z64dan on 06 July 2007
| Fuzzmosis said: Investing at a large loss for several years is quite painful for any investor. They've definitely got their financial analysts working to lessen the blow as much as they can, and without question put the billion dollar loss for this quarter to help make 2008 profitable, since they would make shareholders happy. (Not sure if it works for American taxes, in Canada you'd need to demonstrate actually losing the money rather than saying you will, but less taxes on other profitable divisions with a 40% tax rate does make it only a 60% loss rather than 100%) But investing at a loss for years is very dangerous. If I invest 1 million for 1% (So 100 million capitalization) for a loss of 20 million, 15 million, 10 million, break even, then gain of 5 million, my 5 year investment has net me a loss of ... 400,000 dollars. If I had just banked that money, at 3% interest for 5 years.. I'd have gained 160,000 dollars. For a total net wasted income of 560k. Investors do look at opportunity cost. They hope that the consoles will take off as shown that they can, but with multiple year losses, you really really do not make the people enabling your investment happy. They are playing a risky game with other people's money right now. At least the Warranty and application gives some good will and gives them a chance to deliver. |
Microsoft, 3 years ago, gave away $32 billion directly to shareholders ($3/share dividend). There are no "people" enabling their gaming investment. They get profit from their operating system sector, and redistribute it as they see fit.
