the rumblings have already started... watch for more layoffs and reorgs. There's going to be a lot of pressure on field sales teams to deliver, but the corporate market just isn't in the mood to spend more on IT right now.
MS needs to take a real hard look at R&D, but it seems like a sacred cow. They spend billions and have failed time and again to deliver.
Microsoft is finally getting aggressive with competitors like Google and Apple, but so far their efforts have fallen flat. It'll be interesting to see how the market Win7 in October. They're building nice buzz, but the consumer market is really difficult right now. Win7 could go a long way in repairing their negative reputation.
For MSFT as a stock, it actually isn't about growth. Their P/E is 14, and they actually have a dividend yield. Their primary driver is increasing bottom line rather than increasing top line like a "traditional" technology company. Long-term, I don't think they are a great investment, but in the next 6 months it might not be bad...
It is always about growth. Always. It doesn't have to be a lot of growth, but a company has to be growing their profits or their stock will fall, dividend or no dividend. The story here is that Microsoft's profits are in decline. The low P/E is simply a reflection of expectations of earnings growth in the future being very low. I'd expect MSFT's P/E to go even lower if this trend holds.
IMO, Microsoft's problem is in it's pricing. If they sold the OS for a reasonable price, I don't think they would have the issues with piracy that they have and the general vague dissatisfaction. I hesitate to buy any MS product simply because it is far too expensive. I have one remaining Windows PC, and once you add in the cost for the 'full' version of windows rather than the crippleware home versions, the firewall, malware/spyware blockers and their yearly subscription fees, antivirus and it's yearly subscription fees, and then the general OS software that should have been included but wasn't, it's just too expensive.
Given that they haven't really reduced prices much, I have pretty much made up my mind that I won't be buying Windows 7 either.
MSFT made $3B profits or $0.33 per share. Which is more than AAPL made. Less than Analysts had hoped by $0.02 per share.
I'll stick by my $22 price target to by MSFT shares, although I am holding steady on my AAPL shares and options...
Who made more money is of no relevance here. Apple is growing. MS is shrinking. It's all about momentum. Once a company this big starts sliding in the wrong direction, it's very hard to turn it around. Ballmer is not the man to turn MS back around.
Or to put it another way, MS peaked a long time ago and is now in decline, while Apple has yet to reach its full potential. I don't see Windows 7, or any other product on MS's current roadmap helping matters much. Maybe they can come up with something big, but not with their same old strategy of copy what everyone else does, only make it cheaper. Can't beat Google that way. Google gives everything away for free. Can't beat Apple that way anymore. People want to be thought of as cool, and will happily pay extra.
I expect MS to start killing off its unprofitable businesses with increased frequency. Soapbox was the tip of the iceberg.
I was watching the stock market today with glee as MS slowly lumbered up 3+% for the day and about 10 mins from the bell, I shorted as much as I could afford
The signs were all there: High-pitched squeaking about how much better (what they meant was cheaper) MS is than apple, aping the Apple retail success, in a word, all but screaming from the rooftops, We have a problem, but don't know how to fix it, so let's borrow from our competition's play book. But really, all you had to do was go to MS's financials from the previous four quarters to see the downward spiral; makes you wonder what the analysts are actually analysing. I doubt a discounted W7 will bring people back in droves. What I see is more mac users borrowing old versions of windows for the occasional document that they cant' do on an apple---they're in deep trouble. very deep trouble
I see an massive opportunity for Apple. Development of software for Microsoft's current users, so when the customers finally get fed up, they'll have a viable solution. For it to be done right, they'll need a couple of years to develop the paperless fully integrated hospital or large business. Can you see the irony if Apple were to design such an elegant solution that Redmond would have to use Apple servers--what a hoot that would be--or maybe such would be verbotten, like melinda and the little puppies aren't allowed to have iPods and iPhones like real kids
Imagine the trauma of the little Gates-lings having to go through school with a Zoon, then being the only ones in college with an HP or Dell--does the old heart good
Hell, if Apple can rethink music players and phones, why not information systems for enterprise
Yeah, that's sort of what I've been thinking. Personally, I really dislike the company. I think they've done far more harm than good. But I think it's tempting to hear some disappointing financials and forget the unbelievable money pumps they have constructed. Those can fuel LOTS of mistakes on their part.
Apple's fought like a champ, and they continue to make gains. But they have to scrabble for every tenth of a percent, it seems. And it's not like the entire core of Windows users is up for grabs.
What's the percentage of current Windows users who simply won't ever look beyond their OS? I suspect it's a substantial majority. Microsoft will find a way to monetize them, and keep them in the fold.
I agree with you to an extent. And it's quite an extent, rest assured. But do you think that being able to constantly fuel mistakes and hedging bets on that is a good way to inspire investor confidence? I think the fact that you can afford to make a huge number of mistakes isn't necessarily something to boast about. If that's MS' attitude it's extremely laissez-faire. And it might very well have contributed to this current result. There seems to be no sense of urgency or initiative in Redmond. MS has heaps of R&D money, but look at who is far, far more efficient and impressive with theirs.
One of the reasons I've always come back to is that MS' licensing cash-cow has inspired galactic laziness in the organization.
Only a fool will believe that the decline is due to some mysterious challenges. If it is a challenge, you have seen nothing yet. You make one product that makes money and then you copy many more that lose money, just to show off. And you turn around and say, challenges. There are no more companies left to buy. So now you have to make your own money.
It is a failing business plan. It will continue to decline until this lame company is dead. If you cut $750 million dollars of costs in a quarter and still lose money, surely something is seriously wrong.
So here is the solution; spend more money in advertising screaming how cheap PCs are, and may be some idiots will buy your messy software. Throw more money down the advertising drains. DOn't improve your products. Rename each version of the same product to hide your previous disaster, and may be you will make some money! There you have it, Microsoft! Perfect business plan for success.
Adding up Microsoft's Net Income for the previous 3 quarters, plus this just announced quarter totals to around $14 billion.
Declining, but positive, profits are completely different then a net loss (or being "in the red")
Or am I missing something...
You are absolutely right: This is misleading wording and hence, poor reporting, on AI's part.
It should be corrected. Otherwise AI's financial reporting cannot be treated as credible.
Microsoft is probably on a flat-to-declining path, while Apple is still headed the other way, but the article does not have to exaggerate to make that point.
MS is just about to start to flush more cash down the drain through their retail store initiative, especially if they plan to locate them in the same high rent districts where the Apple Stores are.
And they keep throwing more cash into fixing Zune without seeming to understand exactly what's wrong with it.
They also don't seem to grasp the importance of mobile, and its coming dominance over the PC.
But don't fire Ballmer yet, after all they still have greater profits than Apple.
I think we also have to look at what's on the horizon. We all know from an Apple fan standpoint, no one buys when you know a new product is due. Windows 7 might move more computers after it is out. Sure, Apple has a new OS coming out the same time, but I think they finally priced it right at the $29 mark. I personally wouldn't have a problem buying a new Mac and then shelling out $29 in a few months for an OS update - but shelling out over $200? That's stupid.
Who knows what will happen in the future - all I head about is Zune HD IN THE FALL, Win 7 IN THE FALL, Natal IN 2010, MS retail stores in 2010. Really, its all in the future. Sure, this might be good, but what happens if things fail? Bad reviews of the Zune HD and the whole line might flop. That, or if Windows 7 has a bad first month where there are tons of compatibility issues, viruses and bugs it could sink the OS with Vista-like results.
In other words, right now, both companies are in slow periods - Apple's getting set for a new OS, new iPods and maybe a tablet. Microsoft is getting ready for a new Zune and a new OS. The thing is Apple is thriving, and MS isn't. We'll see. This fall is either going to see an MS rebound, or a sharp turn downwards, but regardless, they have placed all their bets in what's coming up in 3 months, so fall will likely shape the company for a few years.
What is MicroShit going to sell in their stores? Mice, webcam, keyboard, zunes and all Microsoft software? Bad idea Balmer. People could get those stuff online with much better pricing. People are fed up about the 'upgraded' downgrades from Vista to XP. Now you are going to add Vista and Windows7 to the XP
If Balmer is not careful google will eat MicroShit for lunch. Google's OS coupled with a Wine tools (so many out there) could cast a spell on MicroShit era in total. We are not living in a Mainframe and workstation era where people are willing to pay $30,000 license for interleaf. Open Office and Star Office with better capability and stability is available for free or almost free comparing to the bloated MS Office. Mac has much more choice (Open Office, Star Office, NeoOffice and so forth)
To quote Steve Jobs from a few years ago: "Microsoft does not have to lose for Apple to win"!
Apple really took off when they concentrated on doing what Apple does best, instead of trying to refight the OS war. Only the short sighted fan boys on both side of the isle concentrate on the market share percentages. It is meaningless.
It is obvious that Apple is doing great with the small percentage that they have. They are smart because they focused and dominated the hugely profitable upper middle to high end premium systems. Why fight for the other 80% of the low margin market? Just for bragging rights?
When you add in Apple's mobile business the future looks great and it does not require the death of Microsoft. Apple is not interested in the no margin commodity market and the lower margin enterprise & government markets. I hope Microsoft does well there. Who is going to replace them if they do fall since we know that nature abhors a vacuum.
Care to point out the 'other' mistakes ... or will this be your last post?
Sure... the article says "but the second negative quarter..."
Which was the first negative quarter? i.e. that helped tip msft into a full year loss (sic)? According to the author, it was the previous quarter (ending on March 31, 2009).
But, for that quarter (ending on March 31, 2009), msft had a net profit of $4.438 Billion, which was higher than the same quarter in the previous year of $4.290 Billion.
I haven't bothered to check all the other numbers and info quoted in the article. Really, it is the author's job to get the information right.
Good. Hopefully this will put pressure on MS to go back to their original business plan and focus on improving their software instead of sticking their noses in others markets.
right. i have to use it at work so they may as well make XP useable as nobody seems to want to upgrade from it.
of course new computers will have it pre-installed, and since microsoft set the bar so low with the vista debacle, 'success' is almost guaranteed. now they have to convince the millions of business users to upgrade. i think that's the real challenge.
It's a done deal. Many IT shops will roll out Win7 simply because it:
a) doesn't suck any worse than XP
b) is a zillion times more secure than XP
c) XP is getting really crufty and 64 bit XP is really crufty
Folks typically have an inordinate amount of IT crap on their XP builds. A good number can go away under Win7 leading to faster performance than under XP.
Comments
These marketing moves are flat out desperation.
What a management microsoft has wrought.
How long does balmer have under these conditions and decisions? Bill will have to act fast.
And having bottomless pockets, my guess for Balmers replacement will be....
Steve Jobs.
MS needs to take a real hard look at R&D, but it seems like a sacred cow. They spend billions and have failed time and again to deliver.
Microsoft is finally getting aggressive with competitors like Google and Apple, but so far their efforts have fallen flat. It'll be interesting to see how the market Win7 in October. They're building nice buzz, but the consumer market is really difficult right now. Win7 could go a long way in repairing their negative reputation.
For MSFT as a stock, it actually isn't about growth. Their P/E is 14, and they actually have a dividend yield. Their primary driver is increasing bottom line rather than increasing top line like a "traditional" technology company. Long-term, I don't think they are a great investment, but in the next 6 months it might not be bad...
It is always about growth. Always. It doesn't have to be a lot of growth, but a company has to be growing their profits or their stock will fall, dividend or no dividend. The story here is that Microsoft's profits are in decline. The low P/E is simply a reflection of expectations of earnings growth in the future being very low. I'd expect MSFT's P/E to go even lower if this trend holds.
Given that they haven't really reduced prices much, I have pretty much made up my mind that I won't be buying Windows 7 either.
What a horrible article!
MSFT made $3B profits or $0.33 per share. Which is more than AAPL made. Less than Analysts had hoped by $0.02 per share.
I'll stick by my $22 price target to by MSFT shares, although I am holding steady on my AAPL shares and options...
Who made more money is of no relevance here. Apple is growing. MS is shrinking. It's all about momentum. Once a company this big starts sliding in the wrong direction, it's very hard to turn it around. Ballmer is not the man to turn MS back around.
Or to put it another way, MS peaked a long time ago and is now in decline, while Apple has yet to reach its full potential. I don't see Windows 7, or any other product on MS's current roadmap helping matters much. Maybe they can come up with something big, but not with their same old strategy of copy what everyone else does, only make it cheaper. Can't beat Google that way. Google gives everything away for free. Can't beat Apple that way anymore. People want to be thought of as cool, and will happily pay extra.
I expect MS to start killing off its unprofitable businesses with increased frequency. Soapbox was the tip of the iceberg.
The signs were all there: High-pitched squeaking about how much better (what they meant was cheaper) MS is than apple, aping the Apple retail success, in a word, all but screaming from the rooftops, We have a problem, but don't know how to fix it, so let's borrow from our competition's play book. But really, all you had to do was go to MS's financials from the previous four quarters to see the downward spiral; makes you wonder what the analysts are actually analysing. I doubt a discounted W7 will bring people back in droves. What I see is more mac users borrowing old versions of windows for the occasional document that they cant' do on an apple---they're in deep trouble. very deep trouble
I see an massive opportunity for Apple. Development of software for Microsoft's current users, so when the customers finally get fed up, they'll have a viable solution. For it to be done right, they'll need a couple of years to develop the paperless fully integrated hospital or large business. Can you see the irony if Apple were to design such an elegant solution that Redmond would have to use Apple servers--what a hoot that would be--or maybe such would be verbotten, like melinda and the little puppies aren't allowed to have iPods and iPhones like real kids
Imagine the trauma of the little Gates-lings having to go through school with a Zoon, then being the only ones in college with an HP or Dell--does the old heart good
Hell, if Apple can rethink music players and phones, why not information systems for enterprise
Yeah, that's sort of what I've been thinking. Personally, I really dislike the company. I think they've done far more harm than good. But I think it's tempting to hear some disappointing financials and forget the unbelievable money pumps they have constructed. Those can fuel LOTS of mistakes on their part.
Apple's fought like a champ, and they continue to make gains. But they have to scrabble for every tenth of a percent, it seems. And it's not like the entire core of Windows users is up for grabs.
What's the percentage of current Windows users who simply won't ever look beyond their OS? I suspect it's a substantial majority. Microsoft will find a way to monetize them, and keep them in the fold.
I agree with you to an extent. And it's quite an extent, rest assured. But do you think that being able to constantly fuel mistakes and hedging bets on that is a good way to inspire investor confidence? I think the fact that you can afford to make a huge number of mistakes isn't necessarily something to boast about. If that's MS' attitude it's extremely laissez-faire. And it might very well have contributed to this current result. There seems to be no sense of urgency or initiative in Redmond. MS has heaps of R&D money, but look at who is far, far more efficient and impressive with theirs.
One of the reasons I've always come back to is that MS' licensing cash-cow has inspired galactic laziness in the organization.
It is a failing business plan. It will continue to decline until this lame company is dead. If you cut $750 million dollars of costs in a quarter and still lose money, surely something is seriously wrong.
So here is the solution; spend more money in advertising screaming how cheap PCs are, and may be some idiots will buy your messy software. Throw more money down the advertising drains. DOn't improve your products. Rename each version of the same product to hide your previous disaster, and may be you will make some money! There you have it, Microsoft! Perfect business plan for success.
Adding up Microsoft's Net Income for the previous 3 quarters, plus this just announced quarter totals to around $14 billion.
Declining, but positive, profits are completely different then a net loss (or being "in the red")
Or am I missing something...
You are absolutely right: This is misleading wording and hence, poor reporting, on AI's part.
It should be corrected. Otherwise AI's financial reporting cannot be treated as credible.
Microsoft is probably on a flat-to-declining path, while Apple is still headed the other way, but the article does not have to exaggerate to make that point.
Please fix it, AI.
And they keep throwing more cash into fixing Zune without seeming to understand exactly what's wrong with it.
They also don't seem to grasp the importance of mobile, and its coming dominance over the PC.
But don't fire Ballmer yet, after all they still have greater profits than Apple.
Well said!
Agreed!!!
Good, maybe the stock will get so cheap Apple and/or Google can buy them out and end the suffering of billions.
No sell it now to get as much out of the stock as you can and give it back to the shareholders!
I think we also have to look at what's on the horizon. We all know from an Apple fan standpoint, no one buys when you know a new product is due. Windows 7 might move more computers after it is out. Sure, Apple has a new OS coming out the same time, but I think they finally priced it right at the $29 mark. I personally wouldn't have a problem buying a new Mac and then shelling out $29 in a few months for an OS update - but shelling out over $200? That's stupid.
Who knows what will happen in the future - all I head about is Zune HD IN THE FALL, Win 7 IN THE FALL, Natal IN 2010, MS retail stores in 2010. Really, its all in the future. Sure, this might be good, but what happens if things fail? Bad reviews of the Zune HD and the whole line might flop. That, or if Windows 7 has a bad first month where there are tons of compatibility issues, viruses and bugs it could sink the OS with Vista-like results.
In other words, right now, both companies are in slow periods - Apple's getting set for a new OS, new iPods and maybe a tablet. Microsoft is getting ready for a new Zune and a new OS. The thing is Apple is thriving, and MS isn't. We'll see. This fall is either going to see an MS rebound, or a sharp turn downwards, but regardless, they have placed all their bets in what's coming up in 3 months, so fall will likely shape the company for a few years.
What is MicroShit going to sell in their stores? Mice, webcam, keyboard, zunes and all Microsoft software? Bad idea Balmer. People could get those stuff online with much better pricing. People are fed up about the 'upgraded' downgrades from Vista to XP. Now you are going to add Vista and Windows7 to the XP
If Balmer is not careful google will eat MicroShit for lunch. Google's OS coupled with a Wine tools (so many out there) could cast a spell on MicroShit era in total. We are not living in a Mainframe and workstation era where people are willing to pay $30,000 license for interleaf. Open Office and Star Office with better capability and stability is available for free or almost free comparing to the bloated MS Office. Mac has much more choice (Open Office, Star Office, NeoOffice and so forth)
Apple really took off when they concentrated on doing what Apple does best, instead of trying to refight the OS war. Only the short sighted fan boys on both side of the isle concentrate on the market share percentages. It is meaningless.
It is obvious that Apple is doing great with the small percentage that they have. They are smart because they focused and dominated the hugely profitable upper middle to high end premium systems. Why fight for the other 80% of the low margin market? Just for bragging rights?
When you add in Apple's mobile business the future looks great and it does not require the death of Microsoft. Apple is not interested in the no margin commodity market and the lower margin enterprise & government markets. I hope Microsoft does well there. Who is going to replace them if they do fall since we know that nature abhors a vacuum.
Care to point out the 'other' mistakes ... or will this be your last post?
Sure... the article says "but the second negative quarter..."
Which was the first negative quarter? i.e. that helped tip msft into a full year loss (sic)? According to the author, it was the previous quarter (ending on March 31, 2009).
But, for that quarter (ending on March 31, 2009), msft had a net profit of $4.438 Billion, which was higher than the same quarter in the previous year of $4.290 Billion.
I haven't bothered to check all the other numbers and info quoted in the article. Really, it is the author's job to get the information right.
Good. Hopefully this will put pressure on MS to go back to their original business plan and focus on improving their software instead of sticking their noses in others markets.
right. i have to use it at work so they may as well make XP useable as nobody seems to want to upgrade from it.
of course new computers will have it pre-installed, and since microsoft set the bar so low with the vista debacle, 'success' is almost guaranteed. now they have to convince the millions of business users to upgrade. i think that's the real challenge.
It's a done deal. Many IT shops will roll out Win7 simply because it:
a) doesn't suck any worse than XP
b) is a zillion times more secure than XP
c) XP is getting really crufty and 64 bit XP is really crufty
Folks typically have an inordinate amount of IT crap on their XP builds. A good number can go away under Win7 leading to faster performance than under XP.