What Microsoft has to say for itself
Microsoft has kicked off its earnings conference call, after posting quarterly results and outlook that were below what some analysts were projecting.
I'll update this blog once there's more to report. For now, Microsoft is just going through the formalities. (And the sound quality, at least here at CNET, is terrible, with investor relations chief Colleen Healy barely audible).
Update: 2:40 p.m. PDT: CFO Chris Liddell speaking, noting that, since its last conference call, Microsoft has decided to invest more in both acquisitions and in in its own online services business.
He noted disappointment in Microsoft's share price given its results, saying it reflected both general uncertainty and Microsoft-specific issues, such as the uncertain Yahoo issue.
"We remain focused on the factors in our control," Liddell said.
2:45 p.m. PDT: Healy noted that the PC industry saw 12 percent to 14 percent in the quarter, ahead of Microsoft's forecast, with Microsoft seeing its client revenue growing even faster as it returned to making piracy gains after a dip last quarter.
2:47 p.m. PDT: As for the online business, Healy said that page views and search queries came in as expected, but noted that "monetization lagged."
2:49 p.m. PDT: The company sold 1.3 million Xbox consoles in the quarter.
2:52 p.m. PDT: Expenses came in $500 million higher than expected, on higher sales of Xboxes and Microsoft consulting services, both of which have a higher cost of sale, Healy said.
Hiring improved, with Microsoft closing more open positions, Healy said.
2:54 p.m. PDT: Liddell is back. The company expects 12 percent to 14 percent growth in the PC market, but Windows client unit revenue to only climb 9 percent to 10 percent for the year. Slower growth for Microsoft is because of the continuation of a few key trends, he said. Emerging markets growth will continue to outpace mature markets, while consumer segment growth is seen exceeding business growth. Also, more PCs are being sold by large computer makers as opposed to smaller "system builders."
The company sees some of the challenges it saw in the online services business continuing, although Liddell said the company hopes that some of its investments will start to pay off later in the fiscal year.
3:00 p.m. PDT: Microsoft plans to continue to invest (read: lose money) in online services.
"We do not make these investments lightly," Liddell said, noting that the loss will be "a drag" on the rest of the company. However, he said Microsoft views a further several hundreds of millions of dollars is worth the cost given the size of the online advertising market is measured in tens of billions of dollars.
He noted the market is projected to be $80 billion by 2012, making it one of largest growth areas for the company.
Turning to Yahoo, Liddell said the company made the decision to shift gears during the quarter as a deal with Yahoo seemed less likely and after Yahoo made its deal with Google. Of the increased spending plans, Liddell said two-thirds are related to driving increased search business.
It's plans include more toolbar programs with computer makers, deals with other software makers and Internet service providers as well as a faster roll-out of its Live Search Cashback program. The company will also look at more vertical acquisitions, he said.
3:10 p.m. PDT: Liddell said he won't be taking questions on Yahoo, but he did go over the elements of its latest proposal and added, "We continue to believe our proposal is a compelling one."
On to Q and A:
Asked about the macroeconomic economy, Liddell said. "We are clearly cautious like everyone is," but added that for Microsoft's products, the company is feeling good overall. He did note that the company was seeing slowness in online advertising. "It was weak in the fourth quarter," he said. "There is a direct impact and we are not immune to that in the online space." That weakness is expected to continue, at least in the current quarter, he said.
Microsoft said it won't be deterred by either the current weakness or its failure to strike a deal with Yahoo. "Regardless of what happens with Yahoo, it's a space we are committed to."
He again pointed to the company's planned investments in areas like distribution deals as well as new business models, like Live Search Cashback. "In the short term that is not going to make the division profitable," he said.
Pressed by analyst Heather Bellini on when Microsoft might see the business shift away from being a drag on overall margins, Liddell said, "I can't promise you you are going to see a massive turnaround in the short term."
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
That will move the stock, guaranteed.
Roberto
Why is Microsoft bashing so popular? Mrs. Fried seems to write alot of Apple-biased articles on here. Why though...
Technology shouldn't be about division. Its sad to see alot of people, especially those employed by C-Net, be so bias against Microsoft....who in fact creates several cross-platform apps and doesn't lock-in the majority of the customers (at least not as insulting as Apple does).
... i am still waiting for webcam support on msn messenger for mac, while a lot of other msn clients for mac support this feature. is it ms engineers who couldn't solve the problem, or is it ms trying to force people to their os by limiting features on cross-platform apps. same thing applies to tiny little streaming audio codecs that ms won't release for other platforms, or not anyone else do anything about it either.
ms bashing is so popular because they haven't done anything to be appraised since the release of xp. on the other hand apple released a wide range of products, or updated them. ms did innovate, a lot, but that was a decade ago.
did i mention the crazy and very ill-informed (i think he boycotts google, at least that would make sense about the comments he makes about pretty much anything, and ms search algorithm isn't even decent to find anything online) dude that they probably sneaked out from a mental hospital and made the ceo?
and btw apple does get bashed, a lot, probably even more than ms. just go to the support forums of apple and click on any topic. i can't say the same for ms since they don't even have a support forum, let alone the e-mail and phone support is 50 bucks a call. at least apple has the sack to listen to complaints for the first 90 days after the purchase.
Microsoft is the lockstep 'our way or the highway'
Both Linux and Mac can read MS dox & disks, MS does good to open its own without crashing.
Firefox knocks Internet Explorer out of the box, is fully customizable and runs on all 3 OSs.
Heavy-handed? Who was it just gave Yahoo 24 hours to 'buy in or die'?
Which platform has been around longest and has the worst security - MS hands down.
Why would anyone buy a new OS ( Vista) from a company that has yet to get its almost 30-year old OS (Windows) to run right. Even half right.
I run all three - in the last 5 years I have had no - that's NONE - BSODs from Mac or Linux.
But with WinDoze? At least eight - two caused directly by installing SP3. The first was a pre-start up Blue Screen of Death which rendered the hard drive inaccessible and made repairs impossible. What a nice present from the bozos at the home of the sloppiest code in the West: MicroBomb.
And what happened to MS support? Even when it is an upgrade/ install problem you get two calls during which they do everything possible to put the blame elsewhere and then deny you any assistance.
If you do get help, 2/3 of your help time is on hold - they practically dare you to hang up (thank God for speakerphones).
Face it, Soft-ies, MS is a bloated piece of slopware that no one understands. The 'upgrades' are corrections and corrections to corrections. And the more you use them, the more crashes your 'fixes' will cause.
I haven't had to install a Mac lately, but I've put in a half-dozen installs of Linux. They take 30 minutes for a full install from scratch, including all updates for the OS and about 25 key apps all of which are included at the same price: FREE.
How good is MS? Wel-l-l ... even the founder has bailed out - leaving the ship to the rats.
Windows isn't the problem. Look past the software. Its the ****** "quality" PCs that can't run ANY operating system with a decent GUI. Since Microsoft doesn't forcefully coerce the planet to use their own brand of computer hardware....the computers that are built for it by "quality" manufacturers such as E-Machines usually aren't even putting Linux on ;]
yarlq: If you actually knew something about technology and operating systems...then I would bother responding to you personally. Any idiot can install an operating system. And believe me, anyone can bash Microsoft.
murbo: thanks for not being immature. yea, Microsoft has a bad PR problem. but its mainly due to steve jobs' eclipse of good marketing....which is about all his company does without a hitch or hidden fees/services/malware: and that would be good marketing
and yarlq..before you insult "the West" you should read up on tech and get back to me.
Given their history and their lackluster profits that would have to be 1.3 million shipped with maybe half of that actually be purchased.
If their have been 10 million actualy xbox 360 sales it still doesn't break even with the $1 billion dollars invested to fix all the problems the crappy MS engineers caused. Add license fees and it still doesn't come close.
XBOX is a loser. Technically and financially.
- by Wookiee-1138 July 20, 2008 2:08 PM PDT
- Thanks for confirming what we all already knew. There's at least 1.3 million complete idiots in the world.
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