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:
- Microsoft Soars 11% After Blowout Q1 On Vista Demand Financial News - Yahoo! Finance Snippet: "They beat expectations on the top line by over a billion dollars. They beat EPS by 6 cents. And their operating margin this quarter came in at 43%, which is just tremendous," Tran said. "Sometimes you have to just stand back in amazement at the money machine that Microsoft is."
- Microsoft Has Hefty Earnings - News & Analysis - Technology - MSFT - MSFT Snippet: Microsoft (MSFT) proved it is a growth stock with its first-quarter earnings report, which blew away Wall Street estimates.
- Microsoft 1Q Profit Beats Street Financial News - Yahoo! Finance Snippet: "It's a very good report," said McAdams Wright Ragen analyst Sid Parakh. "I think people are going to revisit how they look at Microsoft. So far they've been viewing it as value stock. Going forward, they'll think about it as a growth stock."
- Business Technology Microsoft's Earnings Show IT is funding its Google Chase Snippet: Microsoft’s new Vista operating system is low-hanging fruit for bloggers: A large number of the people who use it don’t like it, and they’re always happy to let us know. The new version of Microsoft’s Office hasn’t generated much buzz either. But Vista and Office are generating something much more important than buzz: money.
- Microsoft shares jump on lifted outlook Financial News - Yahoo! Finance Snippet: "The growth of Windows Vista has finally occurred," said Kim Caughey, senior analyst at Fort Pitt Capital Group.
- Microsoft Make Investors Swoon - Forbes.com I just like that title.
"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.
168 comments:
"Facebook investment (and a "win" over Google there)"
If that's what counts as a "win" for Microsoft, things must be even worse than they seem. And they seem terrible.
Someone commented the previous post the facebook deal is non-us advertising only. Where did you read that? I don't see it anywhere.
I don't see an investment in facebook as positive. Sounds more like Microsoft throwing money at something simply because google wants it.
Did Microsoft "win" over Google?
http://www.lotus911.com/nathan/escape.nsf/d6plinks/NTFN-78BG4P
I struggle to see how paying $240 million for channel rights to a highly questionable per-click revenue stream is a win. Making that money back is predicated on a LOT of advertising clicks!
I mean, that's more than half of aQuative's entire revenue stream from last year. And I'm sure the channel exclusivity has an expiration date.
Here's a straight-forward opinion re: MSFT-Facebook
http://seekingalpha.com/article/51380-facebook-can-t-save-the-decline-of-microsoft
"Someone commented the previous post the facebook deal is non-us advertising only. Where did you read that? I don't see it anywhere."
From news: "Besides buying a stake in Palo Alto-based Facebook, Microsoft also will sell Internet ads for its Web site outside the United States, broadening a marketing relationship that began last year."
more than half of aQuative's entire revenue stream from last year
Facebook's estimate revenue for the entire year is only $150 million, and that includes US also. MS isn't going to make back that investment anytime soon, maybe only when Facebook goes IPO, but how much more can Facebook's value go up beyond $1.5Billion?
Also, a previous post said that Facebook's technology does not scale, something about the 5000 friends limit. In light of that, is this a smart move on MS part, or a desperate one?
Regarding the "Non-US" advertising only. I heard that the Facebook deal is just not exclusive in the US, but that it is exclusive outside the US.
The facebook deal was great and exactly the right thing, and aligns with the strategy MS should take as I have posted about previously.
1.) we create a realationship that we do not need to own
2.) we blocked google
3.) we priced facebook out of google's market (well, anyones!)
4.) international, especially China, has much higher growth potential than domestic market
5.) and this made the stock go up more than xbox. and cost 10% of that diaster.
this totally rocks! I'm excited about it and I hate online. I do wish I would have waited until this week to sell some stock, though!
I just sold a bunch of shares at $35.43 in after-hours trading. I'm not complaining.
Could it last? Possibly, if we don't make any stupid mistakes (PR or otherwise). Will it last? Probably not. On the other hand, I'm starting to see some positive buzz around Server 2008, so perhaps the long, dark night of the soul is ending?
I am looking for pessimestic side of today's earnings and guidance. Where else can I go besides the all pessimist club called minimicrosoft.
Commentators please bring it on. I am here with a big hope.
Good for MS! Good for house prices around Redmond! Big profit means more hiring. More hiring means new employees need to buy houses around Redmond. That should help the housing market recover faster! Good all around.
Maybe MS should spend some of that dough to improve traffic around campus too! All those new buildings are screwing up my commute.
>2.) we blocked google
How exactly did Microsoft block google? Just curious how a 1.5% investment did that.
>And I think }True Organic Margins{ has become some new financial reality distortion field for our numbers.
Is that the same as 'low hanging fruit'?
I just sold a bunch of shares at $35.43 in after-hours trading. I'm not complaining.
Good gravy! If that isn't a typo, I'm floored. Can this actually be happening...???
(I know, I know - the real question is: can it last? I'm not holding my breath.)
come on - even the folks on mini have to be blown away. this was a truly amazing quarter. go msft!
Re: Facebook 5000 friends limit
This isn't a scalability thing at all. The system designers never envisioned that a normal person would have that many friends. The user limit is sky high. The friends limit is only reached by bloviating bloggers. How many of them are there and how much revenue to they bring Facebook? Both of these are very small numbers.
>"I'm starting to see some positive buzz around Server 2008, so perhaps the long, dark night of the soul is ending?"
I am sure all this stock excitement is generated by the positive results/analysts, but to me the most exciting thing I have heard from Microsoft in years is the idea of minwin/windows 7. That should have been Vista. And that little sleeper press sweep exposing Taut's gem a few days/weeks ago I think did more for MS soul than anything since Office 97. Simply because if it isn't cheap, fast and a positive UE, it's Ubuntu for me (et al) next time.
But heck, wha'd'iKnow? I'm just one of BG's monkey customers from the peanut gallery.
Good quarter but if you look at it deeply, Microsoft still makes a lot of money only on Windows and Office. Inspite of the blow out sale of halo 3, profit from gaming division was a disappointment(not revenue but profit). I think Vista had a lot of problems but at last after years it is making revenue. And we are slowly winning the server market. Those are the good things. I just wished MS just did the following
1. OS - Windows server and client
2. Office
3. Development tools- minimal Just Visual studio
4. Database - SQL
5. Some new focussed opputunity for growth (could be one of consumer devices -like ipod- online advertising or basically one of the new things). Don't focus on all. Focus on one but win it and then after winning it seek the next.
Dump the rest -like CRM yada yada and do dome real headcount reduction to just focus on the above. That will control the cost also.
>>2.) we blocked google
>
>How exactly did Microsoft block >google? Just curious how a 1.5% >investment did that.
what we paid for that 1.5% valued the company at around 15 billion if someone wanted to buy the whole thing. I suppose they could sell out for less if they wanted to ... but now they have a nice pile of cash to cover operations, and we have set up a wickedly high price to get a share of it. Google could throw a billion at them ... and only get ~4%. Smile, dammit, we're finally playing chess instead of checkers.
i wouldn't sell yet. experts predict the market will be solid thru the holidays. I'll take the ugly bet that this run will last us well into Dec.
15 comments in and no naysayers to bash Office, Vista and the Entertainment division?
Cat got all those tongues?
lol
i wouldn't sell yet. experts predict the market will be solid thru the holidays. I'll take the ugly bet that this run will last us well into Dec.
This stock will trade down to the $32 range in the next couple of weeks before going back up. The next few days will be a wild ride with the Fed expected to cut rates next week. If you don’t need the money, then I would not sell.
MSFT is finally on its way up. People are afraid to hold on to their short positions below $32 and the volatility will bring in a lot of traders which results in a lot of wild fluctuations. Don’t panic if you see the stock fall $2 - $3 in the next 2 weeks.
This is just my $0.02. As always, you do what you think is best for you and your family.
Now that MS is a "growth" stock again, minimsft should say bye-bye. People won't care about downsizing anymore if their stock awards are making money. When people are making money, they complain less. So, any chance of downsizing has dropped dramatically. In fact, it would slow the attrition, hence maintaining the bloat.
So, Mini - your happiness has just caused your worst fears to happen - MS ain't going to slim down anytime soon.
"15 comments in and no naysayers to bash Office, Vista and the Entertainment division?
Cat got all those tongues?
lol"
Ok, I (or my wife) will bash Vista.
After seeing Vista on my laptop, and playing with it for about 20 minutes, my wife said that she would like her next computer to be a Mac. And I don't disagree with her. I plan on loading XP on my laptop over the weekend. I'll probably get more work done that way anyway.
"but none of the analysts probed with respect to expense / headcount reduction. Guys!?!?!"
It was such a strong report overall that nobody wanted to nitpick. Plus, margins did improve regardless and the double-digit top-line growth provided a ready excuse for the headcount increase (albeit that they may not be positively correlated). Online, the main weak spot, should be thankful they got a pass as they are tracking towards a further $800 million loss for the year.
>Cat got all those tongues?
Sorry, mini, I grabbed the wrong article heading:
But outside, the drumbeat goes on!
http://blogs.zdnet.com/carroll/?p=1762
How's that 35.12 stock therapy working out for ya?
"Now that MS is a "growth" stock again, minimsft should say bye-bye."
Get a grip. One great game doesn't a season make. It's encouraging, but let's see what the follow up looks like. I'm sure Mini would like nothing more than to walk away from this blog because the many real issues it has raised over the past few years have finally been successfully addressed. Strong quarterly results aside, the jury is still decidedly out on the latter.
Welcome to the beginning of the Ballmer era. With Gates more or less gone, he is finally free to
run the company as he sees fit.
Watch for:
1. Cost-cutting in various long-term research groups--how many freaking online research divisions do they need? (Live Labs, anyone?) MSR probably as well, although Gates might actually fight him to the death on that one.
2. Paring back of the first-party Microsoft content sites (e.g., MSN Video, MSNBC, Money, Autos, Entertainment, etc etc etc.). Online doesn't need to chase every up-and-comer with an imitative site, all it needs is a credible search platform and solid ad platform--then it can sell ads on anybody's sites. And maybe a few services to compete with the iLife/iMac tie-ins on the Mac--those are now called "Windows Live." So bye bye MSN by 2010. FINALLY.
3. More licensing tricks to increase "revenue per socket"--Vista SKU division was only the beginning. Hey, if there's no cheaper alternative, why can't Microsoft raise prices?
4. Creation of a viable enterprise subscription business (Microsoft Online).
5. More consulting and services.
6. More aggressive cost-cutting in general. Shorter time window for experiments to show good numbers. If I worked in TV platforms, eHome (Media Center), Tablet, Ultramobile, BizTalk, or other formerly "strategic" divisions that have no products with real traction among users, I'd be worried.
7. More and larger investments and acquisitions. Probably including some stupid ones that don't pay off.
On the topic of stock buybacks:
I really really want to believe Liddell when he says the following:
"We expect EPS to grow very fast as well." Already growing faster than 20% this year, the bottom line will continue to benefit from operating margin expansion and share buybacks, Liddell added.
http://www.thestreet.com/s/microsoft-looks-mighty/newsanalysis/techsoftware/10386865_3.html
Is this just wishful thinking on my part? Any insights here? Management totally pulled back on buybacks this quarter.
I've been running Vista SP1 on a laptop and it is great. At least vastly better than plain Vista. I have yet to see the spinning donut on an explore window. However, I did a clean install, not sure if that makes a difference or not.
Ok, I (or my wife) will bash Vista.
Well, I built a new machine recently, with newer CPUs, 2G ram, a reasonably powerful video card, Vista runs like a charm. Maybe that is why PC sales increased, as Ballmer was betting on...
>>Get a grip. One great game doesn't a season make. It's encouraging, but let's see what the follow up looks like<<
You're moving goal posts. Wasn't last quarter very good too? I bet you said the same thing then as well.
"MSFT is finally on its way up."
Yeah, right, only until the next time the DOJ or EU decide to poke us in the eye or that rumored recession finally hits.
Dump the rest -like CRM yada yada and do dome real headcount reduction to just focus on the above. That will control the cost also.
Exactly, dump non-core crappy products such as CRM, etc. Those don't add much value to the company. They also promote people way faster than they should. I've been told that several of their "senior" people would be SDE 2 in other divisions.
I don't see an investment in facebook as positive. Sounds more like Microsoft throwing money at something simply because google wants it.
If you're applying for a job and can send a facebook link to a prospective employer - or if a prospective employer asks you if you have one of those - then you can see the potential value of Facebook. It represents you.
This quarter and the previous ones really shows the amazing franchise Windows and Office are. Yes Google is on its way to building a good one, Apple is building one on the iPod and now the iPhone, but man these 2 franchises are still amazing and will remain so for a few more years. If I were Ballmer, I would use this opportunity to make the cuts that we need to make and retarget the talent that the company has towards retooling the franchises and building couple of new ones. If MSIT kept an archive of this blog, there are lots of good ideas there on what to cut. With Google recruiting aggressively, it is tricky to make cuts especially when morale is down. We would lose our best talent. As morale improves with the stock price, this would be the right time to get rid of some fat and charge up and take the hill with the leaner meaner company.
"I'm starting to see some positive buzz around Server 2008, so perhaps the long, dark night of the soul is ending?"
You have obviously not been using the ignominious piece of crap. Try moving files around like I do all day long on Corpnet.
It has all the Explorer defects of its little brother Vista and professionals as a group are not as likely to drink the Kool-Aid as the consumers did. Incidently, I have yet to hear positive comments from "regular" non-MS people about Vista. Every single person I know who installed it has ever re-installed XP when they could, or is complaining about how bad the experience is.
You people just don't get it. This isn't about vista or management performance, the record profits are because of the exchange rate. 50% of their sales are non-USD so of course earnings would be up.
When the FED lowers rates next week, expect MS earnings (and hence also their stock price) to climb in line with the rapidly collapsing dollar. Honestly though, there'd be better money in selling your MSFT and buying euro.
>>>You have obviously not been using the ignominious piece of crap. Try moving files around like I do all day long on Corpnet.<<<
Interesting...I wonder why Toms Hardware gave it a good review then.
http://www.tomshardware.com/2007/10/25/windows_server_2008_reviewed/page19.html
In particular there was no mention of slow file transfers.
They must be shills.
I took the opportunity of the uptick to unload the majority of the options that I had left. I may be wrong, but I haven't seen anything to suggest that middle management has changed at all, and I don't see any long-term improvement until that happens.
I assume that there was a bunch of partner selling in all the shares that were traded.
"You people just don't get it. This isn't about vista or management performance, the record profits are because of the exchange rate. 50% of their sales are non-USD so of course earnings would be up."
put the crack pipe down and back slowly away...
uhhh... there are a lot of whackjob theories out there, but this one is just retarded.
>>>You people just don't get it. This isn't about vista or management performance, the record profits are because of the exchange rate. 50% of their sales are non-USD so of course earnings would be up.<<<
Looks like all those analysts missed this somehow.
Does the exchange rate fiasco also apply to Apple, Google etc?
>>> Anonymous said...
>"I'm starting to see some >positive buzz around Server 2008, >so perhaps the long, dark night >of the soul is ending?"
>
>You have obviously not been using >the ignominious piece of crap. >Try moving files around like I do >all day long on Corpnet.
I realise this is a futile request. Whoever said this, please contact me directly. I promise there will be no repercussions to your comment. I just want to know about bugs we can fix to make the product.
/iain mcdonald
p.s. I am using nearly every build & its not my experience of WS08 - but you may have some case that we just don't see.
"You're moving goal posts. Wasn't last quarter very good too? I bet you said the same thing then as well."
No, merely pointing out the obvious: one (or even two) good games don't make a season (or correct years of prior mistakes). And no, last quarter wasn't in the same league. The stock's reaction confirms it.
You have obviously not been using the ignominious piece of crap. Try moving files around like I do all day long on Corpnet.
Are you sure its Server 2008 and not Corpnet itself?
Corpnet network throughput sucks due to overloaded server disks and busy network - I often get throughput of 3-4MB/s which is ~25% of what you should see on a normal network.
"This isn't about vista or management performance, the record profits are because of the exchange rate. 50% of their sales are non-USD so of course earnings would be up."
Overstated. Forex gains were good for a 2% boost in revenue or approximately .02 of the .06 EPS beat. It may be a large part of the upwardly revised revenue and EPS guidance for the year (although stronger PC growth is likely equally responsible), but that's about it.
The great financial results are not good news. Instead, they are guaranteeing that things are not going to get better.
The fundamental problem is that Microsoft has way too much money. This means that those at the top can be rewarded with obscene amounts of cash. In turn, this creates an enormous incentive for people to try to climb to the top. And the "climb to the top" creates most of the politics, backstabbing, "managing up", avoiding of responsibility for mistakes, and all the other BS that makes Microsoft an ugly place to work.
If Microsoft was just getting by financially, it wouldn't have time for all the garbage. It would have to focus on what actually works to produce a product that customers care about. The politics and insane processes would have to go (or else the company would collapse).
So: great financial result, and what it means is that the garbage is not going to be cleaned up any time soon. If enough of the money trickles down to you to make putting up with the garbage worthwhile, great, take the money. But if you are hoping for a saner working environment, this quarter's results killed it.
MSS
The great financial results are not good news. Instead, they are guaranteeing that things are not going to get better
Amen!
Mini, I have to say that your commentators have talent!!
I am the commentator who challanged your pessimistic club to come up with some rant. The prize goes to...
.
.
.
MSS, a complete idiot.
Welcome to the beginning of the Ballmer era ... Cost-cutting in various long-term research groups-- ... Paring back of the first-party Microsoft content sites ... Shorter time window for experiments to show good numbers.
The continued hiring binge proves that stuff is pure fantasy. MS is just going to keep hiring until things go south and then there will be the mother of all layoffs.
re:
>Overstated. Forex gains >were good for a 2% boost >in revenue or >approximately .02 of >the .06 EPS beat. It may >be a large part of the >upwardly revised >revenue .and EPS guidance >for the year (although >stronger PC growth is >likely equally >responsible), but that's >about it.
this also applies to some of your 401k investment options - if you've been in the overseas funds you have been doing pretty well, I think there is still some upside left, you should at least look.
The great financial results are not good news.
So, what are you saying? That MS should do badly instead of great in order to bring the day of reckoning so MS can start doing great? That's just plain looney.
Aside from that, this was a product launch quarter. Next quarter will be different.
MSS took the words right out of my keyboard. It reminds me of the old (pre-breakup) AT&T motto:
We don't care. We don't have to.
Microsoft announces Vaporware Platform
While some teams are hard at work wrapping up products like Windows Server and SQL, others are still trying to justify their existence.
Look at today's announcement from the Connected Systems Division about the "Oslo" platform: http://www.microsoft.com/presspass/press/2007/oct07/10-30OsloPR.mspx
Here's what we are promising:
- BizTalk Server '6'
- BizTalk Services '1'
- .NET Framework '4'
- Visual Studio '10'
- Repository for System Center '5'
Perhaps we should try to ship .NET 3.5 and Visual Studio 9(2008) first.
How many years is it going to take to build "a unified platform integrating services and modeling"?
Google and some of the Web’s leading social networks are teaming up to take on the new kid on the block — Facebook.
An alliance of companies led by Google plans to begin introducing a common set of standards to allow software developers to write programs for Google’s social network, Orkut, as well as others, including LinkedIn, hi5, Friendster, Plaxo and Ning....Along with salesfore.com and oracle
Article from nytimes.com
http://www.nytimes.com/2007/10/31/technology/31google.html?ref=technology
Hmmm, as developers will we want to spend x amount of time and energy learning a new programming standard to develop for ONE closed off platform (Facebook)and bow down to Zuckerberg or will we want to use what we already know (html, Javascript, etc) and develop for multiple platforms.... Hmm, gee a tough call.
So it begs to be asked, did Microsoft really win in its "bidding war" for Facebook or did Google just not care b/c it had something under its sleeve already?
And did some 20ish y/o Zuckerberg outsmart all those "super" brainiacs in MS upper management and forced a valuation of $15 Billion for Facebook? ... that way when he has his IPO next year... it will be valued above $15 Billion and not just $1 Billion. Gee, what is going on with you guys? You let some smug kid right out of college pull a quick one over you.
And I agree MS had a great quarter but like the other guy said earlier... you had releases (Vista, Office, Halo)... what is going to happen next year with nothing coming out of the pipeline. Better dump those options while it is up at $35.
Facebook vs Google's OpenSocial....
Let the games begin....
>> The great financial results are not good news.
> So, what are you saying? That MS should do badly instead of great in order to bring the day of reckoning so MS can start doing great? That's just plain looney.
The great quarter is great - for the corporation. The employees are not the corporation, and their interests are not identical.
The employees have two main interests:
- getting paid well, and
- having a decent working environment.
The great quarter helps (maybe) with the "getting paid well" part. The "maybe" is there because the money is going to go to the partners much more than it is to the average worker, and because back in the day Microsoft gave a lot more in options than it currently does in stock grants. Still, it's a financial boost for all the employees, and that's good for them.
But the place where it's bad is the other part of what employees want, which is a decent working environment. This is the main issue that this blog is focused on. Sure, some time is spent on "more money", but much more is spent on insane managment practices, politics, backstabbing, the whole dysfunctional Microsoft culture. And that is where the good quarter is bad news, because as Anonymous said, Microsoft doesn't have to care. All this did on the "decent working environment" was make it a bit worse, because now there's even more money that partners will get, giving the politically inclined even more incentive to claw their way up to that level, no matter how much damage they do to the actual business processes of the company on their way.
That's why I say it's bad news. For the issues that this blog focuses on, it is bad news.
MSS
P.S. Things going bad financially is no guarantee that these issues get fixed. In fact, things can get even more dysfunctional in bad times.
But the point is, it's not going to get any better any time soon. Accept it or walk away.
At least, so it looks to me, an outsider.
Better dump those options while it is up at $35.
You had unexpired options?
I joined Microsoft not too long before the stock went into freefall.
Though I was awarded a few 10-year options, they're a rather small percentage of the total options I was granted. Those all expired under water. Actually, the last of them didn't expire too long ago. (The 7 year options.)
While it's nice to see Microsoft stock on the upswing, it really doesn't generate much new incentive to me. My stock grants won't change much. (shrug)
I try not to look at the stock and then all the options that expired under water (I believe all but one grant would've been above water now). It's just too frustrating to realize that you joined Microsoft too late for the 90's stock boom, and thanks to the stock being in the toilet for years, all of those options expiring leaves you missing even the benefit of a small upswing.
Sorry, some are so gung-ho that they're unhappy with anything other than unrealistic and unbridled optimism. I'll do what so many want to hear: "Go team! Yeah! Woooo! Way to go, Microsoft!!"
Sigh.
Dump the rest -like CRM yada yada and do dome real headcount reduction to just focus on the above. That will control the cost also.
and
Exactly, dump non-core crappy products such as CRM, etc
CRM is a profitable product.
This is also proof that these rumors about "it's faster to get a promotion at group X" are just rumors. The grass is always greener on the other side of the fence...
I have worked in the Windows division and now work for CRM. I can assert that the professional level here and at Windows is the same, and that the career velocity is the same.
At the bottom feeder level like me, the number of nice people is the same here and there. But because the product is much smaller, here we have less management layers, so things run much faster.
Looks like Jon Pincus is leaving MS after 8 years...
Oh, whatever. Neither we or they can manufacture coolness on demand (Apple has the patents, lol). If Google builds their own Facebook clone, they have just as good a chance of flopping as we would.
Someone said:
>3. More licensing tricks to increase "revenue per socket" Hey, if there's no cheaper alternative, why can't Microsoft raise prices?
While I tend to believe that person was either a troll or just plain vacant above the shoulders, I feel the need to respond based on what was published today about the google PC to be sold at Walmart. The whole thing is less than $200 bucks (hardware software the whole shebang), runs on Ubuntu pre-installed with Googles of other g-goodies.
http://blogs.pcworld.com/staffblog/archives/005830.html
Microsoft will be forced to adopt a high end OS strategy and/or compete with a very simple but powerful low end offering.
While this is just a low end consumer machine, it speaks volumes about the future of computing, in which Microsoft with its Apple competitor Vista product line is is selling its cheapest software only for about the same price as the computer itself. It also says a lot about what is next on the horizon for Google and Linux, which will be commercial machines for similar low prices.
Apple targets the high end computing market: it looks like Google is getting into the mass produced low end in a big way.
Maybe that is why Goog stock was selling for $700 a share. Ouch!
From my mid-level, +10 year perspective there are a few great points re: good results delaying positive management & cultural change.
The heavy sigh that the great financials caused me was due to the VALIDATION this delivers to all our misguided decision makers and their cheering syncophants.
The visionaries stood at the edge of the sea with their magic bones and ju ju being hailed by their followers, raised their hands and demanded the ocean come to them.
Then the tide came in.
Now leaders have 'facts' validating their greatness. Now logic will now only paint you as a non-believer and heretic & you can kiss career velocity goodbye if you don't get aboard this belief system.
In the meantime - I'll keep reconstituting the same materials into ppts and daydream of stock going to $45.
What the hell - PC & Server sales are strong and should be for some time to come & maybe it'll happen before the tide lowers and someone has to do something about all the flotsum it's left on the beach.
"That's why I say it's bad news. For the issues that this blog focuses on, it is bad news."
The Q's numbers and subsequent stock rise have definitely taken a lot of heat off the leadership team. But if management is smart, they'll understand it for what it is - a reprieve, not redemption - and get busy accordingly. If instead they decide it's proof they were right all along and little needs to change, well that'll likely manifest itself pretty quickly in both morale and future results. The competition isn't standing still, and customers, investors, and employees, all have other choices.
You had unexpired options?
Dude I've got thousands of 10-year options (from right before the switch to grants) that are well above water. The last of the 7-years expired, but these options are money in the bank (once I exercise).
The stock performance is giving me thousands more every day (on paper), which is pretty good for a commodotized (in MSFT's view) engineer as myself.
You must've exercised when they were worth a buck or two. O ye of little faith.
"Dude I've got thousands of 10-year options (from right before the switch to grants) that are well above water. ...
...You must've exercised when they were worth a buck or two. O ye of little faith."
Sheesh, what bull! Within the last year, and last 6 months, people lost thousands of shares that were underwater by just a buck or less. People DID have faith, it just wasn't returned.
Wonderful news for Microsofties from the US, and some relief for those from Europe. Why? Dollar is much, much cheaper now than a few months ago, so after converting the present MSFT quote of 37 USD to euro or any other European currency in fact we don't get much more than from 29 USD a year ago. Or: we don't loose as much as a month ago. Good to know that MSFT revenues come mostly from outside of US.
You must've exercised when they were worth a buck or two. O ye of little faith.
Nah, I have a small amount of 10-year sets. However, compared to the collection of 7-year options that I had accumulated mostly before the .com bubble burst, they're a tiny fraction.
Sorry, I still believe that I showed tremendous faith in not dumping all of my shares when the option-buyout happened. I believe that I showed faith when I stayed with the company year after year (and I'm not a spring chicken: I have many employers under my belt. I know what other options I have in this business), believing that the stock would crest those options before they expired.
I'm glad you're cheery, but from my perspective being happy about still having some 10-year grants that are worth $X doesn't make up for the ~$n*X that vanished into the thin air of stock option reality.
My point still stands, I believe: The stock gain sounds good, but the bottom line is that it is little incentive, and for those people who joined after Bill got rid of options altogether (and only hold Grants), it isn't even a question.
I'm not attacking Microsoft; I'm not attacking improving stock performance (guarding and improving shareholder value is what corporate management is supposed to do). I'm only claiming that the improving stock price is not, in fact, a motivator for most employees.
Remember that target stock grant values for each level are now expressed in dollar cash value. Since each share is worth more today, expect to receive fewer shares next time around (the investment value remains the same, of course).
The investment value always was the same, it just wasn't shared with you. I was originally concerned about this move, thinking along these same lines, but I've come to the conclusion that it was just another clumsy management move. Now that it's transparent, you can see for yourself that you have no incentive for the stock to go up under the stock grant system.
The wealth generated by employee plans was always about the numbers. A $1 move for a level 61 option recipient meant $1000-2,000. That same person is looking at more like $300-400 now with the equivalent stock grant.
However, the move to grants does have some merit. At least you do get something when the stock is stagnant. You get the dividends, which can buy you a latte 4 times a year, and you get the value of the stock. The option program gave you nothing as long as the stock was stagnant. However, once it went up, you were looking at a nice bonus.
Anybody who ever counted on stock options to rake in loads of cash is a fool. Options are just a glorified lottery ticket and that goes double for a company already as huge as MS.
Anybody who ever counted on stock options to rake in loads of cash is a fool.
Does that affect the question of whether the rising stock price is an incentive to employees?
I'm the "ye of little faith" poster. A few replies:
I have a small amount of 10-year sets. However, compared to the collection of 7-year options ... they're a tiny fraction.... I still believe that I showed tremendous faith ... faith ... more faith ... believing that the stock would crest those options before they expired.
I see, my misunderstanding. Yea, I held alot of faith that turned up nothing also. Somewhat a gamble since I could have turned them over for about a dollar at max performance.
Within the last year, and last 6 months, people lost thousands of shares that were underwater by just a buck or less. People DID have faith, it just wasn't returned.
Yea, my hire options expired literally pennies underwater. Earlier this year I could've gotten a few hundred for them, which is not worth it considering what they were sold to me as.
after converting the present MSFT quote of 37 USD to euro or any other European currency in fact we don't get much more than from 29 USD a year ago.
I'll have to make sure and not do my grocery shopping in Europe now!
I just watched a great lecture by Ricardo Semler and he's got some pretty innovative ideas regarding management and running a company. Just wondering what others thought?
http://mitworld.mit.edu/video/308/ (long, but fascinating)
Here's a brief bio:
For nearly 25 years, Ricardo Semler, CEO of Brazil-based Semco, has let his employees set their own hours, wages, even choose their own IT. The result: increased productivity, long-term loyalty and phenomenal growth. Can his radical approach work for you?
http://www.cioinsight.com/article2/0,1397,1569009,00.asp
Sigh-in spite of you and MSFTextrememakeover, Mini, my desire to do something great at MSFT continues to burn white-hot.
But first, I have to get the Blue Badge, which is no small feat. The Careers website sucks (it's just as bad as Office.Live.com); neither of them works half the time. Isn't anybody embarrassed by Job Agents that crash or the daily job notifications that are anything but daily?
The other Blue Badge impediment is age: it appears recruiters aren't allowed to call anybody who's experienced enough to have actually done something productive, like help customers make money. Oh, needing an H1B seems to be a good way to get a call (or at least an e-mail froma recruiter). Yes, I have pretty good qualifications (MBA, IBM, PMP), and yes, I can easily get a terrific job in Seattle, and yes, I'm playing the world's smallest violin, but it looks like Microsoft could use some fresh blood in the middle, as well as upper, levels of management. Unfortunately for me, I like a challenge and I'm way too determined to give up on what would be a huge kick. But maybe these issues are the mineshaft canary that's not chirping any more.
Here's my attitude: FYINV ("...I'm not vested"): I have something to prove and if you're in my way you're going to get hurt. One thing about being a "experienced": you don't suffer fools. I don't go ad hominem like BillG (no employee on the planet deserves to be bullied by the richest man in the world) but I do run a tight ship: my team knows what I expect and they by-God deliver.
My faith has wavered over the last few days, but I've on the road. Maybe my own bed will get me reinvigorated to make a difference in and for MSFT.
Peace out, brother!
When I joined I could have either negotiaited the salary or the number of stock options. I choose to negotiate the number of stock options which they doubled. All that long, I felt silly to do so. But now I can excercise all my options and recoup all the benefit I lost by not negotiating the salary.
If you are interested in knowing the number of options I have, here is a math quiz. Before the $3 dividend the number of options I had was a round number. After the $3 dividend the number of options I have has all the same digits. How many options do I have?
The only cure for MartinTayor-itis is a KenDipetio-otomy. Bye-Bye Stuart Scott - You have made life hell for a number of women in your org, and we're all glad you are gone.
Jeff Matthews (I'm not making this up) has rewarded Microsoft incredible live search engine with world class humor--keep it up Jeff.
http://jeffmatthewsisnotmakingthisup.blogspot.com/2007/10/how-to-build-igloo.html
Reading the blog to the end, you will find:
"My personal favorite came in the “Related Searches” box, where Microsoft graciously provided many extraneous results that its "best engineers" had somehow decided would useful to me after I'd figured out “How to Tie a Bow Tie.”
What Microsoft offered, and I am not making this up, was as follows:
Related searches: “How to Build An Igloo”
Hey, you never know when you’re gonna need to build an igloo after a night on the town."
Maybe a better solution to improving Microsoft than slimming down would be to just shut the company down for thirty days, give 100% pink slips and `reboot' with a select few projects and development teams. It couldn't get any worse than it is.
Stock's at 37!!!! oooooohh. chortle.
Following on the "How to build an Igloo" meme:
Daylight Savings Time started on a different day this year. On the day in question, all my Macs switched and my XP machines did not. They were one hour behind.
I double-clicked on the time next to the tray on the toolbar (bottom right of screen) to bring up "Date and Time Preferences." I reset the "Internet Time" option, using both available servers. No dice.
I toggled the "Daylight Savings Time" switch on the other pane of the same window. No dice.
Then I hit "Start"/"Help and Support" and typed "Daylight Savings Time" in the "Search" field. I got:
"Suggested Topics (0 results)"
"Full-text Search Matches (0 results)"
The accompanying text suggested that I "check my spelling."
However there were 15 results in the "Microsoft Knowledge Base." The first hit was "FIX: time() Function Overcompensates for Daylight Savings Time."
The second hit, "Daylight Saving Time Not Advancing," looked promising, but was instead a lengthy essay about a bug affecting "a very small number of computers running Windows NT" (not Windows XP).
The third hit was "Windows NT Boot Process Hangs Because of Daylight Saving Time Manipulation."
From there it all got more obscure, and I was still reeling from the fact that typing "Daylight Savings Time" Got me zero Suggested Topics and zero Full-text Search Matches.
Then I gave up. Someone said, "Why don't you just manually dial the time backwards?" I explained that, given what I'd learned in the last ten minutes about the machine's difficulties dealing with time stamps, I decided to leave it alone.
Meanwhile, My networked Macs were instantly correcting the erroneous timestamps of files from my XP box as they traveled into the Mac environment (fixing all "Date Created" and "Date Saved" timestamps).
Do I even need to compose a summary statement? This is the software company that gives me dialog boxes that say, "Click Here to find out information about how to adjust settings to prevent this message from appearing again" (rather than giving me a frigging seleted checkbox right there saying "Display this message in the future").
enjoy the rise MSFTee's, with Kevin Turner at nipping at BillG's bootstraps the success will be short lived. Turner's crazy rants (see we own enterprise search comments... huh?) and the fact that he would rather be CIO than COO (should have applied for that job in the first place instead of trumping up bogus accusations to remove Scott and take the role yourself... not happened yet, but it will. Duh!) Don't cross Turner, he handles things the "good ol boy" way! Yeeee-haw!!!!.
The otlook is not good, not good at all! Turner is firing (read: making go away) any exec that doesn't see things his way... sorry, is this Microsoft or Wal-Mart? Hey Kevin, if things are so great at Wal-Mart, why are you at Microsoft?
Mr. Turner, you got what you wanted by ousting Scott... so when do you announce your new title as CIO or dual role as CIO and COO, or is you master plan to take on every C level role you can... just call me Sir K Turner "The C".
What do you think, investors are stupid? C'mon, you just cashed out big, take that , pay out, pay off, pay-ola, whatever, buy the fam a compound back in Arkansas and go start Turn-Mart. I am sure the good ol boys you "dealt with at Sams Club" would love to help you start the next general store.
Look at Robbie Bach, you and the other execs are in Turner's scope sight. Be vewwy, vewwy qwiet!
>"enjoy the rise MSFTee's, with Kevin Turner at nipping at BillG's bootstraps the success will be short lived."
I'm not a softie, and definitely not a fan of Turner, but I would be willing to bet that the stock goes up with every top tier partner that gets the ax. You could probably put all the names in a hat, pick three, fire them and watch the stock go up.
Sit an do nothing but the sos and it will continue to stay in the trading range it was in for years.
It is pretty certain the outside sees Microsoft as a stagnant me-too company. Something has to change, and that can't happen with old blood.
Stuart Scott ousted? Please enlighten, I haven't heard anything about this. What happened? What's going on? Is it official?
>On the day in question, all my Macs switched and my XP machines did not.
Since the half-dozzen XP and Server machines I have all switched just fine and the "DST Help and Support Center" is the second hit on microsoft.com's search, I suspect your problem lies somewhere between your chair and your keyboard.
>Do I even need to compose a summary statement?
Yes, you do. May I suggest starting with an apology?
Yes, you do. May I suggest starting with an apology?
1) I want you to explain in exact detail what I did wrong. I then want you to tell me how my behavior deviates from the behavior of anyone using XP (since I listed my steps in order).
2) To whom am I "apologizing"? Did I single anyone out? Did I attack anyone except in the broad sense of complaining about the behavior of the software?
3) Let's assume for purposes of argument that you're correct and I made some error (for example, not performing every single Service Pack upgrade or failing to recognize the initials "DST" as representing "Daylight Savings Time" even though a search for the string "Daylight Savings Time" came up empty). Even in this remote contingency, by what stretch of the imagination is any of this (e.g. the bad experience and the subsequent complaint) my fault, as in, some transgression for which I must apologize?
What convoluted view of the world translates "customer cannot solve simple problem using logical steps, and presents narrative of such steps as complaint" into "customer has done something wrong and must now apologize?"
I have 25k options at $21.
When the stock hits $41, I make 500k. That's when I will cash out and retire.
Thank you MSFT !!!
have 25k options at $21.
When the stock hits $41, I make 500k. That's when I will cash out and retire.
Thank you MSFT !!!
Don't forget taxes.
>Let's assume for purposes of argument that you're correct and I made some error (for example, not performing every single Service Pack upgrade or failing to recognize the initials "DST" as representing "Daylight Savings Time" even though a search for the string "Daylight Savings Time" came up empty).
The full title of the second entry for a search for the term "daylight savings time" on microsoft.com is "Daylight Saving Time Help and Support Center". I merely abbreviated it to DST because I didn't feel like typing out the whole thing. In fact, of the 7,460 results that appear for the search "daylight savings time", three of the first six are likely to lead you to help.
Aside from your combative tone, the fact that you didn't even bother to follow up on the advice offered to you tells me you're more interested in trolling than actually getting any assistance.
>I want you to explain in exact detail what I did wrong.
There are a variety of technical support options open to you. This blog is not one of them. May I suggest that you approach them with more humility than you have shown here.
Don't forget taxes, or that MSFT won't hit $41.