Wednesday, January 23, 2008

Microsoft FY08Q2 Results

FY08Q2: As always, my favorite post-analysis sites for the results:

At a simple level, I feel anything that Microsoft reports is like spitting in the wind during the current financial storm. I'll be interested in hearing if we have anything encouraging to say as being a safe-haven for investors during this period, given the current releases and the upcoming releases.

Mr. Todd Bishop has a preview and nails my concern about the analysts concern of our forward looking statements. Also - though I doubt it will come up except as a generalized catch-all warning - with the EU feeling us up again to try to figure where we moved our wallet to, we have more legal uncertainty to deal with.

Update: After the release...

FY08Q1: ba-da-Boom!

FY08Q2: ba-da-BING! (or should that be, "ba-da-Cha-CHING!"?)

Channeling an upbeat attitude that could be heard as, "no, really, our poo doesn't stink," Mr. Liddell got to take lead on one of the most positive and reassuring Microsoft quarterly results conference calls I've heard in a long time. He expressed extreme pleasure over the results, as do I imagine every Microsoftie (unless you do want to point at the stinky poo of OSB and how E&D / Xbox has a deep, deep hole of billions to fill income into).

I'd say every time I heard an analyst try to give Mr. Liddell a soft-pitch opportunity to say something negative or overly cautious, Mr. Liddell was like, "Nope, things are going great, and will continue going great. Or greater."

Safe-haven for the investors' money, indeed!

Oh, and kudos to Jason Maynard for asking Liddell about the new EU actions and how that figured into Liddell's thinking. Not much of a meaty answer (well, most of the answers weren't very meaty) but it was nice to hear such a challenging question. I hope it comes up again during our Friday Town Hall Meeting in 34, though I wouldn't expect a more detailed answer.

Follow-up posts:

MSFTExtremeMakeover: Q2 FY08 Earnings. Snippet:

Short version: strong results, increased guidance, generally upbeat tone, and no really embarrassing items for analysts to question. Good job! Yes, online continues to be a sinkhole for cash. But everyone is used to that by now, and at least the top line result is semi-respectable. Yes, there's still no color on actual large scale Vista deployments. But at least client revenue and unearned remains solid. Bottom line, if last report was sufficient to get some investors to take another look at MSFT, then this one should attract others and perhaps reduce doubts that last time was merely a fluke.

Mr. Joe Wilcox: Microsoft Watch - Corporate - Microsoft Q2 2008 by the Numbers. Snippet:

Liddell's confidence may have something to do with where Microsoft makes its money. Just four years ago, the majority of revenue came from North America. Now, 60 percent of sales are outside the United States, Liddell said. For the quarter, Microsoft sales increased 30 percent in emerging markets, 20 percent in established markets like Europe and 15 percent in the United States.

Even if the U.S. economy slows down, overseas sales could offset any decreases in technology spending here.

Mr. Todd Bishop: Microsoft beats quarterly estimates, raises forecast. Snippet:

Microsoft's Online Services Business was the only one of the company's five divisions to post an operating loss for the quarter, $245 million in the red. The company's Entertainment and Devices Division climbed to a $357 million operating profit thanks to holiday video-game sales. Chris Liddell, the company's chief financial officer, said this afternoon that Microsoft is still expecting that division to be profitable for the full fiscal year, which ends in June.

And the general attitude of the rest of the reports:


Now, let's be sure we don't start slipping back to our old sloppy ways, because, well, our poo does stink. Just like everyone else's.

Thursday, January 10, 2008

Raikes and Other Exits

Well, I should be sweating to the 80's soundtrack at the ProClub with about half of Microsoft that's trying to squeeze in there for January to burn off Christmas cookies, but here everyday that passes yet another exit hits us, and today we have a biggie...

Jaffe: Exits Microsoft dealmaker Bruce Jaffe going startup - shoot, why swing billion dollar acquisitions when you can be a billion dollar acquisition?!?!

Fitzgerald: Another of the Microsoft old guard moves on All about Microsoft

Raikes! Microsoft Announces Retirement and Transition Plan for Jeff Raikes, President of the Microsoft Business Division Company announces it has hired Stephen Elop from Juniper Networks; Raikes will continue at Microsoft through September 2008.

Wow, I'm surprised. I can understand that Mr. Raikes has had a long, long career at Microsoft, but as we wonder about the leadership in the upcoming (and no doubt somewhat dysfunctional) post-Gates era, my money was riding on Mr. Raikes to step up and perhaps be on the shortlist for running more of Microsoft. At least Jeff gets to go out on a high-note.

And of all of our leadership at Raikes level, I respect him the most. There's something more to him (there is something there there) that I admired when around him.

And Stephen "Who?" Elop? I found it ironic that while Mr. Ballmer in the announcement email was praising Mr. Raikes ability to recruit, mentor and nurture Microsoft leadership, Raikes was not being replaced by someone he groomed. I tell you, if I was a Raikes direct I would seriously be considering whether I was ready for a new challenge, at Microsoft or elsewhere.

The Market's reaction on Friday? MSFT Extreme Makeover has an interesting comment on this:

The [external] choice for replacement seems to have the right pedigree, but Raikes did a solid job with Office and was widely seen as the leading candidate for eventual Ballmer replacement as CEO. So I don't think the market is going to react positively to the news tomorrow.

Two more quick things:

CES: MSFT Extreme Makeover has a compilation of BillG and CES and a take on the $1,200,000,000USD acquisition of Fast Search.

Xbox departures: a commenter makes the following observation:

It's weird that Mini and all the commenters here have failed to notice the mass exodus from the Xbox team in 2007. By my count, more than 15% of the product team (dev/PM/test) have left Microsoft for Apple, Sony, Google, Yahoo, MySpace, Amazon, and various other companies (including several startups, local and in the Valley).

This is great progress towards a Mini-MSFT!!

(Though, it's mostly bad attrition and has some other negative implications you can work out on your own.)

The main complaint I hear about the games / Xbox area is things are drying up given the "show me the money" religion that's been adopted. Some pet projects (or just random projects) that had nothing to do with future profit have been disbanded. Man, I can't even squeeze out some crocodile tears for that...

Administrivia: expect more CRF'ing after that last post. Boy, did that suck given all the high hopes I had for positive, aspirational comments. I'm bearing a grudge. I'm human. I'm upping the moderation a bit more to be on-topic and less open to general gripes by anti-Microsofters.