Friday, April 23, 2010

Looking over the earnings $MSFT #MSFT

MSFT – earnings
· prob. disappointing given heightened expectations. EPS/revs beat print, but light of some
actual ests. def revs fall Q/Q, which is below expectations.
· revs came in $14.5B vs. the St $14.4B
· EPS came in .45 vs. the St .42
· The results include the deferral of $305 million of revenue relating to the Microsoft Office
2010 Technology Guarantee program. Adjusting for the revenue deferral, third-quarter
revenue totaled $14.81 billion
· def revs came in $12.26B which is actually down Q/Q vs. $12.527B = weaker than expected
· “Business customers are beginning to refresh their desktops and the momentum of Windows
7 continues to be strong,” said Kevin Turner, chief operating officer. “We are also seeing
tremendous interest in our market-leading cloud services for business.”
· Windows revs came in $4.415B vs. the St ~$4.4B (although some up high $4Bs) = inline-tobit
· S&T revs $3.5B vs. the St $3.7B
· MBD revs came in $4.2B vs. the St ~$4.2-4.3B
· While consumer demand continued to be strong, we saw renewed strength from small and
midmarket customers with year-over-year growth of more than 15%. Within the enterprise
customer segment, we saw the beginning of a recovery in IT hardware spend, but as we've
discussed on past calls, we continued to see lengthened sales cycles
· Last Friday we released to manufacturing Office 2010 and SharePoint 2010. We expect
commercial availability in May, with general availability in June
· From a macro perspective, we expect the next quarter to be similar to the third quarter, with
continued strength in hardware shipments. We were encouraged by the recent uptick in
business PC growth and expect that this business refresh cycle will continue over a couple of
· As a result of our operational initiatives, improved Xbox 360 console costs, and a continuing
favorable revenue mix, we now expect full-year gross margin to expand 1% compared to the
prior year. With regard to operating expenses, we remain focused on diligently managing our
cost structure and aligning resources to key priorities. For the full year we are lowering our
operating expense guidance, now expected to be between $26.1 billion and $26.3B. For F11
opex, “we are currently working through our budgeting process and maintain our outlook of
$27.0 billion to $27.5 billion”

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