This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Microsoft Gives Up the Grail

More immediate gratification came Thursday when Ballmer said that Microsoft would push down its operating-expense growth to be slightly slower than it was in 2006, easing pressure on margins and possibly allowing for more room at the bottom line for dividends. Ballmer said Microsoft would stay the course in both dividend payments and stock buybacks.

Still, there was talk of faster-growing rivals: Google (GOOG), Apple (AAPL) and (CRM) were named. Microsoft seems to be using a, on-demand, CRM product as an anchor for its business side. Reviews have been mixed to date, but Microsoft is using its close relationships with large companies to win over new users.

Speaking about the CRM potential, Ballmer said, "That's a product that I think is just a gem most people don't even think much about ... But again we're kind of No. 2 or 3 in trying harder; we're not the No. 1 guy in the market, which again I view as an upside opportunity."

Which got me wondering: Of the three rivals it's watching, one of them has a much smaller market cap than the others. Google, at $144 billion, is half Microsoft's size, while Apple, at $73 billion, is again half as big.

But Salesforce is valued at only $5.6 billion. That's less than what Microsoft spent on R&D last year. Microsoft has enough cash ($7 billion) to take over Salesforce at a 23% premium to its current value, which would take it from third place to first overnight in a key growth area.

Combining Salesforce's technology with Microsoft's client base would arguably help both companies. And it would cost $7 billion, a pittance for Microsoft. Remember, that's how much it cost shareholders when Ballmer opened his mouth last week.

3 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs