John Dvorak over at MarketWatch has raised the issue of Microsoft (MSFT) being broken into pieces. He writes: "As things stand, Microsoft has become stodgy and rumpled."
The idea of taking apart Microsoft is not new. It reached its peak in 1999 when the Justice Department was pushing an antitrust case against the world’s largest software company. The government brought in M&A firm Greenhill & Co. to examine how Microsoft might operate in pieces, but things never went that far.
Dvorak does not specify what the pieces might be. The most probable configuration of a new set of companies would include; 1) the client operation which is the desktop OS, 2) the business division plus servers and tools, 3) the online business which has MSN and Live Search, and 4) entertainment and devices which has Xbox, mobile products and Zune.
The problem with the plan, or any plan of this sort is that Microsoft’s online businesses and its entertainment/devices are too weak to stand on their own. Even if they are not well managed by the big software firm, the odds that they would survive as independents is fairly low.
Microsoft has certainly been a disappointment for shareholders. But, the more likely path is that Steve Ballmer and his operating executives will make a hard set of decisions. They will close some businesses and put substantial resources behind others. It has already dawned on them that portions of the company are failures. And, it is just a matter of time before they have to address it or face the the humiliation of under-performing the market year after year.
Douglas A. McIntyre can be reached at [email protected].
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