Microsoft FY2014 Q4 Earnings: Revenues Up, Profits Down Slightly 66
Microsoft has released their latest earnings report, and it's not as bleak as last week's news might have you suspect. Quoting Forbes: Microsoft reported $23.38 billion of revenue for the fourth quarter, up 17.5% from the same period last year. Net income, however, came in at $4.6 billion, down from last year and behind Wall Street analysts' consensus estimate, both about $5 billion. At 55 cents earnings per share were down 4 cents and a nickel short of the Street’s call. For the full year, revenue clocked in at $86.8 billion an 11.5% increase from a year earlier. Net income was $22.1 billion and earnings per share were $2.63.
They took a hit from finalizing the acquisition of Nokia's handset division (not unexpected). The cloud services side of the business appears to be growing, while traditional software sales have stagnated. The layoffs will cost Microsoft between $1.1 and $1.6 billion over the first half of next year.
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Hmmm...they are doing just fine and getting stronger. How can that be - according to this message board Linux rules and is taking over the world! Seems to fly in the face of the SD worldview. Keep dreaming...I'm counting my returns in stock portfolio and enjoying life. Curious how many of you zealots will admit how wrong you are.
They had not in the prior ten years gotten stronger than the S&P 500. If ten years ago you had invested in an index fund tracking the S&P 500, your return to today would be 77% instead of the 57% you would have received by investing in MSFT. Many other companies out-performed the S&P 500 in the same ten-year period.
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If you are tracking a company's performance by its stock price it's kind of laughable; share holders are a mentally unstable bunch, and unless you sacrifice your company for short term profits they really don't get excited. There is no long term outlook for companies any more, and MS' long term strategy I think, is getting stronger. The cutting of the 18k employees is just showing they are narrowing their focus and really concentrating on the areas they think will be big; cloud, and mobile.
And as somebody i
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If you are tracking a company's performance by its stock price it's kind of laughable
What do you suggest then? A Ouija board? The stock price is the consensus opinion of people investing real money. If you are so much smarter than the market, you should have made billions by now taking highly leveraged contrary positions. Please post a picture of your yacht.
unless you sacrifice your company for short term profits they really don't get excited. There is no long term outlook for companies any more
Sure. That is why companies that invested for the long term, like Amazon, Google, and even Microsoft in their early days, were unable to raise capital, and have all gone out of business.
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They're investing money in the idea that the stock is undervalued.
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If there's a general perception that a stock is undervalued, people try to invest money by buying stock. This raises the price until people in general don't think it's undervalued any more.
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They're investing money in the idea that the stock is undervalued.
For every buyer who thinks the stock is undervalued, there is an equal and opposite seller who thinks it is overvalued. The current stock value is the market clearing price where supply equals demand.
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Except the stock has movement, and there is some probability that it will move up or down. Savvy investors have more information: they know general trends in stock movement, and can predict more accurately which way it will move. Non-savvy investors don't: they work on the principles of stability, that being that a nice, safe stock that's been climbing will continue climbing, and so they buy in as the stock gains value.
The second group tends to believe the stock is undervalued more when its spot price
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If you are tracking a company's performance by its stock price it's kind of laughable
I agree, but the poster to which I replied was bragging about how MSFT is doing so well and his stock portfolio is being counted by him and he is enjoying life. I merely pointed out that MSFT did not even perform better than the index.
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They had not in the prior ten years gotten stronger than the S&P 500. If ten years ago you had invested in an index fund tracking the S&P 500, your return to today would be 77% instead of the 57% you would have received by investing in MSFT. Many other companies out-performed the S&P 500 in the same ten-year period.
I don't think you are considering the regular dividends that MSFT has paid out over the last 10 years, which have been anywhere from a 1.2% - 2.5% annual yield. Plus, 10 years ago, at the end of 2004, they cashed out a special dividend of over 10%. So really, if you had the same amount of money in the S&P 500 and in MSFT for the last 10 years, you might actually have more value from the MSFT investment if you re-invested the dividends in MSFT.
I haven't run any calculations, so I'm not positive on the nu
Re:This must be confusing to y'all (Score:4, Insightful)
Microsoft has returned 100% in the past 10 years, dividends reinvested, or 7.25% annually. S&P 500 has returned 118% with dividends reinvested, or 8.2%.
Which, in my mind, makes them kind of equal. Microsft is now considered a value company , so lower risk and lower reward. Adjust for risk and it looks better. Also, chosing the past 10 years is kind of arbitrary - why not 7 or 12 years.
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In what fantasy universe does investment in one company yield lower risk than investing in 500?
I am a huge fan of passive index investing. However, that rests on the efficient mark hypothesis, which assumes the underlying stocks are being priced correctly. In order to do that you need to enter my fantasy world were 1. time machines don't exist, and the future is filled with risk and uncertainty and 2. people have varying risk profiles, some of which are lower than the generic risk profile of the S&P 500.
Without people pricing the individual securities correctly the aggregate index means nothing.
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They are taking on more and more hardware business. This is a much less profitable venture than they had before, so I don't expect things to be as rosy as you seem to. It is very hard to maintain the profit margins that they are accustomed to. Wall Street has given them a huge boost over the last year, but remember that comes after 10 years of no movement, and they still aren't anywhere near their highs during the dot-com bubble.
Still, the layoffs show that they are serious and PC sales have finally stabili
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Well, they've already become AAPL - their margins are almost identical at around 20%. But that is down from the roughly 30% margins they enjoyed over the last 5 years. And the trend is downward. A pessimist might look and see them trending towards Samsung's 12% margins if they insist on ramping up their hardware business.
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Apples gross margin for Q3 2014 was 39.4%. thats a bit better than 20%
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Obviously I was not quoting gross. Microsoft's is over 65%, and headed downward. In 2010 it was around 80%!
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I would not recommend holding onto the stocks of a company whose overall balance sheet has been stagnant for about a decade, and where its core revenue source is sufficiently threatened that they're undergoing a major restructuring to pivot away from it altogether. One quarterly earnings report is nothing to make investment decisions about.
The last time I saw this sort of acquisition, layoff, and rehiring cycle from a major company, it was Pfizer, and that did not end well for the shareholders.
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I'm not too concerned about their stock price, I'm concerned about their cash flow and the future of the business.
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One quarterly earnings report is nothing to make investment decisions about.
Are you kidding? The Street makes investment decisions based on single news reports!
Really, the day to day volatility of the market never ceases to amaze me. One bad news report? DJIA down 200. One good report? Up 150. It seems to be based on moment to moment emotion rather than logic. No wonder out-guessing the market is so hard. I think the big traders more or less permanently forget to take their meds.
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However when it comes to hardware, MS barely makes any profit.
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Revenues up, profits down. Odd. Revenues up all the time because inflation.
Stocks don't reflect real business performance.
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They could probably cut half of the company in the form of middle management without anyone who does real work affected. Supposedly that's their plan. Who knows though after the middle managers' necks are on the line who gets offered up as the sacrificial lamb.
Government Contracts & Microsoft (Score:1)
Is there any way to find out how much of M$ revenue/profits are due to government & other public sector contracts?
It's our money, so I'd be nice to know how much we're paying them.
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Is there any way to find out how much of M$ revenue/profits are due to government & other public sector contracts?
It's our money, so I'd be nice to know how much we're paying them.
Microsoft used to report Public Sector revenue in their earnings report, before the new reporting/org structure, so if you look at earnings reports from a couple of years back you can find it. Doubt it has changed much as share of overall MS revenue in this time, so you could extrapolate to today. This would be the global figure, if you are looking for US numbers I don't think that was broken out, but would most likely follow the overall distribution for MS (40% is US&Canada, 60% is international).
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All government spending is available through some channel. The process to obtain such information may differ from one branch of government to another but there is a process.
Unfortunately the information is not readily available on any web site until someone already collected it and published it.
so I went & had me a look (Score:3)
I went here: http://www.microsoft.com/inves... [microsoft.com]
They have a nice little drop-down to select year/quarter and links to financial statements...it's all right there
My problem is I don't know how to read this MBA/budget speak...
I looked at 2009, their xls "financials" info...Q4...
Saw the breakout by sector tab, but the categories were type of services (servers, 'client', etc) but couldn't see where there was a "Public Sector" or anything similar...couldn't find a category for type of client.
Also, I"m a bit miffed
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You are not going to find it on Microsoft's website. By the way, everything I am stating falls under subjective accounting judgments.
Microsoft must disclose any relationship that is material significant. i.e., if the US Government bought 10% of their stuff they would have to disclose that. Of course, Microsoft sells nothing to the "US Government" – they sell to the executive branch, Social Security Administration, etc.
Microsoft must break out results along geographic lines. i.e. North America. Still n
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thanks for the info!
Who would still want to work there? (Score:3, Interesting)
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Does MS want "great" people? Seems to me that MS wants people who are cheaper, and easier to push around.
MS just churns out re-hashed products. Nothing that takes any great creative minds.
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Re:Who would still want to work there? (Score:5, Insightful)
All I hear is your butt hole whistling non sense. You are saying this without any backing. If you speak of their office product line then FINE, but the rest of their products including Server and OS products are continuously evolving to take advantage of new hardware and strategies that help businesses. This is especially true of their server offerings. Even the office products add new features that if you don't care for can avoid by sticking to your old version. Office 2000 can still read files created with the newest version of office so as far as I'm concerned nobody can claim they were forced to move forward.
Creativity has nothing to do with the progress MS has made in the past years. They continue to offer drop in solutions that don't require ridiculous amounts of expertise to implement which is how it should be for any business all the way to small enterprises. I can't speak for large enterprise because I lack that experience but I can speak for anything below that.
Their development tools (VS Series) are continuously implementing the newest standards as well as major improvements to their windows only features.
You sound like a hardcore Linux fanboy that can't see past his monitor. Real Linux techs understand where each operating system belongs and what it's true application in the real world is. You clearly don't.
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Isn't this only true if the person on the newer version explicitly saves them in 'old' format?
Re:Who would still want to work there? (Score:4, Informative)
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I can assure the compatibility pack works. We had to use it for many years as we had a few users running Office 2000 and had to handle files from customers which were in 2007 format.
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They have this compatibility pack which proclaims it gives the ability to open newer format files in older versions of office; not sure as to its success level: Microsoft Office Compatibility Pack for Word, Excel, and PowerPoint File Formats [microsoft.com].
I haven't used it for Office 2000, but did have it deployed for years for Office 2003. In general it works, but those new features and changes that require a new year version have their toll. The newer files will open up in compatible versions and the original can't be edited and saved in the new format. Sometimes formatting might change or bigger problems. Typically if you are reading or dealing with occasional later version files , it will get you through in most cases. Sometimes, you might have to ask fo
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Microsoft is moving away from the home user market their old Bread and Butter and moving towards more to B2B and Government type of work. Kinda like IBM.
They are not going to switch over quickly, and they are going to try to gain consumer market again. But MS will be making more and more of its money from the boring stuff.
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Um, what? How will they lose their best people? Via layoffs? That's possible, but it's also possible they'll lose a chunk of dead weight in the middle layers.
A lot of the most talented people don't care who they work for, as long as the pay's good and the job's interesting. And Microsoft has a lot of cash.
Initiating a change to a stagnant or destructive corporate culture is a good thing. Whether the results will be beneficial or even more destructive remains to be seen.
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There is sure to be a Dead Sea effect and MS's long-term prospects cannot be great if they have lost / will lose their best people
Having lost control of the mobile market to Apple and Google, Microsoft can now look forward to its sunset years, slowly rotting away. Microsoft employees can look forward to more cuts, sooner rather than later. The one constant will be the backlbiting culture, which will increase as the concentration of rats on the ship increases.
20% profit and people are bitching (Score:5, Insightful)
Most companies are happy to turn a 10% profit after expenses, employees, and so forth. 20% is a fantasy for them.
Yet the greedy Wall Street pricks aren't happy with a 20% profit.
Re:20% profit and people are bitching (Score:5, Insightful)
Yet the greedy Wall Street pricks aren't happy with a 20% profit.
That's because those pricks know about Microsoft's 90% gross margin and they want to know how the missing 70% got pissed away.
WHO F#CKING CARES? (Score:1)
Microsoft should be made to pay that money back to the consumers who were coerced to upgrade needlessly. This is just another travesty in the extremely long list of travesties in the 21st century so far.
Licensing/ownership irony (Score:3)
I find it a bit ironic that Microsoft has helped usher in this huge digital age where none of us really want to "own" digital content any more. We don't rush out to buy CD's any more, we subscribe to music services or stream Pandora. We don't go out and purchase DVD's, we subscribe to Netflix or rent some viewing via iTunes.
Yet, despite some little things like Office 365, Microsoft still makes its bread and butter via selling software to OEM's and volume customers that runs on hardware, both of which many of us are increasingly not wanting to own. I f*cking hate installing an OS on a server and then making sure the damn thing stays running. I'd much rather rent the VM in the cloud. Even better, just let me subscribe to your web service.
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Is there an irony here? I think a non-insignificant people *don't* want to be on the subscr
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...non-insignificant number of people...