• Silicon Alley Insider, Friday, June 19, 2009 12:31 PM

Even for a company as cash-rich as Microsoft, Steve Ballmer's plan to invest 5-10% of Microsoft's operating income over the next five years on search is simply a bad invest -- at least according to Henry Blodget over Silicon Valley Insider. Specifically, assuming Microsoft's operating income stays constant -- it will likely grow -- it's $5.5-$11 billion.

"Microsoft has been investing hundreds of millions a year in its Internet business for more than a decade and that investment has yet to generate a single dollar of return," Blodget says. "If you add up all the losses investment, in fact, you get a number that is similar to what Microsoft plans to invest over the next 5 years: $8 billion." In other words, he adds, "Steve has already been investing about 5%-10% of Microsoft's operating income on the Internet for the past decade, and he has nothing to show for it."

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