Microsoft Posts First Quarterly Loss Ever 327
HangingChad writes "Microsoft's announcement of a late October release date for Windows 8 was eclipsed by its earnings report, in which the computer giant posted its first-ever quarterly loss since going public in 1986. The loss stems from Microsoft's continued struggles with the online services division."
Take a look at the details (Score:4, Interesting)
That loss is entirely down to the aQuantive 6.2 billion writedown. As far as analyst estimates are concerned, taking that into account, this is actually a beat. Take a look at after-hours stock price movement. Did MSFT get slammed?
Write down is still money that was spent (Score:5, Interesting)
The second sentence is basically true, but the first is somewhat misleading. Essentially, they recognized that a $6.3 billion purchase of aQuantive that they made (which wasn't counted as an expense at the time, because it was treated as the acquisition of an asset of equal value to the purchase price) was, in fact, almost a pure expense, since the asset they acquired turns out to be pretty much entirely worthless (they took a $6.2 billion writedown against the $6.3 billion purchase.)
But that writedown is money that was actually spent, its just money that was spent in 2007 and not counted as an expense then.
Article: It failed to see iPhone and touchscreen (Score:5, Interesting)
In addition to its $6.2 billion disaster of a purchase, Microsoft made another critical mistake in 2007: It failed to recognize the debut of Apple's iPhone as the game-changer it turned out to be and missed the launch of the touchscreen revolution. Its partnership with troubled Finnish cell phone company Nokia notwithstanding, Windows phones barely have a toehold in the iOS-Android duopoly.
It is par for the course for Microsoft to phoo phoo anything new (Remember "640K memory is enough for everyone", "You mean companies are going to print their URLs in their advertisements?" ) and then play catch up. Usually that strategy worked out for Microsoft because corporate computers formed 90% or more of the computing platforms in the world, and it had a stranglehold on that market.
Two things stymied Microsoft in the cell phone arena. First was obvious: It lacked market dominance for ram through bad but barely adequate competitor and swamp out the competition.
But there was a second player, that we slashdotter would loathe to give credit to. The much maligned evil phone companies. They are used to getting hefty margins peddling corded and cordless plain old telephone equipment. They saw what happened to the manufacturers of the ubiquitous beige boxes. They were reducing competing purely on price, the brutal price war changed the landscape. In the 1990s the hardware accounted for 95% of the cost of the computer and the software was hardly 5%. While software prices remained stable and went up (MS-Office retailed for $550 when the PCs had fallen below 500$ mark). The telcos were determined to not to let that happen to them. Being incompatible with Microsoft, and not giving it any toehold was the common strategy.
So even if someone in Microsoft saw the threat of iPhone that company is too big to move nimbly, too bogged down in earlier mode of competing, it had made too many enemies, it has stabbed the back of too many partners and it has scared off too many partners.
Re:Positive cash flows (Score:1, Interesting)
Microsoft has been pouring money onto everything until they monopolize it. It worked really well and annihilated a lot of competitors by the way.
I remember the times Microsoft will literally buy you to develop for the xBox or DirectX. I was there and then I saw the people that got bought to say that they felt "trapped" and could not get out from MS tech.
But as new companies with big pockets got into the game, first Google, then the new Apple and then Facebook, the last one with so much money and not really knowing what to do with it, the game did not worked as well as before.
The Microsoft Zune did not work out, Life, Bing and now Lumia are not working out as expected, even after pouring billions from their desktop and Office monopoly.
Re:Article: It failed to see iPhone and touchscree (Score:4, Interesting)
Microsoft's problem is exactly that it has bought into this "threat of the iPhone" meme.
Microsoft and Apple have different markets and different sales channels. By trying to compete with Apple, Microsoft is exchanging a position of dominance in enterprise "productivity" computing for one of abject weakness in consumer/mobile/fashion computing. In so doing, it is alienating its partners and customers even more than usually.
Sure, enterprise computing is a mature market, and it's not possible to continue double-digit growth in it any more. Big deal. Are electricity utilities reinventing themselves as iOS app developers? No; they are making good money in a static to declining market. That's the mature, high-return, low-risk strategy.
Microsoft needs to ignore Apple; if it doesn't, lawyers will be getting fat off aggrieved shareholders.
Comment removed (Score:4, Interesting)
Re:Another Shitty Summary. (Score:5, Interesting)
Not me. I'm buying a new PC/laptop NOW while it still comes with Windows 7, versus getting stuck with Vista Part 2 (Win8).
Oh and not everything is bright & shiny. The article continues: "The charge was an acknowledgement that the companyâ(TM)s struggling online services division is a significant financial drag on the company, losing nearly $2 billion over the past year in addition to the $6.2 billion writedown. Microsoft is still pouring money into runner-up search engine Bing, but it only has a fraction of the market share rival Google enjoys. "It brings into question Microsoftâ(TM)s ability to compete on the advertising-driven web and suggests this is a market segment that is beyond Microsoft, creating long-term doubts over Bingâ(TM)s future," Rob Enderle, principal analyst at the Enderle Group, said via email."
Re:"the loss stems from..." (Score:4, Interesting)
In any case a loss is indicative of a problem. We will see if there are more losses in the future, and what this does to the companies expectation.
More like 72% lost share (Score:1, Interesting)
"Yeah, they've "lost" like 5% market share with windows"
No more like 72%, you might like to count historical sales and then use market share in terms of units out there in total, but the investors are only interested in new sales.
76 million Android devices last quarter, about 50 million Apple devices, there's about 200 million PCs sold a year, about 50 million Windows units in an average quarter.
Yes, you read correctly, Apple sells about as many iPad/iPhone/Macs as Microsoft sells Windows 7 licenses.
28% Windows market share (Score:5, Interesting)
50 million Windows 7 licenses/quarter.
76 million Android activations/ quarter
46 million iOS devices, 50 million is you add the Mac sales / quarter.
See for yourself, they're market share is down to less than 30%, soon Apple will be selling more iOs devices than Microsoft sells Windows.
Smartest guys (Score:5, Interesting)
a $6.3 billion purchase of aQuantive
Seriously - whoever made this deal for aQuantive is a certified genius. That was about 1000x their earnings. People say Amazon investors are absolutely batshit crazy for buying at 187x earnings, and they're not a third-rung company.
How many MS apps REQUIRE Windows?? (Score:5, Interesting)
I'll point something else out here: Microsoft has a lot of products, a LOT, and most of them are small income products. The one thing they have in common is THEY ARE BUILT FOR THE WINDOWS ECOSYSTEM.
If they lose the OS market, they lose everything. Because Ballmer's pride won't ever let him port all those apps to whatever is selling, he'll follow Windows market share down to zero.
I know it's popular to say "well IBM are still doing well", but they're not doing well in the PC market place. They were lucky to find a lot of government contracts and services saved them, but they lost the PC market to others. Will MS find a market to run to if they lose Windows??? If so what market??
Is it Schadenfreude to simply spell out the truth here?? They've ALREADY lost the OS market, they're LOSING the apps market. The apps market trails the OS market, because of the legacy sales. Those XP users are potential customers too, even if they're not sales in this quarter. But Ballmer is so stuck in the past, he thinks he can force XP users to upgrade to Windows 8, but they (I include me in this) will go to Android or iOS. I'm switching to Android tablet after this, already have an Asus infinity on order.
Re:Yay! (Score:4, Interesting)
Microsoft just had their highest quarterly revenues ever, and hid their profits by writing off a 2007 $6B acquisition. It's all tax deductible, you know.
There's so much dumb wishful thinking in this thread.
Re:Facetime (Score:3, Interesting)
Insightful?
Maybe if your work doesn't require using word processors, sticking numbers into spreadsheets, spend the whole day coding, or similar things, then... yeah... I guess a tablet is as good as any other general purpose computing device for work-purposes.
It's funny that you mention the iPad, though. The other day, my boss couldn't review a document I sent him (just, you know... open the document and read it; no changes from him required) because "I just have my iPad with me, and I can't open it here". So... yeah... here, have an anecdote. Make of it what you will.
Also, it's funny that you try to argue against GP's claim that the vast majority of people who have tablets also have a desktop/laptop. First, your personal case actually gives credence to his side of the argument: you do have/use a PC for work. Yeah, sure, you can put your tablet in a dock and attach a keyboard and call it a "general purpose computer" (technically, you'd be right), but it still doesn't make it one. In the case of the iPad, the meaning of "general purpose" gets changed to "whatever Apple lets you do with it". Can I compile code from within iPad? No? Then... sorry, you're wrong.
I bet they bought the iPad despite owning a PC. Not the PC despite owning an iPad.
Wow, so brave. Well... I wonder why? Is it because desktops/laptops precede tablet computers by a few decades? Who knows? But... hey... let's bet. It's fun!
Trust me... someone that owns an tablet and doesn't own a desktop/laptop probably has no worries regarding silly things like "working" or simply have a job that doesn't require actually working with computers (for example, a point-of-sale thingie... sure... that could be done on an tablet): they're probably someone whose idea of using a computer is "facebook", consuming media and little more.
tl;dr: You think people can work on tablets as if they were "general purpose computing devices" because your work doesn't actually require a "general purpose computing device" (a "special purpose computing device" works just as well, apparently). In the real world, lots of people actually need "general purpose computing devices" to get work done; sorry to inform you.
Re:Yay! (Score:4, Interesting)
Correction: it's non-deductible. Still, it will look better writing it off this quarter as opposed to taking a loss when Windows 8 is released.
Re:28% Windows market share (Score:4, Interesting)
I was going to say, "You miss the point; Microsoft doesn't make money on Android either," but then I remembered, oh wait.. actually they do.