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I watched in horror as I lost heaps of money last Thursday & Friday on my tech stocks.

In case you missed it, the hottest story last week was Steve Ballmer essentially breaking the rules of the high-tech stock market by ack- nowledging in public how crazy our collective delusion is:

“There is such an overvaluation of technology stocks, it is absurd,” Ballmer said to a group of journalists here at a technology conference being given by the Society of American Business Editors and Writers. “I could put our own company and others in that category.”

The full story: http://www.wired.com/news/news/business/story/21915.html

Stupid, stupid, stupid. Or is it?

One of the key factors working against Microsoft right now is the fat valuations against minimal revenues of their primary media competitors, namely Yahoo, eXcite@Home, et al. These companies are able to leverage on their fat valuations to make paper acquisitions and mergers (well documented on this list) at values unacheivable in normal circumstances.

So, maybe Ballmer was executing strategy. Try to knock back the bad boys a few steps to prevent them from broadening their range of services. The impact of this on the MSFT stock is barely significant when compared to the broader imapct it has on tech stocks. It could throw the IPO game into paralysis and help Microsoft make acquisitions much more cheaply overall.

Not so stupid afer all.

Later in the day he said:

“I think it’s bad whenever reality gets so out of line that you get distortion,” Ballmer told Bloomberg Thursday afternoon, hours after making his valuation statements. “I love our company. It’s a wonderful company. I love my stock, and I don’t sell my stock. Nonetheless I do believe the things I said to that other group.”

The full story: http://www.wired.com/news/news/business/story/21941.html

Regardless, Ballmer is likely to need a flak vest and a riot squad next time he visits the Valley. Depending upon the degree of outcry, maybe he’ll get offered up as a sacrificial lamb and they’ll build him a nice early retirement package, MSFT-style.

-Ian.

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