The rally on Wall Street continues as buyers jump in on any pullbacks in the major indices to mop up shares. Concerns about the broader market now being overbought have started to get louder but buyers aren’t trying to hear it. Earnings continue to fuel the gravy train. The reversal in oil prices also contributes to impressive gains across the board. Consolidated volume support is high, with more than 5 billion shares changing hands. Investors have gained more confidence since the Fed stood pat on the funds rate yesterday.
MSFT reports a higher-than-expected profit and revenue for the Q1 FY2007, which ended on September 30. Forward guidance is in line with the Street consensus. However, the upside earnings surprise doesn’t impress investors. Although it gains 14 basis points (bp) in live action, MSFT actually dips slightly in after-market trading.
What does MSFT have to do to impress investors? Ship Vista as planned and then find ways to monetize more assets and energize growth. I don’t understand why MSFT is sitting on a $34BN cash pile. MSFT is still viewed by many, me included, as a growth firm. A growth-oriented firm should not have so much green sitting pretty. It suggests MSFT is running out of ideas. While consumers and investors get sidetracked by Vista, I think MSFT needs to get really innovative again. Just trying to grab market share from Sony, Apple and Google won’t do anymore. There's bound to be some questions on life after Vista during today’s earning call. I’ll be all ears.
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