Microsoft Misses Quarterly Revenue Projection

monsterhead78 wrote to alert us to a BusinessWeek article discussing Microsoft's uncharacteristic miss of its own fiscal projections for the third quarter. From the article: "Three months ago, the software giant said it expected revenue for the period to come in between $9.7 billion and $9.8 billion. But when the company released results Apr. 28, it came up short. Microsoft (MSFT ) rang up just $9.62 billion in sales, a 5% increase from the year-ago quarter."

What! The Street loved the results

[winkydink]

Here's an excerpt from the AP feed:
Microsoft shares rose 85 cents, or 3.5 percent, to close at $25.30 in Friday trading on the Nasdaq Stock Market.

The company reported its fiscal third-quarter earnings after financial markets closed on Thursday.

For the quarter ending March 31, the Redmond, Wash.-based company earned $2.56 billion, or 23 cents per share, up from $1.32 billion, or 12 cents per share, a year ago.

Analysts surveyed by Thomson Financial were looking for the company to post earnings of 32 cents per share on sales of $9.83 billion in the latest quarter. The company would have met earnings expectations, except for legal charges of 5 cents a share and a 4-cent-per-share charge for the expense of stock-based compensation required under new accounting rules.

Revenue is important but profit even more so. MSFT closed up today 3.48%

Newsflash:

[Evanisincontrol]

Microsoft wrong: World is stunned!

Seriously, who cares? If any other company in the world missed their quarterly projection, it wouldn't be worth the lint in my pocket to know about it. Microsoft comes up short by less than a percent, and it's worthy of /.

how much more market saturation can they get?

[John Seminal]

Three months ago, the software giant said it expected revenue for the period to come in between $9.7 billion and $9.8 billion. But when the company released results Apr. 28, it came up short. Microsoft (MSFT ) rang up just $9.62 billion in sales, a 5% increase from the year-ago quarter.

So, if sales went up 5% from last year, how much higher can it go? How many more copies of windows do they need to sell? Or will Microsoft metamorpahsize into a service company? It was not that long ago I was reading that MS was going to stop selling Office, and start renting it. Only way to use it is to be on-line or something dumb like that.

$80 million

[rookworm]

while $8E7 is a lot to us mortals, they were only off by less than 1%. What is the big deal?

Re:Who would have guessed...

[TheCabal]

Languishing? They posted over 9 BILLION in sales. They came a few million short on a projection. Excatly how do you prove that Microsoft's stock is stagnating? they closed today up over 3 points.

is this really significant ?

[for_usenet]

So we're talking about an 80 million dollar miscalculation, out of 9.7 billion dollars (just over 0.8%). I know these are big numbers, but in the grand scheme of statistics, is this more than just a statistical anomoly? Or are the accounts not even supposed to be that little bit wrong ?

I would love to see MS taken down a notch or two, but I have a hard time believing this is more than just wishful thinking on the part of some parties. If we see more than a 1% reduction in successive quarters, then I'll agree we're onto something. But till that time, I'll just keep hoping ... ;-)

Re:$80 million

[Rude Turnip]

It's not a big deal. Here's the thing. If you're the kind of person that even blinks an eye when reading news like this, then you have no business buying stocks. Go get yourself a 2% FDIC-insured savings account. In the grand scheme of things, you only make money in the stock market if you invest for the long term and keep a diversified and balanced portfolio.

Re:Who would have guessed...

[fsmunoz]

Even more disturbing, who would have guessed 5 years ago that /. would be filled with Apple fanboys while Free Software zealots decrease in number? :)

Re:Who would have guessed...

[RzUpAnmsCwrds]

"Who would have guessed 5 years ago that Apple would be Wall street's darling and growing its stock by leaps and bounds while Microsoft software is languishing its stock is stagnant and not meeting expectations?"

Microsoft grew earnings 5% over last year, a very impressive feat considering that they haven't released a new OS since 2001.

They are a mature company, and they have achieved market saturation in many of their sectors. Any growth at all is impressive.

Moreover, they still make about 3.5 times more revenue per year than Apple - without a strong hardware business.

a couple ideas...

[John Seminal]

they haven't released anything new, except for free patches to fix broken software

First, I think I am done buying M$, but having said that, I had an idea.

Why does not Microsoft not release their OS, but hold it for a few months, have a large beta group of testers. Fix the bugs. Have their own in house hackers try and break in, make more fixes. Load it with lots of different kinds of software and fix whatever problems they have.

Instead it feels like they release a product too early. Service pack 1 followed by 2 and 3 and 4.

My second complaint is these service packs are too large for some people with dial-up. If AOL can have 100's of CD's in every computer store, why can't Microsoft have their free service patch CD's in stores??

Headlines

[aaarizpe]

Google News:

Microsoft profits jump to US$ 2.56 billion this quarter (Earthtimes.org)
Microsoft Third-Quarter Profits Double (Yahoo News)
Microsoft: The Cash Machine (Motley Fool)

Slashdot:

Microsoft Misses Quarterly Revenue Projection

It's almost as if there's some bias or something...

Re:a couple ideas...

[Momoru]

Why does not Microsoft not release their OS, but hold it for a few months, have a large beta group of testers. Fix the bugs

Not to be a troll, but can someone tell me specifically what bugs everyone is always talking about? Currently running Windows XP sp2 at home and work, my computers have not crashed once this year...not frozen, not blue screened, nothing. I know occasionally (maybe once a month) you'll get windows explorer crashing (where the desktop looks like its refreshing), but otherwise I don't experience any bugs? (My fedora box is performing as well btw) Please don't respond with "spyware and viruses!!!" cuz a) I havn't ever gotten any b) they are mostly user initiated.

Re:a couple ideas...

[black mariah]

Shhh... we can't let things like truth leak onto Slashdot.

Can the /. news filter please relax?

[timothy_m_smith]

I don't know why I even both to post this b/c I haven't posted in months, but can't this site be just tiny, itsy bit less slanted? I understand that MS is the antithesis of Open Source and that is what this site is about, but please spare me this type of story.

No one here would give a crap about MS corporate results, but b/c they miss by a couple percent it becomes a story. Can't there be a little bit more reason? Not everything in the Windows world is terrible and every aspect of Open Source is not perfect. Maybe that is why I like Ars Technica better, b/c they are much more reasonable...

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Re:a couple ideas...

[Momoru]

Thanks for the reasonable answer, however I would point out two things, the original poster that I responded to made it sound like the current patched version of Windows is buggy, so buggy in fact that we need to have a focus group get together, test it and fix all these bugs that are in windows. Its a GOOD thing that we get patches from Microsoft every month, the bad times were when they didn't offer this service. If you take any given operating system there are tons of patches released all the time. There are constantly updates and bug fixes for Firefox, Linux, Apache, etc... Bugs happen, patches are good. My only point is that people make Windows sound "buggy", and this reminds me of when I was a hard core mac user in the late 90s and everyone kept telling me how crappy and buggy macs were based on their occasional use of them at school or in the 80s. Yes windows was real buggy in the late 90s to early 00's, but they have done a decent amount of effort to fix these problems, and XP is just as usable and secure as Linux or Macintosh these days, it just happens to get alot more attention because of its user base. As I mentioned before, I just let automatic update do its thing, don't open unsecure attachments, and have no problems with my computer. With XP, unlike Win98, I havn't had to reinstall windows once, and i havn't had my PC lock up once.

Sarbanes-Oxley

[quarkscat]

MSFT, Fannie-Mae, and many other public corporations are now (finally) under the onus of section 404 of the Sarbanes-Oxley Act. They can no longer "smooth out" the squiggles on their profit line charts that reflect the true nature of business -- now the corporate officers must certify both the internal financial accounting process AND the quarterly results posted with the SEC.

Juggling the numbers to keep the shareholders numbly ignorant is now a criminal act that the corporate officers are responsible for. Accounting mechanisms for pushing/pulling income spikes and sags into another quarterly report are no longer tolerated.

Any company with large corporate and government customers is bound to have variations in their accounts receivables, some of which will break the rising tide of their profit line charts. There (usually) isn't anything really wrong with these corporations. It's just that the accounting equivalent of cosmetic botox injections are no longer allowed. If this drives shareholders into the mentality of a longer term financial view, like 1, 3, and 5 year outlooks, it would not be a bad thing for the economy as a whole. It will, however, suck rotten eggs for all the corporate officers whose bonuses and incentives are tied to their quarterly results. I will weep giant crocodile tears for them -- NOT!

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