Microsoft at the altar

All dressed up and no place to go? Microsoft’s deadline for its US$41.2bn bid for Yahoo! has come and gone and the company remains undecided about what to do now. The fact is that the world’s biggest software company needs to act if it wants to prevent itself sliding into the status of a yesterday’s man in the fast-changing tech world.  It’s shares have dropped 20% this year and last week it announced a 11% fall in quarterly earnings. It’s not even certain that an agreed purchase of Yahoo! - a clear second to Google in the online world - would return Microsoft to a growth path.

The company, however, is sitting on an embarassment of riches thanks to its near monopoly of the PC operating environment to date. It’s net cash as of March 31st was a stunning US$11.8bn, up from US$7.6bn a year ago. In its latest quarterly statement, Microsoft stated that about 9% of its pre-tax earnings came from investment income. If it can’t find a home for this money, it’s going to become a bank, not a technology company. In the meantime, it remains a very rich groom indeed.