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Comment by crcastle | Hacker News Reader

Agreed.

I don't understand how a CEO (Ballmer) can last so long at a company with share price effectively flat between $20 and $30 since 2002 (1). Especially in the tech industry -- unless shareholders think the results would be worse without him. MSFT has dividends which maybe offset the flat share price in the investors mind, but oracle (2) and ibm (3) pay dividends and they have had good share price growth since 2002.

(1) MSFT: http://goo.gl/He849 (2) ORCL: http://goo.gl/iNWs1 (3) IBM: http://goo.gl/0W6Kz

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Including dividends, MSFT has returned about -44% since Steve Ballmer assumed the CEO position in January 2000. By comparison during the same period the NASDAQ-100 index returned -37%, IBM returned +66%, and ORCL returned +20%.

The problem is that Gates likes him for some reason. The two of them own an a very significant portion of the company and essentially control the board of directors. So Balmer's going to be in charge so long as both he and Gates wants him to.

Personally I think expecting stock price to always increase is horrible these days.

I agree somewhat with that. I can't place my finger on it, but there's something I don't like about growth needing to be the norm... but that's a whole new topic.

Regardless, the opportunity for profit is why people purchase public shares of a company. Profit can only be made by an increase in share price (assuming no splits) or dividend payout (i think).

EDIT: realized there are many other ways to make money (sell short, derivatives based on price volatility, etc) but i think my point is still valid that the shareholders of a company want growth in share price or they'll invest their money elsewhere.

The reason you always expect growth is because as a company retains earnings its total assets grow. You expect that given more money you should earn more money. If you get to a point where you're earning the same amount but require more assets to do so, you are going to get a lower multiple on your earnings. The other option is to payout all your earnings as dividends but the problem there is double taxation(if you live in a country that taxes dividends) which lowers the value of those earnings to the investor.

Your discomfiture is well placed:

  http://www.youtube.com/watch?v=F-QA2rkpBSY

The world is mostly logistic curves, but the ponzi needs us to all believe in exponential curves.

TY for the link. Another example of a great lecturer being able to make up for a dry subject matter.

Just a clarification for those (like me) who didn't get it:

A logistic curve is basically an S-shaped curve, also known as a sigmoid.

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