On Sunday my friends Matt and Sarah asked me why MSFT had dropped so much. I started rambling about R&D overspends, paying to ramp up xbox 360 production, Vista delays, and so on. Maybe that really isn’t the case as one commenter at Mini-Microsoft pointed out:
I was researching MSFT’s SEC filings and I have come to the conclusion that the stock price is being intentionally manipulated to help MSFT’s bottom line. As long as the stock price remains below $28.73 by December 2006, the company will not have to book the $2.21 billion in stock option expense on the shares that were sold to JPMorgan.
Interesting idea. The glaring counter-argument to that is that BillG and SteveB lost way more than $2.21 billion during our recent decline.
MSFT was up a decent amount in a down market today. This would normally be taken as a good sign. However, it was nothing more than sector rotation. People are still selling small caps and commodity froth. They’re buying safe, non-cyclical large caps like MSFT, General Dynamics, Colgate Palmolive, Proctor & Gamble, etc. When that’s over, we’ll go flat to down again.