Today Tech Crunch’s Duncan Riley asked if Microsoft - and not Yahoo! - could become Google’s main competitor? It was an odd question, because Microsoft is worth nearly $300B in market capitalization whereas Google weighs in at about $160B. Of course, $35B of MSFT’s valuation comes in cash, whereas Google’s coffers bolster a cash hoard of $10B ($7B if the DCLK acquisition closes).
It’s a bad argument, frankly, because much of MSFT’s value comes from software, even though it’s got assets in video games, web portals and search, and much more. Don Dodge broke up each unit’s contribution some time ago.
I ran with that post and projected a value of some $29B on MSN.com/Live.com, and suggested maybe MSN.com/Live.com should be merged into Yahoo!.
Today Steve O’Hear runs down the company’s web video initiatives over the years.
It’s interesting to see that while everyone gets excited whenever MSFT does anything pertaining to web video, it’s not exactly a new field it is entering.
Historically, calls to break up MSFT have come from monopoly cops… but since MSFT’s stock price has largely traded within a $20-30 range for much of the 21st century, should Redmond spin-off its multiple units and let its managers manage them more effectively?
It would certainly make MSFT become transparent to financial markets. I’m not saying MSFT should sell assets in their entirety, but they can float a few units, merge some with others and retain considerable ownership.
I don’t think Gestalt psychology holds true in capital markets: GE is worth more separate than combined I don’t care who says what, News Corp.’s FIM? Ditto. The list is quite long: I think conglomerates cover up more than they unearth, and when it comes to high growth areas like those MSFT operates in, it might make more sense to break them up in lieu of holding them together.
Any thoughts?
Disclaimer: Long YHOO
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