More Videos
- Has Twitter's Finest Hours (Seconds) Come and Gone?
- Intel's Andy Bryant Offers An Explanation
- Apple's Global Retail Invasion
- Intel Settles; AMD Settles the Score
- HP's Shot Across Cisco's Bow
- Back Off, Regulators!
- iPhone, App Strategy the 'New Dot Com?'
- Cisco Jumps; Rest of Market to Follow?
- Call It 'Microsoft Math'
- Intel in the Anti-Trust Crosshairs, but Why?
MOST SHARED
- U.S. May Wind Up Green With Envy
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
- Japan Third Quarter GDP Jumps; 2010 Growth May Slow
- Analysis: APEC Nations Back Face-Saving Climate Plan
- CNBC Video: Warren Buffett & Bill Gates - Keeping American Great
- For Investors, The New Green Looks To Be White
- Stronger Yuan Needed for Global Rebalancing: IMF Chief
- Disaster Film '2012' Drowns Rivals at Box Office
- Taking a Page from Obama's Asia Agenda in Investing
- The Cost of Thanksgiving Dinner 2009
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
- CNBC Video: Warren Buffett & Bill Gates - Keeping American Great
- U.S. Stocks Rally for the Second Straight Week
- Dollar is Not Plunging—So 'Calm Down': Market Strategist
- Strategists Say Markets Have More Upside — But How Much?
- Hirschhorn: Risk-Averse Traders
- Roginsky: A Funny Thing Happened on the Way to Financial Reform
- This Year's Biggest Thanksgiving Leftover: Cash
- TV Series Inks Unique Deal For Fight
- Stronger Yuan Needed for Global Rebalancing: IMF Chief
- Gold Hits Record $1,130 as Dollar Drifts Lower
- Japan Third Quarter GDP Jumps; 2010 Growth May Slow
- Analysis: APEC Nations Back Face-Saving Climate Plan
- GM to Start Repaying $6.7 Billion US Government Loan
- Shift Into High-Quality Stocks Could Move Market Higher
- Cities With the Most Home Price Reductions
- Drug Study Questions Effectiveness of Merck's Drugs
- Military Arms Race Dominates Dubai Air Show
RSS FEED
Tech Check
Text Size 
 |
Click for more earnings info |
Microsoft [MSFT
Loading...
()
] did beat Street expectations on the bottom line, reporting 47 cents, or 3 cents better than consensus. That's good news on a lighter than expected top line of $14.45 billion against the $14.49 billion expectation, which is a bit of a surprise given the big run these shares have seen in recent weeks, and the huge growth Microsoft has enjoyed in each of the previous two quarters.
So, where was the weakness? That's the issue.
Four of Microsoft's top five revenue generators all came in light. Client ($4.025 billion), Server and Tools ($3.255 billion), Online Services ($845 million), and the Business Division ($4.745 billion) all had trouble measuring up. And that might signal a broader economic slowdown that so many investors are worried about.
The only bright spot was the entertainment and devices division -- a surprise unto itself, because of ongoing Xbox 360 shortages during the quarter -- which blew past expectations which were only recently revised upward. The Street was originally projecting about $900 million. That projection swelled to $1.24 billion. Microsoft exceeded $1.57 billion for the unit, showing robust strength no one was really counting on, even in the face of a surging Nintendo [NTDOY
Loading...
()
] Wii and stiff competition from Sony [SNE
Loading...
()
].
Guidance is also an issue. For the company's fourth fiscal quarter, the revenue line is better than expected at $15.5 billion to $15.8 billion, but the EPS midpoint is only slightly above consensus at 45 cents to 48 cents.
If there's really good news, it comes from Microsoft's first peek into full year 2009 guidance. The company's revenue of $66.9 billion to $68 billion far exceeds earlier expectations by the Street. Same goes with Microsoft's anticipated $2.13 to $2.19 in full year earnings per share.
So the big takeaway: Microsoft seems to be sluggish in the most recent quarter reported, and the quarter it's in right now. Longer term, business seems to be on the road to recovery.
If you're "trading" this stock, you're banking some profits because the steep run recently was certainly not justified by the numbers reported today. If you're "investing" in this stock, you're looking for a bottom and committing new capital to the cause, because it looks as if in the not-to-distant future, Microsoft is preparing itself for some pretty healthy growth.
The wildcard, of course, is what Microsoft does with Yahoo [YHOO
Loading...
()
]. A raised bid could be perceived as a negative by Microsoft shareholders, who are already worried that the 62 percent premium it's prepared to pay is already too high a price. These earnings aside, that's a cloud -- or opportunity -- still hanging above the company, depending on your perspective.
Watch the headlines this weekend. News will happen either way with Saturday's Yahoo deadline. Either a prolonged proxy -- fight bad for both sides; or a done deal, with both sides ready to move forward hand in hand. I've talked to a lot of investors on both sides, and the latter choice comes up as their first choice. Over and over again.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes