Thursday, April 24, 2008

Microsoft FY08Q3 Results

FY08Q3: favorite post-analysis sites for the results:

The last report was a knock-out and the stock responded accordingly and shot up.

Ends up Microsoft leadership had a plan to address that issue: attempt to acquire Yahoo. Amidst a world of puzzled financial faces mumbling "wtf?" we started our ill advised adventure to consume Yahoo, whether they wanted it or not. The stock responded accordingly and tanked.

I expect today will be another solid quarter, but the Ill Advised Adventure Monkey is riding our back and I expect a good bit of the analyst probing will be around Yahoo (wondering if we'd be dumb enough to raise our bid), and perhaps reviewing the upcoming money-making product stream, plus what a non-Microsoft + Yahoo future looks like (one word: shiny).

Mr. Ballmer engaged in some good bluster Wednesday, saying that Microsoft could just walk away from the deal. Please, please, walk on by. I haven't talked to every employee at Microsoft, of course, but everyone that I've talked to believes this is a bad idea. And that's not hand wringing.

Overall: the results are in and... ouch. Various reactions:

(1) MSFTExtremeMakeover: MSFTextrememakeover Q3 FY08 Earnings - which firsts starts off w/ MSFTExtremeMakeover considering packing the whole blogging gig up - go over and have productive participation if you want to express your encouragement for the blog to continue. A snippet on the initial analysis:

Again looking quickly, Client sucked. And it seems to be not just the technology guarantee impact but also anemic OEM growth. The .ppt brags about the same 140M Vista licenses sold that we've been hearing about for a while now. So clearly there's been no acceleration wrt installed base upgrades either. Surprise! Not. MBD was also weak. I haven't delved further to figure out why. Servers put in a strong showing as per usual. Kudos to that group at least. And finally E&D managed to eke out a paper profit (as long as you ignore intra-group transfers and the convenient "Corporate-level activity" bucket).

(2) Mr. Joe Wilcox: Microsoft Watch - Corporate - Microsoft Q3 2008 by the Numbers - as always a nice breakdown.

(3) Mr. Todd Bishop:

Microsoft Strategy solid even without Yahoo, which roles up a response from Mr. Liddell that you can only hope allows us to walk on by Yahoo (or at least not raise the offer price):

As outlined in our recent letter to the Yahoo board, unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives. We will provide updates as appropriate next week. These alternatives clearly include taking an offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities, both organic and inorganic.

Notes Microsoft's profits exceed estimates - snippet regarding Xbox / Entertainment and Devices making money instead of being one huge money sink:

Does the operating profit mean that the company is no longer losing money on the Xbox 360 hardware?

Colleen Healy, Microsoft's general manager of investor relations, didn't answer that question directly when I asked this afternoon. However, she said, "What I can confirm for you is we're making really good progress on that cost curve."

(4) WSJ: Business Technology Vista Drags on Microsoft - snippet:

If we dig a little deeper there’s evidence to suggest that Microsoft has a Vista problem.

(5) Scotch it! Two to close on, including best use of the word "scotch" I've seen in a while:

  1. Microsoft results disappoint Financial News - Yahoo! Finance
  2. Microsoft issues final threat to scotch Yahoo deal Financial News - Yahoo! Finance

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