[Beijing website production] Microsoft's Windows business performance was weak last quarter, Bing should be a big highlight

Microsoft's Windows business performance was weak last quarter Bing should be the biggest highlight
 

On the morning of October 21, Beijing time, Microsoft released the two Financial report for the first quarter of fiscal year 2012. The financial report shows that the sales volume of Microsoft's flagship Windows operating system has only increased slightly due to the reduction of expenses by enterprises and emerging markets, which has curbed the company's profit growth. But overall, Microsoft's first fiscal quarter results met analysts' expectations.

Windows business is weak

Microsoft's first fiscal quarter financial report showed that Windows sales only increased by 2% over the same period last year, consistent with the sluggish PC sales. Windows still occupies more than 90% of the global PC market. Although the sales of Windows operating system ended three consecutive quarters of decline, it was still lower than some analysts' expectations.

Brendan Barnickle, an analyst at Pacific Crest Securities, an American investment bank, said: "Windows operating system sales are again lower than expected, although the gap is not as big as in the past few quarters." Windows 7 sales have been relatively stable since its grand launch in 2009. ( Beijing website production )

Microsoft's growth now mainly depends on its core corporate customers. Despite the slowdown in economic development, corporate customers continue to invest in technology. In contrast, individual consumers are waiting for the release of Windows 8 next year, delaying their purchase plans indefinitely, or choosing to purchase Apple's iPad tablet.

Peter Klein, CFO of Microsoft, said that the upgrading cycle of commercial PCs is still at the "midpoint", and he believes that this demand will continue to grow. Klein said on the analyst conference call: "We expect that the trend of commercial PC growing faster than consumer PC will continue at least in this fiscal year."

On Thursday, Microsoft's share price closed at $27.04 in regular trading on NASDAQ, and fell 0.7% to $26.85 after hours. The stock has been hovering between $20 and $30 in the past 10 years.

Decrease of necessary losses

The biggest highlight of Microsoft's first fiscal quarter is that various signs indicate that the situation of the long-term loss making online service departments, including MSN and Bing search engine, may have begun to improve. The department suffered a loss of $494 million in the current quarter, the lowest loss since the last seven quarters, which eased the pressure on Microsoft's finance to some extent.

Since Microsoft launched Bing in the middle of 2009, the online service department has caused Microsoft a loss of more than 5 billion dollars. Microsoft has invested heavily in this area to catch up with the industry leader Google. Microsoft did not make a new statement on Yahoo, which was sold on the analyst conference call. According to Reuters and the Wall Street Journal, Microsoft may join hands with private equity companies to buy Yahoo.

Microsoft once launched an acquisition of Yahoo in 2008, but it was rejected. An analyst asked whether Yahoo's sale would hinder Microsoft's cooperation with the company. Klein did not directly answer this question. "This is a long-term alliance. They are totally focused on the business we need," he said

Not exceeding market expectations

Microsoft today released its first fiscal quarter of fiscal year 2012. According to the financial report, Microsoft realized a net profit of 5.74 billion dollars in the quarter, up 6% year on year, or 68 cents per share, compared with 62 cents in the same period last year. Microsoft's performance in the first fiscal quarter reached the average expectation of Wall Street, but this was the first time that Microsoft did not exceed the expectation of Wall Street in the past 10 quarters.

Barnick said, "Only earnings per share (EPS) met expectations, and Microsoft's EPS is usually higher than analysts' expectations. The first fiscal quarter has never been a peak sales season for Microsoft, so this result is not surprising." Overall, driven by the hot sales of Office products, Microsoft's revenue in the first fiscal quarter reached 17.37 billion dollars, up 7% year on year, The global downturn in the economic environment has obviously not inhibited the growth of Office business.

The revenue of the Office business unit was 5.6 billion US dollars, up 8% year on year. It is Microsoft's best-selling and most profitable business. The revenue of the server and tools business unit was $4.2 billion, up 10% year on year, but still lower than some analysts' expectations. Driven by the hot sales of Xbox, the revenue of entertainment and equipment business increased by 9% year on year. The Xbox is still the most popular game console in the United States.

Increase in overseas cash

Microsoft said its $8.5 billion purchase of Skype, an online chat service, will add about $600 million to its spending this fiscal year. The transaction was completed last week. According to Microsoft's estimate, in the 2012 fiscal year starting from July 1, the company's expenditure will be in the range of $28.6 billion to $29.2 billion.

At present, Microsoft's cash reserve has reached 57.4 billion dollars, of which 89% (about 51 billion dollars) is overseas. The amount of Microsoft's overseas cash is increasing rapidly. Just three months ago, Microsoft also said that its cash reserve was $52.8 billion, of which 85% (about $45 billion) was overseas. Microsoft competitor Apple said Thursday that the company's cash reserves reached $81 billion.

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