5:32 p.m. We're still on hold (guess all the reporters didn't call in at least 10 minutes ahead of time, as requested) and I'm noticing that cost of sales was way up -
5:35 p.m. After a very scripted introduction (sounded like it was recorded by a computer and not a person), we hear that Microsoft "choose the right places to focus" with their SQL server sales, for instance, and is "ramping up the supply of Xbox 360 consoles."
5:38 p.m. Expect an increasing set of opportunities and challenges with regards to product launches like Xbox 360 consoles, and home entertainment sales are up 85%.
5:46 p.m. Continue to see a shift in "premium edition" OEM sales of MS software. They can't say enough about SQL servers. She puts extra emphasis on every adjective when she talks SQL.
5:47 p.m. Pleased with the great response that Office Live has received.
5:49 p.m. MSN revenue down - but advertising revenue up slightly, especially in instant messaging properties. "Made good progress" in transitioning search advertising from the Yahoo! platform to proprietary ad platform - and lower-than-expected performance from partner-driven ad search volume. Doesn't look like it's working as planned although they say that they're sure it was the right decision. Hmm.
5:51 p.m. Xbox revenue growth of 133% - she almost sings "one hundred
and thirty three."
5:53 p.m. Over 10 million downloads of
digital content since launch for Xbox 360. Huh.
5:54 p.m. There's my
increased cost of sales - it's from Xbox 360 console costs. The weird thing - it sounded like she was laughing when she talked about the 49% increase (either I calculated wrong or she's
referring to a different comparison. Update: yes, I calculated wrong).
5:57 p.m. Now CFO Chris Liddell is talking. MSFT generated less cash "primarily
due to the timing and magnitude of legal settlements."
5:59 p.m.
Expecting to release a "broad public beta" of Microsoft 2007 "this spring." Isn't it spring
now?
6:01 p.m. Stock keeps ticking down in after hours - it's at
$25.52 now.
6:02 p.m. Expect 30 cents per share for the fourth
fiscal quarter.
6:04 p.m. Three main drivers of the guidance change:
"higher product costs in order for us to deliver as many Xbox 360 product consoles as possible." They're
trying to kill the Playstation by flooding the market, it seems. Second, increased sales & marketing costs, mostly
for the Xbox 360.
6:05 p.m. Seems like the third reason is R&D
and acquisition costs, especially for the search advertising platform. Chris sure has a funny accent - he says
"wOUARld" and "see-cOUAr."
6:06 p.m. He says
"Ad CenTOUR" funny too. And they're sure that this investment is worthwhile, and has "enormous potential
for growth."
6:12 p.m. Ooh! questions. First from Steve at Bank of America, who asks
(essentially): can't you please spend less so that you can make more money? And Chris answers that he could have quite
a big sales variation, but not much of a sales variation. But maybe expenses
could be less.
6:15 p.m. He asks a follow-up question. Everyone always has to flout the rules
with the one-part question guideline.
6:16 p.m. Charlie from
Sanford Bernstein: Are you reserving two million Euros a day for European fines? Chris says he can't answer that but
there is no change from the previous reserve.
6:18 p.m. Adam Holt
from JP Morgan: is the headcount change going to be front-end loaded? And will you be giving customer incentives around
the holidays in order to encourage customers to upgrade to Microsoft Vista? Chris won't give specifics beyond next
quarter, though.
6:22 p.m. Heather from UBS: Is this a change in
company strategy? Is the company willing to sacrifice earnings growth for revenue growth? Chris says, umm, basically -
but he'll talk more about strategy in the July analyst meeting.
6:27 p.m. Cash? from Merrill Lynch asks the same company, wonders if it is hiring of superstar programmers. Nope, says Chris, and it's certainly not millions for the CFO's pay. Heh.
6:29 p.m. Robert has the last question and asks about the shape of the year. And he'll get nuthin' and like it.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
4-27-2006 @ 6:35PM
Dominic Jones said...
Well done!
4-28-2006 @ 11:24AM
Craig said...
Adcenter is well worth the investment. The drop in revenue is purely due to them not opening the doors yet to all competitors. This has allowed a handful of advertisers to have low CPCs.
They are also doing a very good job keeping the quality of the users high with strong standards on ad copy .
You can read more about their entrance into the market at http://conversionindex.did-it.com this site talks about scale and quality of users in all of the major search engines and their syndication partners.
4-28-2006 @ 12:16PM
Norm Robinson said...
How can Microsoft stock that makes $2.98 billion or 29 cents per share this quarter as compared to the same period last year of $2.56 billion and 23 cents a share go down 11% overnight?? The stock market system has been broken for years and this just proves it more and more !! Analysts that make expected earnings goals should all be fired !! It's completely stupid to think that investers can lose so much overnight !! I suggest that we all just get out of all stocks and then "all stupid analysts can be fired and work in the fields with the Mexican farm workers, because that's what they deserve !!