Wednesday, October 24, 2007

Microsoft FY08Q1 Results

Updated: I added a couple of more links regarding FY08Q1 coverage. Hey, let's look at today's opening number- Holy Beejeezus! (pop-pop - socks flying off feet): we're above $36?!?! Dear Microsoft Leadership: walk the halls today. If this stays up there, enjoy the glow and celebration of newly motivated employees, and get a clue again about what a big difference that makes.

FY08Q1 ahoy! As always, my favorite post-analysis sites for the results:

Things are looking mighty sunny going into the quarterly results: Halo 3, Microsoft acquiescence to the EU, Facebook investment (and a "win" over Google there), new Live Search technology, a new Live Suite, reblessed by Goldman Sachs, etc etc. The only bad news is the love that's going to be lavished on Leopard in the meantime.

Update: From my preferred top three:

(1) MSFTextrememakeover Q1-08 Earnings - has a nice break-out of the positives and negatives.

(2) Microsoft Watch - Corporate - Microsoft Q1 2008 by the Numbers - Mr. Wilcox has a call-out of something I found interesting, too, regarding revenue from emerging markets:

In another turnabout, Microsoft is seeing some effect from its antipiracy efforts. The change is significant, as PC shipments to emerging markets exceed those for mature markets. Windows sales growth increased in Brazil, India and Russia, among other countries. Growth in Russia exceeded 100 percent. I should point out that in some of these countries, Brazil being best example, Microsoft works with local partners to offer sales alternatives, such as Windows PCs purchased on a subscription basis.

(3) Microsoft profit rises 23%, beating estimates from Mr. Bishop.

Additional coverage (added 10/26/2007):

Jay Greene at BusinessWeek: Microsoft Results Turn Heads - a very nice, encouraging read from start to finish. Start: Despite reliable growth, Microsoft's unsexy stock has often failed to attract jaded investors. Its spectacular first-quarter earnings have changed that. Finish: Investors didn't even flinch at the online business numbers. And that may just be the thing that ends the long fallow period for Microsoft's stock. And lots of goodness in the middle, like the following snippet:

"The only reason this thing has been trading where it has is because of the bad psychology," says Charles Di Bona, an analyst with Sanford C. Bernstein & Co., who has a price target for the stock at $37. "Maybe this is the catalyst where people start to take notice and stop being bored with the stock."

Microsoft’s Billion Vista Bump - Bits - Technology - New York Times Blog Snippet: Nonetheless, a day after we marveled at the $15 billion value placed on the tiny business that is Facebook, this is a reminder that Microsoft, even if it is not so fashionable, has a business that makes real dollars and a lot of them.

Other interesting coverage:

"Growth stock." Nice to read that again.

My thoughts: all of this is great news. Late good news. But good news. The OS numbers are something we should have had coming in two years ago. The premium distinction looks like a good idea, confusing SKU backlash and all.

Here's my one and only ask to any powers in the universe: wherever Ballmer is, keep him away from any interviews or speeches for at least a week or so. Let us enjoy this time, this upswing, without him torpedoing the good news with some pessimistic warning.

The Q&A didn't hold much for me. There was a little bit of probing about SP1 and Liddell acknowledged that BigCos are waiting to deploy Vista based on the SP1, but I guess we don't care too much given that we have our money from them one way or another. No date for SP1 was provided (not that we don't know it already). There was a bit of pushing for OSB's date for profitability, too. Yeah. Right.

There was mention of our continued expense growth directly related to our headcount growth, but none of the analysts probed with respect to expense / headcount reduction. Guys!?!?!

And I think True Organic Margins has become some new financial reality distortion field for our numbers.

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