Microsoft's Financial Horizon

Let's have some chart fun courtesy of Yahoo financial charts (not
pretty, but the data is there)... first, just looking at share price
increase, it's MSFT vs. GOOG:

"http://ichart.finance.yahoo.com/z?s=MSFT&t=6m&q=l&l=on&z=m&c=GOOG&a=v&p=s"
alt="Chart of Google shooting off like a rocket." />

Ka-Pow! (Well,
at least of this writing; the charts are live and all of this text might
make zero sense relative to current financial trends color="#000080">[that would be nice].) Okay, the next contender:
MSFT vs. AAPL:

"http://ichart.finance.yahoo.com/z?s=MSFT&t=6m&q=l&l=on&z=m&c=AAPL&a=v&p=s"
alt="Chart of Apple shooting off since September..." />

I really don't
like being the horizon here in both cases. Now then, of course we're
bringing in billions $USD while Google is in the millions. But they have
momentum and their stock is going in a direction I'm damn well envious of.
And Apple? Well, they are All That right now, aren't they, grooving
silhouettes and all. During a special meeting with BillG & SteveB a
while back, one of the Microsofties posed a concerned question about Apple
and what we're doing to compete against their cool iPod this and iTunes
that. BillG did a great reality check by observing, color="#000080">"Well, I wouldn't want to swap places with
Apple." True. But, still... return on investment is looking
pretty sweet right now. I'd swap that!

So Microsoft's earnings for Q1 of FY05 looks solid from the results
perspective, but the future is not enthusing analysts.  From one href="http://biz.yahoo.com/ap/041021/earns_microsoft_5.html">report:
(bold mine)

Analyst Jamie Friedman with Fulcrum Global
Partners said the company's quarterly numbers looked fairly strong overall.
But he said Wall Street would likely be concerned about the company's
unearned revenue figures.

Those numbers, which reflect contracts that
are signed but not entirely recognizable as revenue immediately, declined
more sharply than he expected. That raises concerns the company doesn't have
a major new product available to lure corporate customers into renewing
long-term contracts.

Microsoft doesn't expect to ship a new version
of its dominant Windows operating system until 2006, and the next big
upgrade for its server product isn't expected until
2007.

"The company looks like it needs products," he
said.

But Friedman also praised Microsoft for cutting costs,
something executives have pledged to do as the years of explosive growth in
the technology industry have waned.

Hell yeah, we need
products. We need products real bad.

2006? Are we to wait until then
to see the stock potentially move up in reaction to our ongoing Longhorn
salvage operation? If you had to guess what the market's reaction is going
to be to the next version of Windows when we finally, finally manage to give
it the bums' rush, what would it be? My guess: zero reaction. What are we
putting in there that is going to excite the user / analyst? Better
security, more stability? Dude, are you telling me what I just bought from
you is insecure and broken? And you want me to pay you to make it
better?

All these technical improvements we meaningfully expound upon
might make your everyday IT guy's nipples harden (mmm, USB-drive
lock-out), but the analysts and consumers just hear
ya-da-geekity-geek-not-worth-my-money-bing.

And as for praising our cost cutting, I guess that praise would fall a
little short if details were provided regarding how we're reaching our href="http://microsoftok.blogspot.com/2004/07/performance-tuning-msftexe-or-how
-to.html">$1,000,000,000 goal for FY05. It would look like a dance
around the obvious: the best way to cut costs is to cut staff. Especially a
lot of the dead wood filling the offices. Cuts now would invigorate the
company, and enthuse the analysts about Microsoft's future.