MS is too big right now and I love the idea of spinning off the 6 entities to see them sink or swim on their own, each with their own stock, which would break the logjam on the stock price.

But right now, the two monopoly businesses (Windows and Office) with huge margins (80%+ and 70%+ respectively) are necessary to support the lower-margin and negative-margin businesses. If you took S&T (fastest growing profitable business) and added it to Client...well, that would be a great business, and the stock would do really well. But who'd take a risk on H&E, MBS, or Mobile? Or even MSN, given the slowdown in revenue last year?

Then again...if they could all reach breakeven by the spinoff time...and they got rid of the "Strategy Tax" (e.g., Xbox no longer has to worry about MediaCenter)...could be a very interesting set of businesses.

The irony of course would be Microsoft choosing to do what Judge Jackson ordered them to do.

A group like home and entertainment and MSN certainly has a big upside that may tempt investors. Lots of companies lose money when they are getting going. At this point I think all the P&Ls can sink or swim on their own. If they turn out to be dogs, they can cut and restructure as they see fit.

It would not quite be what Judge Jackson intended. Remember that IE, Media Player, etc. are all part of client.

- adam

Well put.

>it's not clear that any person, even Bill or
> Steve, can really keep it all in their heads

I can't tell you how much I agree with this - its not their fault but its even worse when all bets are put on the big billg review. "Hey folks, guess what - BillG was ecstatic about the demos!!". Its as if thats what will determine the fate of a product or something, which is totally crazy. In fact, thats the stupidest ide...oh wait never mind ;)

Further balkanization as the answer? Not workable, and 5 of those P&Ls would die almost day off, and that's frying-panning the famed Microsoft-style long-term views, Xbox first to die. And the cash hoard is there for a reason, to buffer a missed upgrade cycle and to fund speculation. Microsoft just needs better corporate goverance, mature company-styled management, not two founders micromanaging and kicking the tires of every group, imparting unworkable visions and goals, while changing strategy on a dime's notice. Quite simple, just needs a regular Fortune 500 management system that is able to lay out realistic road maps that are exactly that; Six Sigma for Software styled.

Cults of personalities ruin companies and keep them from growing and are limited or albatrossed with Founders (possible lucid dreaming) visions. When it works, is it more the 'founder but figuredhead' delegation management style, aka (the late) Dave of Wendy's. When it doesn't you get a Steve Jobs Dictator for Life type or Martha Stewart styled-problems. Basically Microsoft falls in the middle, Gates as visionary dictator and figurehead, Ballmer as founder and 'new style' enforcer, with a small army of burecratic 'own agenda' reporting VPs. When they retire? Easy. Copycat the Fortune 500. One company, with a more rigid hierarchy, and an org chart that actually means something and doesn't change like the weather and doesn't flank daily and has a first focus on customers, with developers second. Perhaps more 'inhuman' and far less geeky but less chaotic and better run.