Big Business

Let me ask you something.  Where do you think Microsoft ranks on the Fortune 500 list?
Go on, take a guess.  I'll bet you that 70% of you are nowhere near the answer.
Why is that?
Why do we continually rank Microsoft higher than they actually are?
Because the press and stock market are obsessed with Microsoft.
Partly because they make so much profit relative to their revenue, and I guess if you plot where they're going they'll get there one day.  So this keeps their share price high, which means if they were capitalised they'd rank much higher than their lowly No 46 rank.

Why do I say all this?  Because I was thinking about Google again, and the obsession with them.
And I was wondering if this obsessive reporting of share worth rather than actual revenue and profit worth, will lead to the downfall of many of these companies, who can't sustain stable revenue and profit, let alone growth.  Which is why I'd predict something happening over the next 5 years to send Google's price tumbling to make them a buy for a predictor, which is why they're less likely to exist in 5 years time.

But taking this a step further.  At some point aren't the Chinese and Indians going to be laughing all the way to the bank, with larger markets, lower priced goods and labour, better technology, better trained workforces?  Won't they just say (in their own language of course!), stuff this share price obsession, whilst this is going on, we're going to build massive revenue and profit companies, and who cares about this weird obsession with share price.

So when I see that crappy Google suck up film, I wonder how blinkered it is to what's really going to happen over the next 10 years.  Maybe it will take longer than 10 years, because if they want to put a person on the moon they must think they're at least 40 years behind!!

Comments

[James Governor]

i remember a real interesting stat-unsupported - but from a MS employee. they pointed out that they spend more with British Airways on travel than BA spends on MS software. it was an interesting idea to ponder.

[gabe chouinard]

I saw that Microsoft is second on Interbrand's annual listing of "most valuable brands", which got me thinking... how can it be the second most valuable brand despite all of the negative backlash toward the company and its products? Isn't it hard to quantify the worth of a brand in that case? How much of Microsoft's "brand recognition" is based upon its virtual monopoly?

[Johnnie Moore]

Gab - good question. I think the Interbrand survey is over-rated at best. It's based on all sort of questionable assumptions but is presented as somehow very reliable.