ikono

What's Intel's advantage(aside from process)? And why hasn't there been a competitive ARM chip in the high performance market?

Is Intel's microcode core better than other competing RISC cores? Is it really that Intel's process is that much better? It seems like it's unanimously the best, but it can't explain everything can it?

I'm having a hard time wrapping my mind around this. It almost feels like Intel has simply added a layer of abstraction. It isn't clear to me that this is a bad thing. Intel has the flexibility of changing that microcode core as they please without worrying about the need for everything to be recompiled if they think of a better implementation with a different instruction set. For very specialized low power devices ARM makes sense. For more complex systems I'm not so sure. You see a strong movement in software towards increasing levels of abstraction. Why would hardware be different?

Is that a fair assessment of the situation? Or am I missing something?

In one of my favorite TED Talks, Barry Schwartz talks about this among other things.

In it he tells a story about a study in Switzerland where a community was asked whether or not they would agree to a nuclear waste facility in their area. Amazingly 50% agreed, they then repeated the procedure but offered 6 weeks salary as well. This time only 25% agreed. He claims that as soon as the incentive is introduced people throw out their perceived responsibilities and instead focus on what is best for them. So instead of asking themselves whether or not they should, they ask themselves "is this a good deal for me".

Is one actually better than the other? I know very little about these things but it seems like ARM relies on a higher volume of simpler instructions at a faster clock rate vs x86 which uses fewer, larger, more complex instructions which take longer to execute. Don't you eventually get to a point where the only way to increase performance is to use more complex instructions?

I mean at some point Intel will be able to deliver x86 CPUs in ultra low power form factors. At the same time ARM CPUs will become increasingly powerful. Is it clear to those that understand these things that one architecture is going to be inherently better?

I don't think the author thinks it's better elsewhere. I assume he's American and is just lamenting that this generation isn't living up to his standards. I don't really know that it matters how much innovation there is or isn't. We can always get better. I'd rather see this argument than the opposite.

If you don't overpay for the shares, your enterprise value should be the same or slightly higher. So market cap should be flat to slightly higher but there are fewer shares outstanding so price per share would go up. When buybacks don't increase share price, by definition market cap must be decreasing.

You're taking the stance of investors are valuing Facebook and the like at X. Prove that's wrong. I think in general if you're going to value companies at significantly abnormal multiples of earnings. The burden of proof should fall on the person assigning those multiples.

But I'll play along anyway. I'll use Facebook as an example. One of the reasons for Facebook's lofty valuation is the very thin trading volumes. People are buying/selling very small $ amounts of Facebook stock in a private market at very high valuations. Imagine company X has one million shares of stock outstanding and I sell 1 of them for $100. Do you think company X is worth $100 million? If so I've got an endless supply of companies for you and I'll even be silly enough to part with them for the bargain price of $50 million. One of us will be rich...

So I contend that the published valuations are somewhat meaningless. The question then becomes what is a company like Facebook worth? Generally there are three main factors that determine a companies value. Tangible assets (cash in this case), earnings, and the value of retained capital. The first is easy and relatively insignificant in this case. The second is very hard, the third is just about impossible. My point is simply that high valuations relative to earnings should imply that there is a very high probability of significant growth in earnings. I think the people that believe in Facebook believe in what it could become not what it is today. If that's true, then the true profit engine is vaporware and it is therefore impossible to have enough certainty in a sufficiently positive future to justify the earnings multiple.

Now one example doesn't prove the point but I do think there is enough anecdotal evidence to justify thinking about the possibility of a bubble.

The real danger is that it's fairly localized to Silicon Valley. So it's fairly likely that if this is or becomes a bubble it will be sort of contained in a small area. As more money gets pored in, wages go up, rent/real estate goes up, ...

It's really more about the amount of leverage and the total volume of money at stake. I haven't seen much evidence of either, although that doesn't really mean anything. But let's take Facebook as an example. It really seems like the "valuation" is due to the tiny volumes of shares being traded.

In general it seems like VCs are throwing 10s of millions around fairly recklessly. 10 million is a lot for most of us, but it's nothing in terms of the US economy. If/when it starts turning into billions instead of millions we could see trouble

> "What, exactly, other than a sneaking suspicion that Facebook might not be worth it's valuation? Clearly some people, the people buying Facebook stock, disagree with you. Why are you right and they're wrong?"

It's not about anyone being right or wrong. The future is inherently uncertain. Investing is about making a bet that will pay off on average. As valuations go higher and higher, it becomes more and more likely that people are only going to make money on an above average future. That's a bubble, and the longer it takes for a below average future to come the bigger that bubble will grow.

> "Even a company that's growing ought to pay dividends in most cases."

That's not true. Companies have opportunities to invest money into things that a normal investor cannot. If a company can invest the money at an above average rate it should.

For US investors, it's even more clear cut as dividends would be taxed if payed out. If the company instead retains and prudently invests that money, the company in essence is able to generate a return on money that would have been payed as taxes. Over the long haul, that "float" is extremely valuable.

"Though <a company>’s intrinsic value cannot be precisely calculated, two of its three key pillars can be measured... The first component of value is our investments: stocks, bonds and cash equivalents... <a company>'s second component of value is earnings that come from sources other than investments... There is a third, more subjective, element to an intrinsic value calculation that can be either positive or negative: the efficacy with which retained earnings will be deployed in the future. We, as well as many other businesses, are likely to retain earnings over the next decade that will equal, or even exceed, the capital we presently employ. Some companies will turn these retained dollars into fifty-cent pieces, others into two-dollar bills. This “what-will-they-do-with-the-money” factor must always be evaluated along with the “what-do-we-have-now” calculation in order for us, or anybody, to arrive at a sensible estimate of a company’s intrinsic value. That’s because an outside investor stands by helplessly as management reinvests his share of the company’s earnings. If a CEO can be expected to do this job well, the reinvestment prospects add to the company’s current value; if the CEO’s talents or motives are suspect, today’s value must be discounted. The difference in outcome can be huge. A dollar of then-value in the hands of Sears Roebuck’s or Montgomery Ward’s CEOs in the late 1960s had a far different destiny than did a dollar entrusted to Sam Walton."

- Warren Buffet, 2010 Letter to Shareholders

Over the last ~10 years Microsoft has been good at #1, good at #2, but #3 has been suspect.

Yes, and increasing earnings per share generally increases stock price.

In theory you only buy shares back when you believe that they are worth more than they are trading for. If this is true, it will increase the intrinsic value of the company and should increase its price per share. If it is not true, then management is incapable of evaluating their own business and shareholders should demand that all non-essential capital be returned to shareholders in the form of dividends.

In either case, my point still stands. These things don't matter enough to be bickering about them. From January 2000 to present the Nasdaq is down about 29%, for Microsoft to only be down that amount your adjusted price would need to be about $40. You need to be very generous to say that those dividends we're worth ~$15 and that's just to match the Nasdaq.

If you really want to argue with the data you should be arguing about the start/end dates. Comparing to the Nasdaq eliminates some of the problem as most tech stocks were equally inflated in 2000. I still think you're looking at near parity at best. Microsoft should have been better than average and the data shows that it probably wasn't.

That's definitely overstating it. They are better than everyone else in the consumer space. Not enough to be worth 8.5 billion for but the core underlying technology is good(They suck at client development though). People underestimate how hard VOIP is because it sounds so simple.

While it may be good for Microsoft, Gates isn't coming back. He's pretty much committed to his foundation at this point and I think what he's doing there is far more important than what he could do at Microsoft.

Microsoft has also repurchased a lot of stock over this period which should inflate the stock price.

In any case, it doesn't matter that much especially given a relatively small number of years and a stagnant price per share. The general premise of Microsoft stagnating is true regardless of how you tweak the numbers.

He started with the Nasdaq comparison, which is fair, and they don't look great in that comparison either. I don't agree with everything in the article but tuning out at the Apple/Google comparison isn't "fair"

Is Netflix using WebM too?

People here need to lighten up. It was a joke...

> We make the code open source when the first device is ready.

What I don't understand is this: weren't people upset that 3.0 wasn't (still isn't?) available when the Xoom launched? Did the Xoom not count as the first device? I mean I honestly don't care either way, it just doesn't seem like he addressed the issues I've been hearing about.

>if it's successful

That's a big if for them right now. When you're trading at a P/E in the single digits ex cash, the market is telling you they have no faith in your ability to re-invest your earnings(especially when interest rates are so low).

I'm going to play a little devils advocate here. What if MS payed a big enough dividend that it was clear to everyone inside that burning money playing catch up was not a viable strategy. Is it not possible that fewer extraneous resources would force them to refocus?

>I can say with confidence that the reason behind Asian Americans not saturating the CEO population in fortune 500 companies is not related to how we were raised.

Don't take this the wrong way but why? The age argument, if true, simply says that the current numbers don't mean anything. It doesn't say anything about why the future is going to be different though.

I also think the story is one sided in terms of portraying all "Tiger children" as being socially inept but I do think it did a relatively good job of presenting the complexity. It was certainly a better article than I was expecting having read the title here on HN. No doubt it played on a stereotype but stereotypes do tend to be an exaggeration of the truth rather than complete fabrications.

"There's a difference between the quality of a business and the quality of a management. If it's a strong enough business, it should be able to withstand poor management. If you gave me the number-one pick in the CEO draft, and said he had to run Ford Motor, I wouldn't do it. It would be too tough. A CEO depends on too many things happening that are outside his control, even if he's the best in the world." -Warren Buffett

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.

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.

My problem with you're argument is that you're focused on strategies/ideas/potential. Microsoft's strategy has always been simple, dominate every software market. There's nothing inherently wrong with that strategy, probably never will be. No one denies the future potential either. It's about execution.

Dominating market's is hard. It requires incredible leadership and execution. Execution is no small thing, you can't just assume that once you have the idea you will be able to execute. So while it's fine to believe in Microsoft's future, instead of telling me what is possible, tell me why I should believe they will be able to execute.

I don't really understand where the term "Walmart disease" comes from. Certainly, Walmart is not an exciting company but it's far from poorly managed. The fact that it's stock has been in a holding pattern for a few years does not mean that it's future is bleak.

Walmart as a company has incredible focus at their core competency. It may be true that they've come close to saturating their market but they still do what they do better than anyone else. Microsoft has saturated their core markets, are losing ground in their core business, and have no idea where they're going to go in the future. But hey if they throw enough money at everything they might hit something...

The one thing they do have going for them is that they still have an incredibly smart collection of engineers. If they somehow find a way to get some leadership at the top, they could turn it around much the way Apple was able to turn it around once Jobs retook the reins.

Honestly, while I understand what you're saying, I disagree. Changing plans and/or pushing back schedules is independent on who's responsible or to blame. If something happened that can't be worked around and my VP neither made contingencies or raised that risk to me from the start. It's their fault. Period. Might sound harsh, but I can't see how you do it any other way.

I don't really think it's about expectations or initiative. It's about accountability. He's simply saying that there are times when the guy on the bottom of the ladder has his hands tied and can say there is nothing he could have done(breaking and entering is not a viable option for a janitor). At some point someone has to take responsibility, Jobs says that starts at the VP level.

I also think people get a little carried away with this due to Jobs' persona. I don't think he means it in a, "you must get X done at all costs". I think he's simply saying, "This is your responsibility. You're accountable. Don't blame someone or something else".