Comments on: Microsoft earnings beat estimates, outlook lower

Software maker says enterprise and consumer demand both remain "relatively healthy," but it says it's keeping a close eye on expenses.

[Penguinisto]

Looks like they dodged a bullet... though profits are down WRT Windows. This says that either Vista sales are worse than expected, or that MSFT had to cut prices hard. I'm thinking the latter, since Windows-based OEM sales are still more or less steady. I wonder how deeply MSFT had to slash per-unit license prices in order for OEMs to stomach Vista, and/or cut that same pricing to try and persuade Dell and HP to not be so aggressive with doing alternate OSes?

Brod sounded weird when he mentions Windows Servers, though - MSFT was pushing server OSes long and hard ever since Windows NT. I think the only visible sign that MSFT put any extra dough into Win2k3 was the massive toolkits they built in to try at persuading Windows NT holdouts to migrate to Win2k3 (at Win2k3's launch party, they went into overtime showing off demos of migrations back and forth -- in both directions-- of Windows NT -> Win2k3 AD). In spite of that, I think it was when MSFT finally decided to EOL Windows NT and stop making security patches for it that the NT holdout crowd decided to start migrating (coupled with some pretty big discounts on Win2k3 licensing to boot for those who had primarily NT environments).

Either way, with profits failing to meet even internal targets, I suspect that it's a sign that the giant has stumbled. Question is, will they manage to make it through the economic mess without losing marketshare?

[Vegaman_Dan]

Penguinisto wrote:

"Either way, with profits failing to meet even internal targets, I suspect that it's a sign that the giant has stumbled. Question is, will they manage to make it through the economic mess without losing marketshare?"

As I recall, you have been proclaiming the company's downfall for over two years now, stating publically that it was a financial failure. With a profitable year and increase reported, you are calling this a stumble? Well, perhaps they didn't grow as much as they would have liked, but in this economy, the reality is that everyone is readjusting their outlook.

Will they lose marketshare? Probably, but I don't think this has anything to do with the economic situation. Will this affect them financially as they are rapdily expanding into other products and services? Probably not.

[Penguinisto]

I didn't say it would die overnight, now did I? Silly inconvenient facts keep getting in the way of your arguments, ne?

By the by, prove I'm wrong in what I wrote up there. That's all you have to do.

[a85]

I find it amazing that you can still claim that MSFT is a mess when it is booking income of 6 billion for the quarter. As for the Windows division, it's still massively profitable and maybe the slight decrease is due to the huge advertising campaign and adding people to the development team. I don't think any company with such large cash reserves and an estimated FYOI of ~25b is in any trouble.

Stop crying wolf... it's getting extremely boring.

[ppgreat]

I did not listen to the call. Was anything specific mention about their stock buyback?

[Mr. Dee]

Even if HP and Dell forced Linux on consumers, the return rates would end up being like those of the ASUS Eee PC which has a return rate 4 times higher than Windows. People love Windows Penguinisto, you are not gonna stop a brand like no matter the consumer perception.

[Vegaman_Dan]

Shhh, the emperor penguinisto doesn't like to be told he's wearing no clothes. :)

[Penguinisto]

@Mr. Dee, Dan:

Are you two going to actually refute my argument with facts, or are you simply going to pound out non-sequiturs and ad-hominems?

Seriously, kids: MSFT's profits fell. There are only a limited number of reasons for that, the big two being either less sales (which you two deny vehemently), or lower costs per unit sold (which seems a likely candidate). So unless you can point to another reason entirely (nope - not the economy - Apple gained massive profit growth last quarter, so 'splain that first if you try the economy angle)? Well, let's hear it. Why did MSFT's profits fall?

Let's see if you can do it this time without falling back on name-calling, passive-aggressive mis-characterizations, or completely irrelevant analogies.

C'mon... you can do it. Let's see you at least try.

[KTLA_knew]

"Seriously, kids: MSFT's profits fell."

Uh, OK. You're lying. MSFT's profit did NOT fall. They had a net profit of $4.37B, which is HIGHER than the same period a year ago. Yes, their profits "fell" UP to $4.37B. I would LOVE to have that kind of problem.

Wow, that was EASY.

[Penguinisto]

"Profits in the Windows unit were down year-over-year, despite slight growth in the unit's sales"

-splain that one.

/P

[james3838]

"-splain that one."

That didn't take long, just required a bit of reading. Guess the new Apple commericial is correct:

The Windows division?s profit, on the other hand, slipped 4 percent to $3.3 billion. Microsoft, which recently launched a massive new advertising campaign to trumpet Windows? virtues, attributed the decline to higher marketing expenses. It also added an unspecified number of people to Windows? research and development team.