Despite the fact that staff are almost in open revolt, the company runs like a feudal kingdom of warring departments and the outfit is not making an impact in the mobile market, Microsoft is still a money spinner.
But Wall Street analysts are getting a bit disturbed about how the press is talking Redmond down and it is seriously affecting the outfit’s share price.
In a research note, Jefferies & Co. analyst Katherine Egbert noted that everyone is comparing Apple with Microsoft, usually with Jobs’ Mob being touted as “bigger than Microsoft”.
The effect has been that as the iPad has generated some $2 billion in sales since its April launch, yet Microsoft has lost $50 billion in market since the device came on the market.
Microsoft shares now fetch a lower valuation than IBM, but Microsoft is still growing faster with expected 2011 revenue and earnings growth of 7.5 percent and 10.6 percent, respectively, versus four percent and 9.2 percent for IBM.
While Egbert said that the iPad will likely steal sales from Windows devices, she notes that with Windows tablets on the way, the market is exaggerating the Apple threat.
Shares of Microsoft are $24.39, but Egbert says that based on Redmond’s growth and profits the price should be about $36.
No doubt there is trouble in Microsoft. It is in need of a restructuring and a cull of senior management. However, even in its broken state it is still making huge amounts of cash. It is a wonder what it would do if it pulled its finger out and concentrated harder.