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Microsoft may pull out of money losing projects

Time: 09:21 EST/14:21 GMT | News Source: E-Mail | Posted By: Brian Kvalheim

Microsoft’s decision to return $75 billion to shareholders marks a shift in strategy, making it more likely the world's largest software maker will pull out of money-losing projects and focus more closely its core business, analysts said on Wednesday. By returning so much of its cash holdings, Microsoft will be forced to become more focused in how it funds existing ventures and any new businesses it might seek out, analysts said. "It's a sign of more discipline to come," said Brendan Barnicle, analyst at Pacific Crest Securities. "Microsoft is done, for the most part, with experimenting with businesses outside of the software industry."

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#1 By 6859 (206.156.242.36) at Thursday, July 22, 2004 10:11:02 AM

MS loses big money on every XBox sold... This doesn't bode well for that console, and it's upcoming replacement/upgrade.

#2 By 37 (67.37.29.142) at Thursday, July 22, 2004 10:36:53 AM

When MS introduced the Xbox, they said they expected to lose money on the console for 5 years. End of story.

#3 By 135 (209.180.28.6) at Thursday, July 22, 2004 11:01:23 AM

I think it's more likely that Microsoft will not be acquiring many more companies, but rather build stuff theirselves.

A new product, company, whatever is unlikely to be successful and profitable for the first 3-5 years. So examples like the XBox are silly, you really have to wait for the second version to see where that market is going.

#4 By 665 (64.151.11.238) at Thursday, July 22, 2004 02:07:59 PM

#4, the MSN division has been making money for a little while now (I think that's as specific information as they release publically), and I imagine that if Hotmail and Messenger don't make money directly, they are helping the portal indirectly by keeping people around the MSN.com site. I would guess they make money on the ads in Hotmail, but probably not much on Messenger, since most people don't pay much attention to the ads.

#5 By 23275 (68.17.42.38) at Friday, July 23, 2004 01:36:07 AM

Acquiring large companies is very hard. M&A's rarely work out as desired.

I'd expect perhaps a few much smaller acquisitions, but never a large one - it is more about culture and identity than technology.

Sometimes companies [that can], make investments that appear to lose a lot of money.
Often, these initiatives are based in a series of coordinated real-world exercises designed to explore and learn about markets and products. What is taken away from these exercises drives a lot more than meets the eye. The X-Box serves a lot of things that go well beyond the console or gaming. Same is true of MSN. Each contributes to the whole and what is clear to me, is that companies, governments and people who know how to exercise, train and evolve doctrine, end up winning. They end up working as they train - it becomes like muscle memory. This provides for a lot of agility - ever notice that despite its size, MS is amazingly agile - and never satisfied with what they have done. MS's brief movement into the WI-FI market is proof of this - they raised the bar, and learned how to fashion their wireless networking protocols - anybody using "Lonestar" - we do and what MS learned is so clearly evident in the UI and especially protocol handlers - amazing stuff.

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