Thursday, July 22, 2004

Microsoft: The World Just Changed

Something astonishing just happened.  Did you notice?  The era of mega growth in the computer/software segment of technology has come to an end. Read in depth here.  

From the link above:

Microsoft, with more than $50 billion on hand, announced yesterday that it would bestow on its shareholders a special one-time dividend of $3 a share, a payout worth $32 billion. 

Although other companies have paid special dividends in the past, the size of Microsoft's payout is far and away the largest cash grant in corporate history.

While the figures in these cases always seem insane, put that aside and think about what the Redman boys are telling us.  They don’t see MSFT growing faster than the market as a whole.  And Microsoft being an industry leader, the industry may not grow faster than the market as a whole.  They’ve looked high and low and there’s nothing they can do with all the cash that's coming in the doors, so they’re giving it to the shareholders to go find something better to invest in.

Since I was a kid, computer and software was the shining city on the hill of industry and business.  From the space program, to Commodore 64's to laptops to internet porn- this was where the growth and cash was.  They were revolutionizing the world.  Well, they did it.  Now they will be settling down and become just like….an automaker…or a retail stock.  Fun, but nothing too exciting.  Pumping out regular products upgrades. Changing the accessories and the style, but mostly the same.  This transition make take time.  10? 20 years?  But the idea of anything exciting coming out of the software industry- The Pure Investor just doesn’t see it.

Don’t despair though, something else will shake your world.  Just wait.  It’s coming at you right now.  You don’t even know it.  Your 3-year old will take it for granted in her 30’s, but to you it will be a marvel.  You’ll look at it just like your great-grandfather would have looked at this laptop - or you would have 15 years ago.  Now, sitting in your office, you’re using one to kill time.  Get back to work.

Stay you.

P.S.  Buy my book.