DailyTech - Microsoft Reports Better-Than-Expected Earnings, Google Can't Say the Same

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IT Microsoft Reports Better-Than-Expected Earnings, Google Can't Say the Same
Tiffany Kaiser - January 19, 2012 8:00 PM

25 comment(s) - last by Smilin.. on Jan 23 at 9:37 AM

(Source: seroundtable.com)

Google's earnings rose 6 percent, but didn't make the cut

Google and Microsoft both announced their fourth-quarter earnings for 2011, and it looks like Microsoft had better luck than search/mobile giant Google.

Even though Google's earnings rose 6.3 percent, it missed Wall Street analysts' previous estimates for Q4 2011. Revenue in the three months ended December 31 increased to $8.13 billion, or $9.50 per share, but analysts expected $8.43 billion, or $10.51 per share.

For the period ended December 31, Google reported a quarterly revenue of $10.58 billion, which is 25 percent higher than Q4 2010. Its net income was $2.71 billion, or $8.22 per share, which was an increase from Q4 2010's net income of $2.54 billion, or $7.81 per share. Google-owned sites generated revenues of $7.29 billion, which is a 29 percent increase from $5.67 billion in Q4 2010.

"Google had a really strong quarter ending a great year," said Larry Page, Google CEO. "Full year revenue was up 29 percent, and our quarterly revenue blew past the $10 billion mark for the first time. I am super excited about the growth of Android, Gmail and Google+, which now has 90 million users globally -- well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+ we will create amazing experiences across our services. I'm very excited about what we can do in 2012 -- there are tremendous opportunities to help users and grow our business."

Despite its mobile/search success and surpassing the $10 billion mark, Google shares plunged 9 percent to $579.30 in after-hours trading today. It just wasn't enough to please investors.

Microsoft, on the other hand, managed to skip ahead of Wall Street's predictions and please investors. For the three months ended December 31, Microsoft earned $6.62 billion, or 78 cents per share. Analysts expected $20.9 billion, or 76 cents per share. Microsoft reported a revenue of $20.89 billion, which is a 5 percent boost from Q4 2010.

Microsoft's business division, which consists of software products like Office, went up 3 percent from Q4 2010 coming in at $6.28 billion in revenue. The entertainment and devices division, which includes Xbox, had a 15 percent increase from Q4 2010 to $4.24 billion. The server and tools business posted $4.77 billion, which is an 11 percent increase from Q4 2010.

Revenue from Windows and Windows Live, however, took a 6 percent dip to $4.74 billion from a year ago. Some believe this dip may be customers waiting on Windows 8 to release.

"We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services," said Steve Ballmer, Microsoft CEO. "Coming out of the Consumer Electronics Show, we're seeing very positive reviews for our new phones and PCs, and a strong response to our new Metro style design that will unify customer experiences across our phones, PCs, tablets and television in 2012."

Microsoft shares rose 2 percent in after-hours trading to $28.75.

Sources: Google, Microsoft

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Microsoft numbers are off

By Trisped on 1/19/2012 9:03:21 PM , Rating: 2

quote:
Microsoft, on the other hand, managed to skip ahead of Wall Street's predictions and please investors. For the three months ended December 31, Microsoft earned $6.62 billion , or 78 cents per share. Analysts expected $20.9 billion, or 76 cents per share. Microsoft reported a revenue of $20.89 billion, which is a 5 percent boost from Q4 2010.

The $6.62 billion does not make sense. Should it be $21.45?

RE: Microsoft numbers are off

By stm1185 on 1/19/2012 9:43:12 PM , Rating: 2

Earnings: The amount of profit that a company produces during a specific period, which is usually defined as a quarter (three calendar months) or a year. Earnings typically refer to after-tax net income.

Revenue: The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

So pretty much they brought in 21B but only 6.62 was profit.

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RE: Microsoft numbers are off

By StevoLincolnite on 1/19/2012 10:00:48 PM , Rating: 3

quote:
So pretty much they brought in 21B but only 6.62 was profit.

Only.
That's still more cash than allot of 3rd world countries governments get.
Heck, that's more money than what the US government currently has.

But good news for Microsoft, hopefully the push into the mobile Arena pays off.
Personally I was hoping more from Windows Phone 7 from a gaming perspective, they need a killer application that does it justice and draws people in... Halo/Fable/Gears of War anyone?
They have the I.P and the studios, just wish they would take advantage of that.

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RE: Microsoft numbers are off

By Pirks on 1/19/12, Rating: 0

By Pirks on 1/19/2012 10:32:10 PM , Rating: 0

Not likely to see any nice WP7-exclusive big budget 3D games like Halo or GeoW until WP7 hardware reaches the same level of GPU power as iPhone. If MS trails way behind iPhone in GPU power, what's the point in developing cool exclusives for it? No powerful GPU -> no whizbang -> no sales -> wasted $$$ for MS.

But in order to get high end GPU hardware out the door faster than now MS has to follow Apple's total control model more closely than they do now. Total integration and development of your own hardware allows you to update everything at maximum speed and hence stay on top of competitors, while at the same time not falling into fragmentation disaster Android style. MS is pretty slow to adapt though, they only now began to realize the benefits that total integration and control brings, 'cause only recently Xbox surged on top of console sales in the US.

So don't expect MS releasing powerful 3D gaming machines/smartphones iPhone-style any time soon. I think first they will try to penetrate the market with their traditional "partner" model where someone else does hardware design, and only if they fail they may try to switch to Apple-like total control, or maybe do their own reference phone like Google does with Nexus or smth like that. Only then we MAY expect to see some real powerful GPUs in MS WP7 reference phones, and THEN you start talking big shot exclusives like Halo etc. Not now for sure, it's way too early for that.

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RE: Microsoft numbers are off

By Pirks on 1/19/2012 10:32:21 PM , Rating: 1

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RE: Microsoft numbers are off

By Pirks on 1/19/2012 10:34:14 PM , Rating: 2

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RE: Microsoft numbers are off

By Pirks on 1/19/2012 10:38:41 PM , Rating: 2

Sorry for triple post, this web site is broken and returns 502 Bad Gateway after you post something, hence my multiple clicks on the post button. Blame lame web admins, not me!

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RE: Microsoft numbers are off

By Reclaimer77 on 1/20/2012 9:54:59 AM , Rating: 3

As someone who owns a smartphone and a tablet (Kindle Fire), as well as being an avid PC gamer, I just don't see the appeal of mobile gaming on a touch screen. It's SUCH a poor input method compared to everything else. It's fine for things like Angry Birds, but anything that requires precision or quick reaction time is very frustrating. The whole experience is frustrating and mediocre actually. Halo or Gears of War on a touch screen? That would be horrible.

Now I know there are Bluetooth gamepads for mobile devices. But then you get into the whole convenience factor and having to carry around a controller etc etc.

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RE: Microsoft numbers are off

By StevoLincolnite on 1/20/2012 1:01:40 PM , Rating: 2

To be fair, I wasn't really expecting a ported copy of the games... I was thinking more of a remake designed around the platform and the controls.

People used to think FPS gaming would never have been done properly on a console, Perfect Dark and Golden Eye proved that it could be done and Halo showed it could be done incredibly well.

Heck even take Halo Wars. An RTS on a console, all RTS games on a console I have played over the years have been slow and clunky, Microsoft actually did a good job with that game and I find it VERY playable even with a game pad.

So saying "never" is not really the best way to go about it, someone will find a way if it's at all possible. :)

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RE: Microsoft numbers are off

By TakinYourPoints on 1/22/2012 6:59:21 AM , Rating: 1

It depends entirely on the game. Games I play regularly like DOTA 2 and Starcraft 2 would absolutely not translate well to a gamepad, they rely on accurate mouse and keyboard input more than any other genre. Others genres like FPS translate "well enough" to a gamepad with things like aim-assist, plus they don't involve that much physical input, just jump/reload/weapon switch and a few other things. It isn't super accurate but the market has shown that the degree of accuracy you get with a mouse and keyboard doesn't matter to most people. Others games like Diablo 3 would translate to a gamepad just fine I think. I have the D3 beta, I know there are plans for a console port, and I actually think it would work.

Again, it depends, and the same goes for touchscreen gaming. People are still figuring it out, but there are games that go well beyond Angry Birds or whatever that are great. Final Fantasy Tactics for instance works great on the iPhone. Then you have games like World Of Goo and Plants vs Zombies that originated on the PC that actually play better with a touchscreen than with a mouse.

Frozen Synapse was one of the absolute best PC games from last year, in my top 5 along with games like Portal 2 and Skyrim, and it is getting a port to the iPad. The game has the potential to control even better with a touch interface than with a mouse, and its multiplayer is compatible with PC and Mac (turns are stored on a central server). So yeah, super excited about that.

To say that touch is "SUCH a poor input method compared to everything else" is incredibly one-dimensional thinking. Like other genres, it really depends on the game, and there are examples of games that use touch and gyroscopes in such a way that it is actually the preferred control method.

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RE: Microsoft numbers are off

By jvillaro on 1/20/2012 12:17:30 AM , Rating: 2

He is right, the text has something missing or of.

Any way here's the accurate info

http://www.microsoft.com/investor/EarningsAndFinan...

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RE: Microsoft numbers are off

By TakinYourPoints on 1/22/2012 11:57:23 PM , Rating: 2

quote:
So pretty much they brought in 21B but only 6.62 was profit.

You say this like it's a bad thing. Microsoft has among the highest profit margins in the tech industry, even higher than companies like Apple.

30% net profit is huge, that's like big pharma numbers.

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Windows decline

By Tony Swash on 1/20/12, Rating: -1

RE: Windows decline

By jimbojimbo on 1/20/2012 11:47:12 AM , Rating: 1

So what's your point again? It's obvious why Windows revenue is down. Tablet sales are taking away from computer sales.

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RE: Windows decline

By Smilin on 1/20/2012 12:37:16 PM , Rating: 3

PC sales are down! It's the end for Microsoft! Record quarter you say? Oh. Nevermind carry on.

There are three big factors in why PC sales are down. In order of impact they are:
1. Diminished Win7 sales in anticipation of Windows 8. This is normal, happens every time, and analysts take it into account.
2. Global recession. Nuff said.
3. Tablet and mobile device sales. MS might be missing out on those bonus sales but they don't cause much reduction in PC sales. Few people own *only* a tablet. We'll see what Win8 does to this same quarter next year.

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RE: Windows decline

By acer905 on 1/20/2012 12:59:47 PM , Rating: 2

More than that. Win7 has been out for what, a year and a half? The same trend happens after every new windows release. Sales are high, then taper off. Especially once the successor is announced. Tablets don't even matter to the equation.

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RE: Windows decline

By Tony Swash on 1/20/2012 4:01:11 PM , Rating: 1

Microsoft won't release WP7 sales figures.

Google won't break out Andriod costs and revenues.

Interesting ommisions. Usually if the news is good it's shouted from the rooftops.

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RE: Windows decline

By Pirks on 1/20/2012 4:53:35 PM , Rating: 2

Appple won't release global Mac market share.

Apple won't break out Apple TV costs and revenues.

Interesting omissions. Usually if the news is good it's shouted from the rooftops.

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RE: Windows decline

By ekv on 1/20/2012 8:12:44 PM , Rating: 3

Holy mackerel! Swash vs. Pirks. What is the world coming to?

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RE: Windows decline

By Tony Swash on 1/21/2012 6:31:49 AM , Rating: 1

quote:
Appple won't release global Mac market share.

Apple won't break out Apple TV costs and revenues.

Interesting omissions. Usually if the news is good it's shouted from the rooftops.

But Apple do release Mac sales figures, broken into regions, and it's a trivial exercise then for third parties to calculate market share.

Apple don't release Apple TV figure but they describe that product as a 'hobby'. It's a product which has probably costs a few tens of millions to develop unlike Android which has cost Google billions (and incidentally has caused the collapse of very important business alliances and led them down a very dubious ethical path on many occasions).

The Guardian, as is often the case, has a very very succinct and to the point article posing the questions that should be posed about Google's results. It's here

http://www.guardian.co.uk/technology/blog/2012/jan...

Here are parts of Larry Page's conference call with comments from the Guardian:

quote:
Page isn't really clear about how to monetise Android. Here's Benjamin Schachter of Macquarie Research with the question: "On Android, the numbers are obviously very, very strong. But can you talk about the monetization potential that's beyond search? What has to happen with Android for you to actually make money on this? And how are you going to do it?"

Page takes over:

"I think we are in a very -- as I mentioned in my remarks, we're in the early stages of monetization for a number of our new products, and Android is one of those. I think we do make money from Search on apps. We do make -- we mentioned that we have a very strong advertising business on mobile, which we obviously -- a lot of those people are on Android as well. And I think that you also see we announced 11 billion downloads on Android markets. Obviously, a lot of those are free, but we also are having a lot of people buy stuff there, too. We've seen a lot of potential for us to make money on Android, and I think you'll see us increase that a lot over time. It's hard to give you details about that right now, but I'm very, very optimistic."

Odd how in the previous quarter's earnings call he said that mobile was "at a $2.5bn run rate". (Then there were only 190m Android devices.) What's happened? Well, some analysis suggested then that a lot of that revenue - certainly a lot of search, as much as two-thirds - really came from Apple devices. Page didn't elaborate before or since. But monetising Android still seems like one of those "Any time soon, honest" problems.

I have always thought that Google stumbled into the Android strategy without a clear vision of what it's costs might be (including non-monetrary costs) and how it would help Google transition to a stable and substantial source of mobile revenue.

Meanwhile Google's desperate attempt to catch up with Facebook is also leading them into more dubious behaviour with unforeseen consequences further down the line. Personally I have felt recently, for the first time, that Google search has become less useful than some other search engines, packing the results with Google+ in your face crap hasn't helped nor has deleting Facebook search results. Again it is not clear that Google+ is a working strategy.

quote:
Now, those Google+ users. 90m, remember? Here's what Page then said, after announcing that 90m figure: "Engagement on + is also growing tremendously. I have some amazing data to share there for the first time. + users are very engaged with our products. Over 60% of them engage daily and over 80% weekly."

What this doesn't mean is that 60% of people with Google+ profiles use Google+ every day, and 80% in a week. Not at all. It's saying that among people who have created a Google+ profile (a group that includes me), 60% use some Google product - which could be search, Maps, Gmail, YouTube, Docs or any other its dozens of things - while they are signed in using the same email that they have for their Google+ profile.

When you put it like that, it's surprising that more of them aren't signed in all the time - if you're using your own machine, for example, then the cookie on your browser will usually keep you logged in until you specifically log out. One also begins wondering how Google knows this detail: if you aren't signed in, how does it know you have a Google+ profile?

It's troubling questions like this that helped drive down Google's share price. Advertising based on PC (i.e. desktop and laptop) search is the only source of 95% of revenue for Google. How will they make money in a world dominated by mobile devices?

Spending billions on a loss making handset maker doesn't look like a great strategy either.

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RE: Windows decline

By Pirks on 1/22/2012 12:28:45 AM , Rating: 2

quote:
Spending billions on a loss making handset maker doesn't look like a great strategy either

Same has been said about early Xbox releases, don't forget about this Tony

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RE: Windows decline

By Pirks on 1/20/2012 5:13:44 PM , Rating: 2

No news here Tony, Windows is declining, MS knows it and this is why they push in different directions - Xbox is the leader, entertainment division profits are soaring, Kinect is selling hotter than iPads :) and VMWare is slowly but surely choked by superior offerings from WinServer team (System Center 2012 etc), and that's not even mentioning radical redesign of Windows itself. MS is following in Apple footsteps, expect more good news about Win8 next couple of years, especially with new Intel and ARM powered Win8 tablets, life's gonna be good! I'm sorely missing a decent tablet development platform powered by .Net, soon Ballmer will answer my woes :)))

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RE: Windows decline

By Tony Swash on 1/21/2012 8:27:46 AM , Rating: 1

quote:
Kinect is selling hotter than iPads :)

18 million Kinects sold in a year. More than 40 million iPads sold in a year.

Switching topics has anyone worked out how to stop the 502 and 503 errors on this site? It's very tedious.

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RE: Windows decline

By Pirks on 1/22/2012 12:43:27 AM , Rating: 2

Oops, you got me there, I thought it was 14 mln iPads only.

Those bad gateway errors also bother me a lot, but this site is stink anyway with its moronic rating system, no edit button, and crazy spam filters that don't allow to make legit posts here. Figures that this stinky site is swarming with Android and Wintel fanboys.

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