Question: Between 1997 and 2004, Microsoft's ROIC fell from 32 to 17.5%. During the same period, Microsoft's earnings grew from $ 3.45 billion to $ 11.33

Between 1997 and 2004, Microsoft's ROIC fell from 32 to 17.5%. During the same period, Microsoft's earnings grew from $ 3.45 billion to $ 11.33 billion. How can a company have a decrease in profitability (as measured by ROIC) but more and more profits? What explains this situation at Microsoft? In 2004, analysts predicted that Microsoft's ROIC would rise to 35%. Why do you consider that this happened? Was it due to any change in the company's strategy?

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