its perennial rival Apple's announcement of a terrific
quarter, Microsoft had some good news of its own. At 5:30
p.m. E.D.T. Thursday evening, Frank Brod, Microsoft's chief
accounting officer, and Bill Koefoed, general manager of Investor
Relations at Microsoft, announced earning
information for Microsoft's quarter ending March 31.The news
was impressive. Microsoft's fiscal third-quarter revenue
totaled $14.50B USD, up 6 percent from the same quarter a year ago.
Factoring in the deferral of $305 million of revenue relating to
the Microsoft Office 2010 Technology Guarantee program, the revenue
totaled $14.81B USD, a rise of 8 percent.Operating income,
net income and diluted earnings per share were $5.17 billion,
$4.01 billion and $0.45 per share, increasing 17 percent, 35 percent,
and 36 percent, respectively, from a year ago.Those gains
came largely on the back of Windows 7, the fastest
selling operating system in history. Peter Klein,
chief financial officer at Microsoft, comments, "Windows 7
continues to be a growth engine, but we also saw strong growth in
other areas like Bing search, Xbox LIVE and our emerging cloud
services. Our record third-quarter revenue along with continued
rigor on cost management resulted in exceptional EPS
growth."Windows revenue rose 28 percent for the quarter
as Windows 7 reached 10 percent of active systems worldwide.Kevin
Turner, chief operating officer comments, "Business customers
are beginning to refresh their desktops and the momentum of Windows 7
continues to be strong. We are also seeing tremendous
interest in our market-leading cloud services for business."Despite
the terrific success, investors aren't showing Microsoft as much love
as one might expect. Microsoft stock actually dropped a bit
over 1 percent in after hours trading. Granted, it rose in the
last couple weeks, but overall it's up just over 25.8 percent since
early October 2009. Apple's stock, by contrast, is up 47.8
percent.One possible reason for investor's unusual lack of
bullishness is weaknesses in the non-Windows part of Microsoft's
platform. Xbox and Zune business units are performing decently,
but the critical Windows Mobile business has been losing
large chunks of market share. Microsoft's
Windows Phone 7 OS can't come soon enough, but that product faces
skepticism from smartphone shoppers due to its lack of support
and copy-and-paste. Meanwhile, it is likely that
Microsoft's existing smartphone OS, Windows Mobile 6.5, will get
passed by Google's Android OS sometime this quarter. That's a
troublesome sign as more computing jumps to the mobile realm.In
the internet search business Bing has failed to grow, as
to market research firm Net Applications, Bing has dropped
from a peak marketshare of 3.52 percent in August to 3.11 percent in
March. Partner Yahoo, whose search is now powered by Bing, has
suffered even more dropping from 7.28 to 5.38 percent over the same
time period. Meanwhile, between July and March, Google jumped
from 78.45 percent to 85.75 percent. Those numbers paint a
rather bleak picture for Microsoft's long-troubled search efforts,
which it has poured money into.Ironically, both in the mobile
phone and the search markets, Microsoft has the same problem, and
that problem has a name -- Google.So while the company has
plenty to celebrate, thanks to the storied Windows 7, there won't be
much fanfare in the earnings reports for the languishing smartphone
or search engine business units.
quote: They have huge amounts of R&D centers across the world and have acquired three to four research firms pretty much every single year.
quote: This means they have the ability to make a very complex product very quickly. Don't believe me look at Windows 7 or office 2010.
quote: As for their monetary stability, Microsoft has so many long term contracts, subscriptions, and brand loyalty that they can comfortably coast for years without much innovation- much like IBM.
quote: But what is truly amazing is that Microsoft isn't just milking long term money, they are setting up a stable platform for the next 25 years. Sure Google dominates in search right now, but who will have four times as many internet users in just 15 years? China. And who is going to have all that nice market share since Google left? Let's not even mention Bing's growth in India.
quote: As for the mobile sphere, Microsoft isn't targeting Apple. Their primary focus is on RIM. Apple will have to face android and I doubt Apple will win that fight. And unlike Apple, Microsoft actually plays nice with other companies like Adobe, which means the market players are much more willing to support Microsoft than RIM or Apple.
quote: Finally the gaming sphere is always growing. Xbox live cannot be doubted at this point. With a new Xbox due sometime in 2012 and Natal in 2010, Microsoft is maintaining a lead that will eventually reach 50-75 million Xbox live subscribers.