. (i.e., I'm paying $15 a share because I think I will be able to sell it for at least $16 a share sometime in the future.)
It has little or nothing to do with dividends or anything else related to how much money the company has on hand, or even whether it's turning a profit. If it had much at all to do with those factors, there would be no way to explain the share prices that dot.coms were hitting during the last decade. I don't think it was exactly a big secret that most internet firms are considered fiscally fit if they succeed in having a net profit somewhere in the area of zero.
Comment removed (Score:4, Insightful)
Re:$40 billion? (Score:5, Insightful)
The only real cures are to overthrow the corrupt governments that keep these country's citizen's impoverished, and/or take mean steps to cut down the birth rate (like, here, we'll feed you and your family for as long as you allow us to put this norplant thing into your woman).
Re:Dividends are stupid (Score:3, Insightful)
Very few tech companies will ever become that "utility" stock that returns 10%-15% every year, MS included. MS will never be the Coca-Cola because MS "must" to continue to spend huge amounts of R&D dollars to keep their revenue stream moving. Coke can just continue to sell coke and make a profit. MS cannot just to continue to sell WinXP and still be around in 5 years.
Have you thought this through? (Score:3, Insightful)
Of course, it might be possible for Microsoft to "buy off" just the very top developers, and do some real damage (as well as scoring themselves some great employees) that way. Didn't they try to hire Alan Cox once?
Re:bankrupt the world (Score:4, Insightful)
You're more correct than you say. They actually loan out the money many times. The very act of MS depositing $40B in the bank probably actually creates (and I do mean creates, yes) an additional $160B over the original $40B.
C//
Re:More philanthropic than whom? (Score:3, Insightful)
Here's an old link [nptimes.com] I found about Gates' philanthropic tendencies: In 1999, the Bill and Melinda Gates Foundation awarded more than $2 billion in grants. That's generous amongst the rich or average or poor.
He's intimated that he will give more than 90% of his wealth away before he dies, as do many of the superrich. So they don't attach as much wages as many other 'average' earners do--which is more effective?
Most of these guys invested in the economy, providing capital through stock purchases and cash holdings that allowed new companies to thrive, houses to be built, etc. And most, yes most, of these ultra-rich give much (most?) of their dollars away after they die. I'd rather see these "10% tithers" save their money, and rev up a large fortune.
Unfortunately, I can't find good statistics on the financial donations. I suspect you won't either--private donations are usually cash-type, non-entity sponsored form. In other words, if the UW gets a $1000 donation from John Smith, they don't and can't really do an analysis on what Mr. Smith's income is. There's some data derived from write-offs on federal tax forms, and this seems to show that the top 5% of the wage-earners represent most of the increases in charitable donations from year to year (a quarter of the increase in institutional contributions was from Bill Gates in 1999).
And don't forget that 91% [econop.org] of the taxes are paid by just the top 5% of the taxpayers. I know that our tax duties aren't philanthropic, but dammit, people want to act like the rich do _nothing_ but capitalize on those beneath them, and it just ain't true.
Re:bankrupt the world (Score:3, Insightful)
On that we agree. My statement is not that there is an infinite amount of CURRENT wealth, but that there is an infinite amount of potential FUTURE wealth. If I make a billion dollars today that does NOT need to mean that the rest of the world lost a billion.
The statement that the rich are getting richer and the poor are getting poorer is about the trends in wealth distribution towards fewer, wealthier people and more, poorer people. Attempting to dispute this by claiming that "liberals believe in a finite amount of wealth" is disengenious at best and just insulting at worst.
If you'll re-read one of my previous posts, I said that those that say that "the rich got richer" SO "the poor got poorer" is an indication that they believe in a finite amount of wealth. If they believe that as a RESULT of the rich getting ticher the poor got poorer then, yes, they believe in a finite amount of wealth.
I will agree that those that observe that "the rich got richer and the poor got poorer" are not necessarily saying that there is a finite amount of wealth. Actually, the people saying this are just wrong at best or insulting at worst, to use your words, since looking at government income per population segment since 1970 I have yet to find a single year where the rich got richer AND the poor got poorer. I've found years that the rich got richer faster than the poor got richer, but I have yet to find a year where the poor got poorer as the rich got richer...
But, that's beside the point. The point is that the people that use that cliche don't automatically believe in finite wealth. But those that say "the richer got richer so the poor got poorer" DO believe in finite wealth.
You're not possibly agreeing with the labor theory of value are you?
Are you suggesting that I ever said we just all sit on our butts and somehow let banks create income for us? Never said that.
*labor* produces wealth. Someone who can loan you money to more efficiently utilize your labor (ie, buy a truck instead of walking to deliver your product).
Labor produces wealth, banks multiply it. I might be able to earn $100 today. But if I deposit that in the bank the bank will be able to use it in ways that may be able to create $400 of wealth for the economy as a whole. THAT'S what I'm saying.
Both are necessary, although there is far more emphasis and reward through finance-based wealth generation than labor-based generation
I agree, both are necessary. Banks can't function if no-one works and no-one earns money. But, given the reality that people need to work to earn a living, banks actually create more wealth than a labroer. I.e., my example above where my $100 turns into $400. I generated $100 of wealth, and the bank generated $300 of wealth with that. So, yes, there is more emphasis on the financial side because it does produce more wealth than a laborer. Of course, if all the laborers stop laboring then we're toast. But that's not reality.
Re:Communism = no one ever starves (Score:3, Insightful)
The dominance of a single, cheap OS running on commodity hardware greatly uncomplicated and accelerated the rollout of technology to the masses of middle class Americans with surplus capital.
I benefitted from this. I've had a stable job for 10 years, I got health benefits, stock options, training. This was not the norm in the early 80's. If it weren't for the tech boom, I might very well otherwise be a 10 year burger-flipping veteran. Through no intelligence or skill posessing shortcoming of my own, mind you. Simply through a lack of opportunities.
Microsoft has created opportunities for tens of millions. But on the other hand, it has also destroyed opportunities for many as well. The demand for computers created and destroyed companies like Word Perfect.
How would this all have played out without Microsoft? I have no idea. Maybe we'd all be complaining about IBM right now. Maybe OS/2 would be the dominant OS. But it would cost $1000. Probably Linux would not have ever been made - and we might all be BSD freaks instead. Who knows? Impossible to speculate.
Re:bankrupt the world (Score:3, Insightful)
The larger the mulitplier, the more it hurts during a real recession.
As part of the multiplier, is the idea of financial float; checks are written that are immediately deposited by the federal reserve into bank A, but funds are not immediately withdrawn from bank B. Thus extra money temporarily exists. So long as the number of transactional cash-flow remains constant, this temporarily created money sticks around. Once a recession hits, purchasing slows/stops, and checks clear...
Since recessions are cyclical, anything that artificially heightens an economic boom will effectively over-stear the economy and make the ensuing correction more powerful.
I personally believe the 90's represented an incredible growth of efficiency in our economy. Banks were allowed greater freedoms, computers reduced transactional costs, demand shifted from expensive goods to high-profit-margin-goods (like software solutions, and raw experienced human labor such as IT and effective middle-management). Since people were generally required to do more, their higher pay was justified; we simply did more work per day than we did in the 80's as a whole.
I believe this growth allowed us to avoid a catastrophic recession / depression on our economic correction. Aside from another socio-technological revolution, we can't sustain such growth as in the 90's, and thus such augmented multipliers are not ultimately to our benifit.
Disclaimer: I've taken several undergraduate economics courses, but I don't claim to be an expert, so comment-accordingly.
-Michael
Re:Communism = no one ever starves (Score:5, Insightful)
There are approximately 5 million dead of famine during Russian Civil War (1917-1922), plus 30-50 million dead (excluding WW2 casualties) in Stalin's Russia, and 30 million dead of famine in Mao's "Great Leap Forward" who might beg to differ [erols.com] with you.
(Actually, Stalin's count may have "only" been another 5-10 million from famine. The other 40 million were executed in purges or worked to death in labor camps. So I suppose you were right - not as many people starved, per se, under Stalin.)
I'll take my changes with Capitalism, if you don't mind.