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Just as your pulse is checked during a routine physical, free cash flow is used as an indicator of a company's health. It equals the cash brought in from operations minus the money needed to pay the bills. Think about leftover money in your checking account after you pay this month's bills.
Investors and analysts see this leftover money as a gauge of a company's ability to perform. It is available for transactions such as handing out dividends and working on new products.
Some argue free cash flow is wrongly overshadowed by the emphasis often placed on earnings. Earnings numbers can be manipulated and don't always tell the whole story -- and earnings don't mean much if there's nothing left over after a company pays its expenses. Even if you bring in a six-figure salary, but no money left after paying the bills, are you in great financial shape?
You don't have to be Einstein to figure out free cash flow. To calculate the number, subtract the company's expenditures and dividends from its operating cash flow.
If the free cash flow is written in red ink, it doesn't necessarily signal curtains. This is common for young companies looking to grow. It also could be a result of heavy investments, which in the long run could be worth a standing ovation.
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Friday, September 05, 2008
New Seinfeld Ad Draws Criticism Online
Associated Press
No soup for Microsoft?
The software giant's new ad starring Jerry Seinfeld has draw largely negative reviews online after premiering Thursday night during NBC's broadcast of the National Football League's season kickoff game.
The ad was the start of a highly anticipated $300 million advertising campaign that Microsoft (MSFT) is launching in attempt to rebuff Apple's (AAPL) popular TV commercials, which have portrayed Microsoft and PCs as uncool.
Click here to watch the commercial
In the commercial -- which can be found at Microsoft.com and on video sharing sites -- Seinfeld is walking through a mall when he spots Microsoft Chairman Bill Gates at a "Shoe Circus" store. The comedian than helps Gates pick out a new pair of shoes while the jokes come quick: showering with clothes on, Gates being a "10," platinum credit cards for a fictional shoe store.
It's a zany ad that packs a lot of quirkiness into 90 seconds. With no direct mention of Microsoft or its operating system, Vista, the commercial concludes with the slogan: "The future, delicious."
The ad was created by Crispin Porter & Bogusky -- a firm with a reputation for oddness. Many technology and advertising blogs have turned to Seinfeld's trademark comedy description -- "nothing" -- to describe the ad.
"Huh?" wrote Abbey Klaassen for Ad Age. "You could be forgiven for not knowing what the heck Microsoft's new TV ad ... was about."
Dan Frommer, writing for the Silicon Alley Insider, pronounced the ad "not funny" and added that the mall shoe store setting "is not going to help Microsoft look any cooler."
For the blog Techcrunch.com, Michael Arrington noted that the "tech and geek crowd is a little underwhelmed" by the ad, which he said is "a far cry from the brilliant Microsoft v. Mac ads."
Brad Brooks, vice president of Windows consumer product marketing, said in a video posted on the Windows press Web site, that the ad is a "teaser" meant to "engage customers in a conversation ... to get the conversation going again about what Windows means in people's everyday lives."
Even if the reaction was mostly negative, Microsoft's ad has clearly succeeded in getting people talking.
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