Microsoft's Capital Allocation May Be Getting Better, But Still Really Bad
by Tim Travis
On January 22nd, news broke that Microsoft (MSFT) has now entered into the fray to help take Dell (DELL) private with Silver Lake Partners. While I believe that if Dell is taken private below $14 per share, the buyers will get quite a deal over the long-term, I find myself constantly disappointed by Steve Ballmer and Microsoft's capital allocation. Honestly, the technology sector as a whole has some of the worst capital allocation habits, and it is amazing the opportunity cost that these companies are willing to pay to maintain these bastions of tens of billions of dollars in search of the next Autonomy or aQuantive time-bomb. To put my argument in perspective I wanted to look back at my previous article, "How Microsoft Can Win" that was written in November. In the prior article I made four recommendations to Microsoft and Steve Ballmer, that I admit are quite controversial, but that I truly believe could help get Microsoft going in the right direction. Below I am going to rehash them and update changes that have occurred since the time of the previous article. read more »
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