Stock s are rebounding on Thursday , with the Dow Jones Industrial Average ( INDEX: ^DJ I ) and the broader S&P 500 ( INDEX: ^GSPC ) up 0.70 % and 0.69 %, respectively, a t 12 p.m. EDT. T he technology-heavy Nasdaq Composite was up 0.84 %.
C ompounding the bear market in China and a Greek crisis that is coming t o a head, Wednes day's outage at the New York Stock Exchange , during which the exchange suspended trading in all stocks for roughly four hou rs because of an "internal technical issue," may have contributed to negative sentiment yesterday (the S&P 50 0 was down 1.7%) .
However, it's worth emphasizing that genuine investors can safely ignore this type of event . First, the equity market s ' infrastructure offers plenty of redundancy , so even hyperactive traders could continue to trade NYSE-listed stocks on multiple other venues, including the N asdaq and BAT S . Second, when something like this occurs, lon g-term investors ca n go back to an instructive quote from Berkshire Hathaway (NYSE : BRK-B) CEO Warren Buffett, who said:
In other words, shares repres ent a minority ownership in a business, and y our focus as an inv estor ought to be on business quality and intrinsic valu e , not stock prices. If you can do that without being distracted , your long-term returns will take care of themselves, regard less of short-term vicissitudes in the market.
Microsoft: No M&As!
Microsoft ( NASADQ : MSFT) CEO Satya Nadella c o n tinues to put his mark on the company -- simultaneously clean ing up an expensive mistake by his predecessor, Steve Ballmer -- as reports surfaced yesterday that t he Redmond, Wash., software giant will take a $7.6 billion writedown related to its 2014 acquisition of Nokia's handset business. The acquis i t i on was a poisoned gift that Mr. Ballmer initiated in th e month that followed his Aug. 2013 annou n cement that he would be leaving Microsoft within 12 months.
The writedown wipes out virtually the entire $9.5 billion purchase price, which incl uded the assumption of $1.5 billion in cash. Combined with the elimination of 7,800 jobs (most of them in the hand set division), it represents a miserable admission that Microsoft has failed in its ambition to take on Apple and the Android ecosystem in mobile handsets.
The retreat from the handset bus i ness i s not entirely unexpected. L ast m onth , Microsoft announced that Stephen Elop, Noki a's chief executive at the time of its acquisition, w ill leave the company . His departure is part of a broad er re organization that include d the combination of the en gineering team s from the Op erating Systems Group and Microsoft Devices Group into a new team, the Windows and Devices Group. Elop had b een in charge of the Microsof t Devices Group.
Th e latest development means two of M icrosoft's four largest acquisitions ( where amounts have been publicly disclos ed) have amounted to lighting money on fire -- to the tune of roughly $14 billion ! In 2012, Microsoft wrote down vir t u ally the entire $6.3 billion price paid for digital marketing company aQuantive.
What were the other two acquisitions? The $8.5 billion purchase of Skype Technol ogies and the $2.5 billion deal for ga mes maker Mojang -- announced last November under Mr. Nadella's watch. Neither of these appear to be models of good M&A in terms of financial return or strategic sense.
There's a lesson here for Mr. Nadella: Acquisitions , along with all strategic decision-making , ought to focu s on building on Microsoft's ar eas of strength in business and consumer software.
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