| albionus said: @ Lingysis Buying Apple was just an example, not necessarily what they would do. Try reading the Wall Street Journal and watching CNBC more often if you've never heard of large shareholders threatening to sell stock if changes aren't made. It was done to the big auto companies a few years ago by guys like Kirkorian (and maybe Buffett but I'm not sure on his role), the WSJ had an article a few months ago about a group of activist shareholders who buy into mid-size manufacturers and then threaten to sell if the plants aren't made more efficient, mutual funds are always moving their money around and threatening companies with profit issues. Microsoft isn't at the moment at risk of such a major move but the Xbox360 is showing no signs of being profitable anytime soon and if MS profits begin to slide shareholders will have a very obvious first place to look. For lesser actions by shareholders just do a news search for "shareholder discontent", shareholders are causing problems all over even at companies that have a single majority owner.
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Maybe we're actually talking about the same things but just expressing them in different words, I do not disagree with anything here. Kirkorian's GM foray (now he's getting into chrysler again) was a failure. Icahn is another, wanting to split Time Warner despite holding just like 2% of its stock. And then there's lost of so-called activist hedge fund these days. Some of them were successful, some were spectacular failures, Icahn's case being a textbook example. The extreme end of this spectrum would be private equities--buy the company, put in a new board, oust the management, run the company themselves, float the company later at a profit.
In the end, it wasn't the threat of selling stock. The threat is to oust management if they are not perceived to be acting in the best interest of the shareholder. It's with no recovery in sight that prompts the selling of stock. There is a difference. (that's also what i mean by giving an example where the threat is selling stock)
The most recent example, and quite appropriate too, given this forum, is Take Two. The management was completely unfaithful to shareholders, and the shareholders did the right thing.
Again, I do not think MSFT's goal is the make consoles. It's about their "vision" of a home entertainment hub, and the XBox is merely the start to gain some experience. I might as well state my personal view on this. I simply don't have any faith them being successful... they have too many issues, with their insistence of integrating everything with Windows being their bane. I see Windows as a transition user-friendly operating system towards cheaper, more universal OS's. It doesn't even have to be an OS--Netscape made Microsoft tremble. And they're right--look at the google office suites, all online and a browser is all you need (I love it). Like the hardware spec argument in video games, software "eye-candism" (i.e. interface friendly and feactures) has a limit. Beyond a point, the consumer simply won't notice. When the time comes, Linux will be fully ready (I use Linux... still too many inconveniences).
Thus, MSFT, seeing the writing on the wall, needs this diversification. In my other post I've stated I believe this is likely the most efficient mode how the economy operates.
the Wii is an epidemic.
