How Microsoft Can Embrace Linux

While some analyst are happy about the revenue increase from Microsoft others are not. Those analysts believe competition from other operating systems like Linux are to blame. Has Linux finally matured enough to noticeably take away money from Microsoft, or has Microsoft not been pushing hard enough to maintain its lead?

When Microsoft announced earnings for its fiscal fourth quarter on July 22, the after-hours markets sent its stock down by 5% (see BW Online, 7/23/04, "Microsoft: Hot Results, Cool Outlook "). Investors clearly had already finished celebrating the Colossus of Redmond"s bold announcement two days earlier that it would issue a $3-per-share one-time dividend, part of a total $75 billion stock-buyback and dividend plan over the coming four years.

Why is the stock being punished? Because the market sees something different from the upbeat picture CEO Steve Ballmer painted on the day of the dividend announcement. It recognizes that Microsoft faces increasing competition in both PC operating systems and in desktop applications, the software giant"s key product areas. And it"s watching Microsoft"s difficulties repeating in new global markets the dominance it has gained in America.

News source: BusinessWeek Online

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