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Microsoft's earnings were mixed -- EPS was up, but revenue was down. The outlook is still bright, though, thanks to Windows 7.  (Source: Sydney Morning Herald)
Results aren't as bad as they look at first glance, but Win7's success is still essential

With Apple reporting another record quarter and releasing new products, pressure was high for Microsoft's results.  Microsoft just announced its earnings on Friday and at first glance they aren't pretty, representing another quarter of declining revenue.

The numbers appear very dire, with revenue, operating income, net income and diluted earnings per share dropping, 14%, 25%, 18% and 17%, respectively.  However, appearances can be deceiving -- this drop was largely because Microsoft deferred $1.47B USD in revenue on Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability.  

Adding back this deferred income, though, the results become a mixed bag.  Revenue, at $14.39B USD (with the deferred income) still fell 4 percent year to year.  However, this isn't as bad as the slide in past quarters.  Further, earnings per share rose to $0.52/share, rising over 8 percent from last year, thanks, in part, to cost cutting.

Chris Liddell, chief financial officer at Microsoft emphasized this positive metric, stating, "We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows.  We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions."

Microsoft's stock rose over 5 percent on Friday, and maintained most of these gains, thanks to the positive side of the results and optimism surrounding Windows 7.

Microsoft's outlook in the near term appears much rosier, even if the current quarter was still a bit rocky.  Microsoft has turned to the well received Windows 7 for fiscal salvation, in part, along with a rejuvenated Zune offering, the Zune HD.  And thus far, the well-received Windows 7 -- launched last Thursday on October 22 -- hasn't shown any signs of disappointing.  Microsoft also hopes to cash in on Windows Server 2008 R2, released consecutively with Windows 7.

Kevin Turner, chief operating officer at Microsoft comments, "The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners, and customers.  We are pleased by the early positive response we are receiving for these products."

Microsoft is also gearing up in its internet business sector for one final rally against Google.  While it may be Microsoft's last chance to catch the internet search giant, with its new alliance with Yahoo it stands the chance of gaining enough marketshare to truly compete with Google at last.

Microsoft's Xbox 360 also has continued to be a lesser, but strong contributor to Microsoft's financials.  In September, the majority of gaming expenditures went for the Xbox 360 console, despite it trailing the PS3 and Wii in console sales.  This is thanks, in part, to the platform's terrific software-attach rate.  Microsoft hopes to boost its hardware profits even more, by locking out third party memory sticks with an upcoming firmware update, forcing Xbox fans to use its more expensive memory sticks or turn to work-arounds.

Looking forward, Microsoft will launch new versions of Office and Sharepoint Server in the first quarter of 2010.  It is also reportedly may launch new Microsoft-branded Windows Mobile 7 smart phones designed by Danger and codenamed "Pink", as well as its Courier tablet, sometime next year. 

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By damianrobertjones on 10/24/2009 3:33:36 PM , Rating: 5
I hope that MS keeps on going and although a lot of people don't really have great things to say, (Probably due to donwloading crap onto their own pcs and infecting the thing), but I watched a show today with Steve Balmer and he seems like a good, down to earth chap. I repect that.

RE: Nice
By rippleyaliens on 10/24/2009 3:48:17 PM , Rating: 4
Win7 Will be big.. Win7 is very corporate friendly. Much more polished than win vista. What this means is that Machines will be sold with win7, which means ALOT of implementation. Dell, HP, Intel, AMD, etc will sell product. For my field, and i am sure many of the DailyTech people, this will translate into increase work/jobs/REVENUE.. Much needed infusion in my opinion..

RE: Nice
By StevoLincolnite on 10/24/2009 10:17:00 PM , Rating: 2
Win7 Will be big.. Win7 is very corporate friendly. Much more polished than win vista. What this means is that Machines will be sold with win7, which means ALOT of implementation. Dell, HP, Intel, AMD, etc will sell product. For my field, and i am sure many of the DailyTech people, this will translate into increase work/jobs/REVENUE.. Much needed infusion in my opinion..

I completely agree, I have never seen so much hype surrounding a Windows Operating System in many many many years, I think Microsoft will do incredibly well in terms of sales, most of the hype seems to be surrounding peoples experiences with the Beta's, Release Candidates as well and not simply just advertising campaigns.

I honestly believe Windows 7 will be the best possible "Stimulus" package (That costs Tax payers nothing!) to hit the IT industry for a very long time.

The great thing about Windows 7, is that people voted with there pockets with Vista, and because of that, Microsoft sat-up and decided to take notice of WHAT the people wanted in an Operating system, and actually do it.

RE: Nice
By Targon on 10/25/2009 8:19:42 AM , Rating: 2
There have been three really big Windows released that made huge strides in the years since Windows 3.1 really caught on:

Windows 95 was a huge improvement over Windows For Workgroups 3.11.

Windows XP was a huge improvement, bringing the power and stability of the Windows NT(and 2000) line to the consumer space.

And now we have Windows 7. All of these releases were very well received compared to the previous offerings.

Others have said it, but a big part of the success of Windows 7 is that it has the DRIVER stability that was missing from Vista at launch. If you think about it, in spite of the issues that some(not all) have with Vista, the reason Vista has had such a BAD reception was primarily due to bad drivers at release(NVIDIA drivers were the source of 30 percent or so of the BDoD issues in 2007 from what I remember). Since Windows 7 shares the same driver model(with some small changes), the maturity of the Vista drivers is what helps make Windows 7 more stable at release.

Windows XP really has been around for a LONG time, so it is good to see so many people willing to upgrade. Stagnation in the OS market would hold back development of new features that would require massive OS re-writes, and I don't see Microsoft wanting to release a free update to provide those updates after so long.

RE: Nice
By crystal clear on 10/24/2009 11:34:31 PM , Rating: 2
Just remember that Microsoft is not planning to retire Extended Support for Win XP until April 8, 2014.
If microsoft ends up releasing a fourth service pack for XP, it will retire support for SP3 (released April 2008) two years after SP4 is released, or in April 2014, whichever comes first.

Plus Independent Software Vendors offering criticial business software/aplication based on Win 7 will also determine the upgrade process schedules/timings.

Its only in 2013 you will see WinXP fading away to make place for Win7.

It's Time
By tech329 on 10/25/2009 6:36:39 AM , Rating: 2
There has been a lot of fence sitting when it comes to people and businesses upgrading hardware and software. Most know the details for this so there is little need to expand on them. It is time though to catch up with that lag and get back in the game. Win 7, along with recently introduced new generations of CPUs and GPUs, will provide the incentive to do just that. In a manner of speaking this is the perfect storm of products at a very crucial time.

Increase revenue for Xbox??!?!?
By sdsdv10 on 10/25/2009 6:11:42 PM , Rating: 2
Microsoft hopes to boost its hardware profits even more, by locking out third party memory sticks with an upcoming firmware update, forcing Xbox fans to use its more expensive memory sticks or turn to work-arounds.

How many here think this will work, raise you hand...

$30 for 512MB from MS:

or 8GB for $26 from Newegg:

Which would you rather buy?

Best quality, Best reputation , Best services
By myyshop9009 on 10/24/09, Rating: -1
By gucio69 on 10/24/2009 8:58:44 PM , Rating: 2
GTF out you spamming troll.

CE Internet > PC Internet
By reader1 on 10/24/09, Rating: -1
RE: CE Internet > PC Internet
By Shadowself on 10/24/2009 6:28:10 PM , Rating: 3
While I personally won't use one (for portability I use an internet capable phone, for mobile computing I use a true laptop [15"]) I don't see Apple's rumored tablet as having any significant impact on netbooks. For some reason people like those netbooks probably because they are so cheap. I can't see Apple coming up with a tablet that is in the same price category as netbooks.

Additionally, Microsoft is attempting to up its game in the CE space including its mobile OS. It certainly has a long way to go, but anyone who has historically counted Microsoft out has later regretted it. Microsoft is nothing if not persevering.

RE: CE Internet > PC Internet
By Hydrofirex on 10/24/2009 6:37:48 PM , Rating: 2
One is an established market - the other is growing. While I agree that portable computing is the obvious, evolutionary, and natural trend for technology at this juncture I do not agree that this is an overall threat to Microsoft, desktop computer, or laptops/netbooks. Will the laptop re-swallow the netbook market? Yes - the word will just define a different portability segment in the overall laptop market (They existed before all this recent hoopla over tiny less powerful laptops!)

Desktop computing isn't going to disappear anytime soon, but It will not be the only market. Location aware portable computing is *just* truly getting off the ground and is the next growth market.


PS - Batteries still have a ways to go before the portable revolution really displaces traditional computing IMO.

RE: CE Internet > PC Internet
By goku on 10/24/2009 7:21:15 PM , Rating: 2
Batteries are fine, we just need to use the power we already use more efficiently. All that electricity turning into a scorching leg warmer is not what I'd call "efficient".

By William Gaatjes on 10/25/2009 3:01:53 PM , Rating: 2
Computers will be more efficient when the software and hardware will be more efficient. That seems totally obvious, but i would like to see an extension next to the priority model. An extention that can be turned on and off by the user globally or per process for maximum compatibility. This extension tells the OS what kind of process it is and how much calculation power it needs. The OS can then even more actively throttle the core speed and the core voltage per process independent of the priority of the process.

The power saving feature AMD used for the original phenom was a good idea, every core of the cpu had his own controllable clock and voltage. However, vista made wrong assumptions and placed lot's of processes on cores that where clocked to low.
I think this is because vista is not aware of the actual clockspeed during the context switch. In the phenom II processor AMD leaved this per core clock control feature out again to remove the bad media attention about vista not running properly on phenom processors with CnQ enabled.
And thus removing a valuable option when it comes to reducing power consumption.

I would love to see such features in the next iteration of the windows os and the x86 cpu's.

Vista buyers feel cheated & disappointed.
By crystal clear on 10/24/09, Rating: -1
RE: Vista buyers feel cheated & disappointed.
By bupkus on 10/25/2009 12:53:42 AM , Rating: 2
plus offer free installation for these Vista based machines.

That's pretty good... you even go me laughing.
For how many millions of machines? Yah, that's a good one.
Maybe Microsoft can get some of that stimulus package money.

Still chuckling.

By SavagePotato on 10/25/2009 11:34:40 AM , Rating: 4
Well you know a couple hundred dollars spread over 3 years totally breaks the bank for these poor souls that had their lives destroyed by the horrors of purchasing Vista (that didn't stop working or being supported because windows 7 came out either go figure).

And paying 50 dollars to upgrade like it costs in the EU where crystal clear comes from is even more economically crippling. What will these poor souls be expected to do? give up Starbucks for a month to afford Windows 7? will the horrors ever end at the hands of the evil Microsoft with the audacity of wanting to be payed for their work?

Clearly going bankrupt by giving away Windows 7 for free to quell the whiny babies that will probably pirate it anyway is the best move for Microsoft right?

Tip for dealing with Crystal Clear, put your hands on your shoulders and make your elbows look like a crocodiles mouth and go om nom nom nom the crocodile is gonna get you Crystal Clear, and he gets all squirrelly and has a fit, it's cute.

By crystal clear on 10/25/2009 8:49:10 PM , Rating: 2
you even go me laughing

Wow what an achievement...its hard to get people laughing these days.

A great feeling for the one who laughs & for the one who makes you laugh.

Be happy........

By damianrobertjones on 10/25/2009 1:50:33 PM , Rating: 4
They have, they did. Various low cost options have been available.

Pesonally, after purchasing Vista Ultimate on day one and using it for many, many hours, Microsoft owes me nothing at all.

They offered many machine with a downgrade to XP option. Either way, you and everybody else had options back then as well. Stop bleating and start being positive for a change.

Just a thought

RE: Vista buyers feel cheated & disappointed.
By King of Heroes on 10/26/2009 10:57:18 AM , Rating: 2
Using Vista HP right now I don't feel cheated at all. Then again, I also recognize that I'm in that freakish minority of people whose computer didn't burst into flames as soon as Vista was installed and its in fact been running great since then (in other words, the minority of people who actually used Vista). In fact, I've put off buying W7 because, after using the RC for a bit, I saw no discernible difference between it and Vista. If there ever comes a time where I need to do a reinstall (which I only had to do when I switched motherboards), and the $30 W7 deals are still around, I'll probably switch over then. Otherwise, I'll just wait for the first one or two Service Packs to come out.

By xeroshadow on 10/26/2009 7:37:03 PM , Rating: 2
I agree and your experience mirrors Anandtech's article. SP1 fixed many things and make it almost indistinguishable from Windows 7 besides the obvious graphical change and smaller footprint allowing it to run on netbooks(and personally I look forward to the SSD changes) but it was too late. Though, I have to say the article was confusing toward the end. Vista made enough changes to be very close to Windows 7 but it is too expensive an upgrade for what you get yet there is no reason to stay on Vista...huh? At least that's how I read the last couple pages of the article. Confusing.

By jeromekwok on 10/27/2009 7:41:32 AM , Rating: 1
You see Apple is charging iPod touch users for firmware 3.0 upgrade, many users are happy to pay so. It is not that ridiculous Microsoft is charging for Windows Vista SP2 upgrade also known as Windows 7. For nerds, it is NT 6.1

Microsoft has been selling craps all the time. Which monopoly needs customer loyalty?

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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