walkitout (walkitout) wrote,
walkitout
walkitout

Einhorn, Ballmer and Microsoft

I turned on Bloomberg this morning to hear that Einhorn wanted Microsoft to get read of Ballmer because Ballmer is holding down the share price. More about that in just a moment, but first, let's take a brief look at Einhorn.

http://en.wikipedia.org/wiki/David_Einhorn_%28hedge_fund_manager%29

I think it's safe to say the following:

(1) David Einhorn likes to say provocative things
(2) So he can make money off of them.

And he seems to be uninterested in the idea that by saying provocative things that he can make money off of, he might actually be hurting people. For example, you could make a pretty solid case that people like Einhorn took a bad situation and made it way worse by the way they treated Lehman in the wake of Bear, Stearns. But Einhorn thinks of himself as some sort of Tell It Like It Is guy, perhaps even heroic, for leading the charge to destroy Lehman.

No, I am _not_ defending Lehman. I'm not defending Ballmer or Microsoft. I'll get to that in a minute.

What I _am_ saying is that I don't much care for people taking a really big position in something, and then getting on every media outlet they can and loudly pushing an opinion in the service of that position, damn the consequences as long as they make some money. (I think that kind of behavior should be limited to, say, checkers on the cracker barrel on the general store porch, or one's own blog or, conceivably, a screechy radio talk show host. You know, where people are _expected_ to be irrational and grumpy. The deal is, they get to vent and their audience gets to laugh at them. _YES_, I am including myself in this group.)

Now about Ballmer and Microsoft's share price. No, wait. Another digression.

Once upon a time, my oldest sister got a computer science degree from the University of Washington. She interviewed with a bunch of companies, who flew her hither and yon because (a) she was a _she_, in an era where there were virtually no young women getting computer science degrees and (b) she had a straight As in a tough degree program. Her criteria for picking a job largely revolved around a desire to have someone else pay for her to get a master's degree at MIT, and she ultimately chose Bell Labs. (She got the degree, worked at Bell Labs and then completely flamed out. You can blame chronic fatigue syndrome. I, personally, blame Jehovah's Witnesses, altho mostly because they took advantage of what appears to be a familial fascination with the Apocalypse, and which my sister has less resistance to and perspective on than I do.)

One of the companies my sister interviewed at was Microsoft. I should, perhaps, mention that the interview took place in the mid 1980s. She interviewed at a _lot_ of companies, but Microsoft was the only one she told me in absolutely clear terms that I should never, ever, ever, ever work at. And she told me, in some detail, why (this is based off a _bad interview experience_). It was relevant information; she knew I intended to follow in her footsteps. I got off the train after the undergrad degree and went to work for DEC instead, where I met R. Sorry about the mixed metaphor.

While I was working for DEC in a compiler group, I spent a bunch of time on Microsoft's campus. I've conveniently forgotten (mostly for the purposes of this post) precisely what I was doing at the time. What I mostly remember was that that building stank of fear. I also remember some half-hearted attempts to recruit me, and I remember a guy from a bb I was on in college who had worked at Microsoft and subsisted by selling small chunks of appreciated stock and living in his sister's condo (she was living somewhere else, I forget where). He did that for at least a decade.

My dad (electrician and later electrical inspector) had set up an IRA some time in the middle of all this, and one of the stocks he bought for this IRA was Microsoft. Microsoft made him a lot of money, and for all his crazy religion, my dad respects money. (Respects is an understatement.) He kept trying to convince me to go work for them. I resisted. He _kept_ trying to get me to go work there, right up through when I was working at a little bookstore on the internet. Perhaps you have heard of it. Name starts with an A.

I really loathe Microsoft. I cheer when bad things happen to them. I feel about Microsoft approximately the same way I feel about US automakers. Very unpleasant things have happened to me as a result of using their products (the cars and the software) and I'd sort of like to punish someone for that unpleasantnesss. In my efforts to evangelize this perspective, I like to point out all the times and all the ways that they may have broken the law and/or screwed people over in a clearly Wrong Way that may not actually have broken a law.

All that said, I think Einhorn is the bigger jackass in this. First, there are quite a lot of indications that under Ballmer's tenure as CEO, Microsoft has been quite well-behaved. It's quite possible that their most recent big releases are really good products. My husband is convinced of this. Back when I was in college, Microsoft was quite obviously putting out vaporware to kill companies -- small software houses basically put stuff together with the _intention_ of getting bought by Microsoft because they knew they'd never be allowed to stay in business on their own. I _vividly_ remember Stacker (http://en.wikipedia.org/wiki/Stac_Electronics). These days, the people picking on Microsoft have a lot of very silly conspiracy theories that make very little sense. I think Ballmer's done a really good job.

I cannot believe I just said that.

Further, Microsoft is at a point where it can be thought of as an industrial stock. It's not _expected_ to shoot up (or down) dramatically. Industrials are the kind of thing where you buy them based on stability and dividend, not appreciation. If you buy an industrial hoping the stock is going to shoot up, and it doesn't, you might be tempted to engage in something Really Awful in order to _get_ the stock to shoot up, even if that something is really, really, really bad for the company, its stakeholders and possibly society at large.

It would have been easier just not to say anything, just to roll my eyes and figure, hey, one jackass takes down another. Big freaking deal. How can I lose? I'm no fan of any of these guys. Well, here's the problem. Einhorn gets paid if that stock price moves. He doesn't give a shit about what the company produces or anything else. His big complaint about Ballmer is that Ballmer doesn't give a shit about what Wall Street thinks.

I don't think that should be allowed to pass without comment. Einhorn -- and the financial community in general -- are a bunch of predators. We all start cheeping like mad whenever we see them to warn the forest they're coming. It's the only defense we've got.
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