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Sun, Nov 08, 2009 - 03:27 AM EST  —  AAPL: 194.34 (+0.3099, +0.16%)  |  NASDAQ: 2112.44 (+7.12, +0.34%)

Microsoft profit drops as Windows sales dive; shares slide
Friday, April 25, 2008 - 09:51 AM EST

"Microsoft Corp., whose Windows software dominates the personal-computer market, fell 4.6 percent in early U.S. trading after sales slumped, casting doubt on whether PC demand can hold up in a slowing economy," Amy Thomson and Crayton Harrison report for Bloomberg.

"The world's largest software maker reported a 24 percent drop in sales of Windows last quarter and forecast earnings that may miss analysts' estimates," Thomson and Harrison report.

"Windows sales fell to $4.03 billion. UBS AG's Heather Bellini, the top-ranked software analyst by Institutional Investor, had predicted $4.3 billion. Sales of Office word- processing and spreadsheet applications also trailed forecasts," Thomson and Harrison report. "Losses at Microsoft's Internet business widened to $228 million, while sales rose 40 percent to $843 million. Microsoft had forecast growth of as much as 45 percent."

Full article here.

Amy Thomson reported for Bloomberg yesterday, "Microsoft Corp. declined 5 percent in extended trading after it reported an 11 percent drop in third-quarter profit and forecast earnings that may miss analysts' estimates as Windows software sales fell."

"Chief Financial Officer Chris Liddell said Microsoft will stand firm on its offer for Yahoo! Inc. and will explore other options, including a proxy fight or abandoning the offer, if no deal is reached by this weekend. Yahoo spokeswoman Diana Wong declined to comment," Thomson reported.

"Chief Executive Officer Steve Ballmer has sought to bolster sales by selling more higher-priced versions of Windows, the operating system that runs more than 90 percent of the world's PCs. Those gains were limited last quarter," Thomson reported. "More Windows sales came from emerging markets, where prices are typically lower, Liddell said in an interview. Piracy rates also picked up in Asia, particularly China, Liddell said."

Full article here.

MacDailyNews Take: Excerpts from a BusinessWeek interview with Apple CEO Steve Jobs, October 12, 2004:

BusinessWeek: What can we learn from Apple's struggle to innovate during the decade before you returned in 1997?
Steve Jobs: Apple had a monopoly on the graphical user interface for almost 10 years. That's a long time. And how are monopolies lost? Think about it. Some very good product people invent some very good products, and the company achieves a monopoly. But after that, the product people aren't the ones that drive the company forward anymore. It's the marketing guys or the ones who expand the business into Latin America or whatever. Because what's the point of focusing on making the product even better when the only company you can take business from is yourself? So a different group of people start to move up. And who usually ends up running the show? The sales guy... Then one day, the monopoly expires for whatever reason. But by then the best product people have left, or they're no longer listened to. And so the company goes through this tumultuous time, and it either survives or it doesn't.

BusinessWeek: Is this common in the industry?
Steve Jobs: Look at Microsoft -- who's running Microsoft?

BusinessWeek: Steve Ballmer.
Steve Jobs: Right, the sales guy. Case closed.

Source: The Seed of Apple's Innovation


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Apr 25, 08 - 08:57 am Comment from: IEEE1394®

Spot on!

Jobs, he brilliant (written like 'God, he's brilliant', since Jobs is God!).

Apr 25, 08 - 09:00 am Comment from: ron

Mr. Jobs for president. I know he's another lib, but he's smarter than the three lib candidates.

Apr 25, 08 - 09:04 am Comment from: IKON

Right on Firewire! wink

Apr 25, 08 - 09:18 am Comment from: MaLvado

Haha, Jobs cracks me up!

Nice one Ron! If only McCain was further right. =(

Apr 25, 08 - 09:19 am Comment from: LordRobin

I don't foresee any upside for Microsoft from here on out. It will be a long, slow, slide downward into irrelevancy. Eventually, they'll have a profitable, but dead-end niche as the "dinosaur OS" some large companies need to run legacy software, while all the consumers and young innovative businesses have moved onto something else.

------RM

Apr 25, 08 - 09:19 am Comment from: Zune Tang®

This is simply a minor market adjustment. I expect you MAC sissies to get your panties in a bunch. Just wait until the next service pack for Vista is released. That will shut your big smug MAC lemming mouths.

Your potential. Our passion.™

Apr 25, 08 - 09:22 am Comment from: Mac+

Is the Titanic sinking?

Apr 25, 08 - 09:32 am Comment from: Randian

And here's the key to MisterSoftie's future:

". . . what's the point of focusing on making the product even better when the only company you can take business from is yourself?"

That's MSFT's future in a nutshell. Unless they have plans to expand their sales force to Mars or Venus, they already have all the market share they'll ever see. The only way to go from the top of the heap is DOWN.

Apr 25, 08 - 09:36 am Comment from: Scott

From the businessweek article, I found a new way to explain why switching to Mac is great for most people...

"It's because when you buy our products, and three months later you get stuck on something, you quickly figure out [how to get past it]. And you think, "Wow, someone over there at Apple actually thought of this!" And then three months later you try to do something you hadn't tried before, and it works, and you think "Hey, they thought of that, too." And then six months later it happens again. There's almost no product in the world that you have that experience with, but you have it with a Mac. And you have it with an iPod."

Apr 25, 08 - 09:38 am Comment from: Goople

they're the new, new IBM

now that they are toast, I'm not following anymore Microsoft news or stories.

Apr 25, 08 - 09:39 am Comment from: Spark

That Jobs exchange should be predictive as to his choice of a successor as CEO. Look to the pool of product guys.

Apr 25, 08 - 09:43 am Comment from: ChrissyOne

Okay, check this out -

I know it's just a glitch in the Google Finance charts. It happens all the time. But timing is everything, as they say, and when I checked MSFT yesterday after earnings were posted, I saw this.

Microsoft dropped so hard, they busted through the bottom of the chart! WOW!™

Apr 25, 08 - 10:01 am Comment from: Demon

Quote Zune Tang:

"Just wait until the next service pack for Vista is released."

With Microsoft it's always just wait till the next pack, Next version, Next everything and when it comes out and is the same old same old.. it's the same story over and over and over again at Microsoft. Just wait for the next...

People are tired of waiting for what they what and for what works. Because waiting is not good enough any more... The Next service pack, the next version, the next...

For average users and IT organizations big and small the waiting is over... I hear it more and more ... They are evaluating their options.. Linux, Solairs, MacOS... they are all on the table... I hear it more and more we've been tasked by the CTO to work out a plan for the phase out of all Windows servers and Desktops...

Apr 25, 08 - 10:03 am Comment from: Cubert

I just love that sales guy quote.

Apr 25, 08 - 10:07 am Comment from: Ampar

" Just wait until the next service pack for Vista is released."


You inadvertently left out the most important word between service and pack.

"Fudge."


tongue wink

Apr 25, 08 - 10:09 am Comment from: Raymond in DC

While I'm inclined to take out the "world's smallest violin" (index and thumb rubbing in "sympathy"), given that MSFT is deemed a bellwether company, when it goes down it drags others down. AAPL, so far, is holding firm.

The fact is, for a company that invests billions yearly in research and development, there's not much to get anyone excited. Microsoft is a momentum play, making big bucks on the default choices that are Windows and Office. The long awaited decline is underway.

Apr 25, 08 - 10:10 am Comment from: Buster

Get this. Let the shareholders kick out Ballmer and bring in Steve Jobs as the new CEO (We know Steve can handle multiple CEO positions). He then promotes all the people associated with the Mac business office and then works on making the new office simple and stable...say like Word 5.0.
Then drop windows, and then everyone will switch over to the Mac and buy Mac office and a new (Mac) operating system.
Everyone wins.

Ok now here is my idea for world hunger......

Apr 25, 08 - 10:11 am Comment from: Gil

At Zune Tang - I always look forward to your insightful prose but you disappointed me this time.

Apr 25, 08 - 10:11 am Comment from: Buster

Did I also mention that I know exactly how women think?

Apr 25, 08 - 10:14 am Comment from: Another IT Guy...

"I don't foresee any upside for Microsoft from here on out. It will be a long, slow, slide downward into irrelevancy. Eventually, they'll have a profitable, but dead-end niche as the "dinosaur OS" some large companies need to run legacy software, while all the consumers and young innovative businesses have moved onto something else."

It's always funny to hear Apple users talk about M$ being a niche product...with 90%+ marketshare.

Apr 25, 08 - 10:14 am Comment from: Splat

I don't believe Steve Jobs is God but he is probably in direct contact with God.

Apr 25, 08 - 10:17 am Comment from: Steve

Did anyone catch anything on Zune sales and their online music store? Today's WSJ didn't have anything on that, and I don't see anything in the other articles I read. I know it's small potatoes for MS, but I'm curious.

Apr 25, 08 - 10:17 am Comment from: howareya

Further right than "war for 100 more years!" McCain...? Only guy further to the right than him is Hitler.

Apr 25, 08 - 10:17 am Comment from: Ampar

"The fact is, for a company that invests billions yearly in research and development, there's not much to get anyone excited."

What? The thought of an extremely expensive big ass table that's a strain to use doesn't fill you with glee and a giddy, tingling sensation? No squirt for you, buddy.

Apr 25, 08 - 10:20 am Comment from: Ampar

"Did anyone catch anything on Zune sales and their online music store?"

I read that they sold another one to a ten year old in Boise, Idaho. He got a refund a few days later when his parents threatened to have the shop owner arrested for child abuse.

Apr 25, 08 - 10:22 am Comment from: Afib

Inevitable.

Apr 25, 08 - 10:23 am Comment from: ChrissyOne

@ howareya

You forgot Rush. At least he'd make sure we all had free pills.

Apr 25, 08 - 10:28 am Comment from: bon

So Yahoo is up 11% and MS is down 11%.

Who should be buying who?

Apr 25, 08 - 10:35 am Comment from: Jubei

@Ampar

"I read that they sold another one to a ten year old in Boise, Idaho. He got a refund a few days later when his parents threatened to have the shop owner arrested for child abuse."


That makes a even dozen sold for the Zune for the quarter. Awesome! LOL

Apr 25, 08 - 10:36 am Comment from: shen

"Further right than "war for 100 more years!" McCain...? Only guy further to the right than him is Hitler."

funny you should mention that.....

"Who is the wingnut of the week? It's Indiana's very own Tony Zirkle, who's running in the Congressional primary. Why? Well, you see...

U.S. Congressional candidate Tony Zirkle is facing criticism from one of his primary opponents, and a host of people on the Internet, for speaking at an event over the weekend that celebrated Adolf Hitler's birthday.

Zirkle confirmed to The News-Dispatch on Monday he spoke Sunday in Chicago at a meeting of the Nationalist Socialist Workers Party, whose symbol is a swastika.

When asked if he was a Nazi or sympathized with Nazis or white supremacists, Zirkle replied he didn't know enough about the group to either favor it or oppose it."

for a great laugh, go google him and look at the pictures.

Apr 25, 08 - 11:17 am Comment from: Splat

I still wish there was a delete ALL command in the iPhone email....

Apr 25, 08 - 11:24 am Comment from: @ Splat

Go to your computer and select all and delete then go look at your iPhone. Also I hear that that is included in the 2.0 software slated for June.

Apr 25, 08 - 12:08 pm Comment from: MCCFR

Did I also mention that I know exactly how women think?

I was willing to treat Buster as a credible contributor to these forums, but - after that comment - he has to be a fantasist on a par with Enderle, Thurrott and Dvorak.

Apr 25, 08 - 12:27 pm Comment from: twilightmoon

Spark: "That Jobs exchange should be predictive as to his choice of a successor as CEO. Look to the pool of product guys."

I was thinking the very same thing!

Apr 25, 08 - 01:14 pm Comment from: Jonricmd

As much as I hate Microsoft, I dont' think they are going to go away. I think they will become like IBM and become more of a global business services company. I have a friend who works for MSFT in the server services division and they are doing pretty well. They are like an elephant going through a desert, trying to get to the next watering hole. They can go a long time with nothing…
Eventually someone will replace Balmer and they will turn it around - not that I wish that.

Apr 25, 08 - 02:57 pm Comment from: ChrissyOne

@ Jonricmd

That's exactly what Microsoft should always have been. Their problems came from trying to be a consumer-facing brand name. If they would just stick to the server room and the office, they'd be doing a lot better.

Apr 25, 08 - 03:15 pm Comment from: Anders

"The world's largest software maker reported a 24 percent drop in sales of Windows last quarter [...] Windows sales fell to $4.03 billion."

Haa-haa!!! Losers!!! Windows sales dive 24%!!! They lost one billion!!!

That could never happen to Apple.

Apple CFO Oppenheimer explained this week in Q2-2008 earnings-call why the gross margin declined to 32.9 from 34.7 percent in previous quarter. Because Leopard revenues declined with 76%.
http://seekingalpha.com/article/73697-apple-f2q08-qtr-end-3-29-08-earnings-call-transcript?page=-1

"Our Leopard revenues in the December quarter as we talked about in January was $170 million, and they were just over $40 million in the March quarter."

Haa-haa!!! Winners!!! Leopard sales declined slightly by 76%, but Apple didn't lose a billion!!!

Apr 25, 08 - 03:19 pm Comment from: ChrissyOne

@ Anders

And Apple OS revenues peak much quicker because they come out quicker. Windows revenue has to sustain a 5 year period.

Apr 25, 08 - 03:38 pm Comment from: Johnsson

By the time iWork version xx arrives next year it'll be bye bye MS office. BUt please don'tsplit the stock, don't do a huge buy-back, keep it where it is now. It's quite fun learning the pattern of wall street manipulaton and exploiting it; it's worked for me.

Apr 25, 08 - 03:38 pm Comment from: G4Dualie

Ballmer will be replaced when Microsoft's credit worthiness comes into question.

In this business, you're only as good as your last product and the days of pissing away obscene amounts of cash to develop products that only serve to stuff the channel are over.

Microsoft and Apple have about the same amount of cash right now and for one of them the future looks bright, the other, eh... not so much. Ballmer was quoted as saying he would be buying up 20 companies this year to pad Microsoft's war chest. But he said that before the Yahoo! deal was made public and now we learn Microsoft would have to borrow 22 BILLION dollars just to buy Yahoo!?

I'll bet the 20 companies are on hold right now. Wouldn't it make more sense to buy 20 companies that are philosophically and functionally aligned that could be parlayed into new and exciting, instead of buying 1 big-assed company who is already a way of life?

Vista was Bill's last great hurrah and I'm sorry to say it will soar like an albatross with a limp.

It sucks to be you Bill...

Apr 25, 08 - 03:42 pm Comment from: G4Dualie

Correction:

Wouldn't it make more sense to buy 20 companies that are philosophically and functionally aligned; that could be parlayed into some new and exciting product, instead of buying 1 big-assed company who is already a way of life?

Apr 25, 08 - 04:16 pm Comment from: amyhre

Ah, Microsoft's promises. Same old, same old. Reminds me of a joke I heard once.

This 80-year old woman was talking to one of her friends and remarked that even though she had been married 3 times, she was still a virgin.

The friend asked how this was possible. "You had 3 wedding nights and never consummated it once?"

"That's correct. The first time I married guy a few years older than me, the guy had a heart attack right before we could and died soon after. The second time I married a guy a few years younger, my husband had a stroke from which he never recovered and died soon after. The third time I married a 20-year old Microsoft employee in fine health, biked everyday and fit as a fiddle."

"Well surely he should have been able to do the job."

"Yeah, that's what I thought too but he just sat on the edge of the bed and told me how good it was going to be when I finally got it."

Apr 25, 08 - 04:43 pm Comment from: Buster

@MCCFR

I was having visions this morning. That I could know everything from curing world hunger to understanding women was in-con-ceiv-able.

....but then I woke up and realized I was late for work.

Apr 25, 08 - 04:46 pm Comment from: Ampar

To amyhre:

That was funny! Thanks!


LOL

Apr 25, 08 - 04:54 pm Comment from: Idiot

So..., how long before the word "beleaguered" is used as a permanent adjective to "Microsoft"?

Apr 25, 08 - 05:56 pm Comment from: British Mac Head

@Zune Tang
"I expect you MAC sissies to get your panties in a bunch. Just wait until the next service pack for Vista is released"


I didn't realise they were going to scrap all the current vista code and re-write a whole new Unix-like OS from Scratch Zuney. We're quaking in our boots aren't we lads.

Apr 25, 08 - 07:34 pm Comment from: CitizenX

Yep, the suits take over.

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