Friday, May 27, 2011

David Einhorn Echoes My Position On Ballmer & Microsoft

I noticed that David Einhorn took time out from his purchase of a minority interest in the New York Mets to echo my long-held contentions, expressed in prior numerous posts (under labels Microsoft and/or Steve Ballmer), that Bill Gates' successor as CEO should be fired.

According to Bloomberg on Thursday, Einhorn's Greenlight Capital's 8th largest position is Microsoft.


First things first. Does noted wealthy hedge fund investor Einhorn's agreement with my long-held call for Ballmer's departure mean I am now correct? Or was I correct all along? Does it matter that someone with billions to invest decides on publicly stating the same sentiments I've written for a few years?

In some ways, it does matter. For instance, I don't hold Microsoft, and, even if I did, I wouldn't own as much as Einhorn's fund probably does. So I wouldn't have the investor influence that Einhorn does.

But, then again, Einhorn's fund owns Microsoft. Wouldn't his statements be expected, in the days ahead, to drive the price of the firm's shares down? Does Einhorn want to accumulate more shares, at cheaper prices, the better to insinuate himself into the firm's management?

That is, after all, Einhorn's modus operandi, is it not? To invest in firms with challenges, hoping to affect a resolution, and thereby see gains from his pre-existing positions in the firm?

But by criticizing Ballmer and Microsoft, while owning the share, Einhorn would seem to be taking some risk, seeing the value of the firm's shares potentially drop for a while, before possibly rising again. Perhaps on Ballmer's exit or Einhorn's securing some role in influencing the firm's strategic direction.

But, in another way, it doesn't matter that Einhorn has now agreed with a position I've held for years. The facts of the case should be based on their merits, not simply on who is voicing them. In fact, sometimes you should assign more credibility to someone who is objective. Someone like me who doesn't own Microsoft shares, but simply observes real performance and comments thereon.

Of course, another reality is that I can write about Microsoft's, Ballmer's and Gates' failure over the past decade all I want, and I'm not going to get the coverage on CNBC, Bloomberg and in the Wall Street Journal that a wealthy hedge fund manager like Einhorn will receive for pithier comments at a much later date.

Is it gratifying for me to see business media embrace Einhorn's views on Microsoft and Ballmer, which are, essentially, my own for years? Yes.

Is it frustrating to know that I can write the same conclusions as Einhorn, for years, and garner no media attention? No. I'm sanguine about having one of millions of blogs. Mine is neither famous nor, on a traffic basis, very heavily read.

However, that said, a series of equally-candid posts about GE earned me an appearance on the most-watched cable news program, O'Reilly's Factor on Fox News, a little over three years ago. And that appearance got the attention of GE's headquarters staff.

Years ago, when the Wall Street Journal featured blogs which discussed topics appearing in the paper, I routinely saw my blog posts featured, driving readership of my blog up over 100 daily visits. Even now, I have about as many daily RSS feed readers as I average in direct readership. And it's fairly common for me to see IP addresses from companies like Goldman Sachs, Lehman and other well-known firms, as well as the US Senate, House and other government entities and universities visiting my blog.

The truth, however, is that I write the blog for two reasons that have nothing to do with other people. The first is to provide myself with ongoing anecdotal reinforcement of the key proprietary research findings which drive my equity strategy. The second is to compile a library of my own thoughts and observations, the better to use to build upon those prior recorded impressions and advance my own ideas about business, finance and economics.

Whether those thoughts and observations are widely-read or bring a significant revenue stream was never the primary purpose of the blog.

All that expressed, however, I do take some measure of satisfaction that someone like David Einhorn took years to arrive at the same conclusions I reached much earlier. And that, thanks to his obsessive attention to mentions of himself in online venues ( grist for another post based upon a brief email exchange he and I had a few years ago), he'll probably read this post and my observations about his being so late to an obvious story.

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