
Microsoft reports first quarterly loss ever - sbashyal
http://marketday.msnbc.msn.com/_news/2012/07/19/12837611-microsoft-reports-first-quarterly-loss-ever?lite
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forgottenpaswrd
Microsoft has been pouring money onto everything until they monopolize it. It
worked really well and annihilated a lot of competitors by the way.

I remember the times Microsoft will literally buy you to develop for the xBox
or DirectX. I was there and then I saw the people that got bought to say that
they felt "trapped" and could not get out from MS tech.

But as new companies with big pockets got into the game, first Google, then
the new Apple and then Facebook, the last one with so much money and not
really knowing what to do with it, the game did not worked as well as before.

The Microsoft Zune did not work out, Life, Bing and now Lumia are not working
out as expected, even after pouring billions from their desktop and Office
monopoly.

~~~
pm90
>The Microsoft Zune did not work out, Life, Bing and now Lumia are not working
out as expected

I wonder if this spells the end of Nokia as well? That would be really very
sad!

~~~
ditoa
Why would it be sad to say goodbye to Nokia? Companies come and go and all of
Nokia's problems today are of their own making. Sure they made some nice
phones 6+ years ago but they could have easily of competed with Apple, hell
Google managed to do it without even having a damn phone they just made the
Android platform and worked with other companies to make the devices. Nokia
should have embraced Android from day zero, if they had they would most likely
be the number one Android phone supplier instead of Samsung.

~~~
rryan
Well, I'll miss Qt. Or at least the corporate muscle that used to fund it.

~~~
chris_wot
Qt will remain. Nokia don't want much to do with it now. That project might be
better off without Nokia!

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xfax
Sensationalist title much?

From TFA: "Analysts were expecting a $5.3 billion profit for the quarter, but
that was canceled out by an even bigger loss on a five-year-old acquisition."

No, analysts were not expecting a $5.3B profit before the report; if they were
they should probably not be in their jobs anymore. The after-hours price of
MSFT shows that this news was already priced in and the loss was actually
_smaller_ that what was expected.

Geez.

~~~
dclowd9901
With these kind of common-sense oversights, I often wonder if many web
reporters actually read the shit they shovel out.

~~~
debacle
Web reporting has very much become first-to-market, so I doubt it.

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crag
Say what you will about MS, but compared to Apple, Google, Oracle, or most
other software companies, MS treats it's developers like gods.

I can not think of any other company that pays so much attention to it's
developer community. I know, many around here may not have experience with as
an MSDN member, but I do.

And trust me, having to deal with the likes of Apple AND Google, I miss MS'
developer programs terribly.

~~~
st3fan
You mean like in this article?

[http://arstechnica.com/gaming/2012/07/microsoft-comes-
under-...](http://arstechnica.com/gaming/2012/07/microsoft-comes-under-fire-
for-five-figure-xbox-360-patch-fee/)

~~~
crag
An unusual example. But noted.

Want me to link to the "thousands" of disgruntled articles about Apple's or
Oracles' developer relations?

I left out Google, cause they do a hell of a better job in that department
than Apple does.

Look I know I'm bashing Apple and Oracle. Cause right now, those are the
platforms what I'm working in. But I've been an Apple fan boy for years. Ever
since my first Power Macintosh (back in the day). And Apple has never had good
relations with it's developers. But today it's the worse I've ever seen.

But not like most of have a choice. We write for where the masses are. And
right now, Apple is everywhere and in my case, Oracle too. I just wish,
sometimes they'd (Apple mostly) remember what it was like when they were
starving. ;)

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petercooper
Sure, although primarily down to a gigantic $6.2bn writedown instead of any
crash in Microsoft's overall fortunes. Best to take a bath now and miss the
mark _big style_ on an otherwise lacklustre quarter and then proclaim the
Windows 8 revenue quarter later in the year as a bounce back.

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mckilljoy
Microsoft has one of its best quarters ever -- revenue is up and growing on
all their major devisions -- but end up taking an accounting loss (and tax
credit, I assume?). Kudos to the accounting team for that one!

~~~
purephase
It was intentional. They used a good quarter to shoulder the write down of a
acquisition. The accountant/lawyers know what they're doing.

~~~
PufferBuffer
Just because you know you're going to suffer a huge loss doesn't justify the
loss itself.

~~~
purephase
I didn't qualify it as I'm not a MS investor. I'll leave it up to the
shareholders to read into it what they will.

This is fairly standard practice. Just much more noticeable when it is MS and
it is such a large purchase price.

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peteysd
How does Steve Ballmer still have a job? I don't think that you could find a
less inspirational, more pointy-haired boss tech executive.

Microsoft needs another visionary at the helm, or it will never make a
comeback.

~~~
vibrunazo
And before someone comes with the "but microsoft doubled its share values
during Ballmer". The argument here is that, with microsoft's dominant
incumbent position, a monkey would have tripled it.

~~~
xfax
Where can I get such a monkey?

~~~
cpunks
Carly Fiorina. She did the same thing to HP, very differently. Cut quality.
Cut R&D. Cut support. Cut service. Slightly lower prices, while your
reputation is still sky-high. Outsource anything that can be done cheaper not
in-house. Scale back benefits and anything that costs money. Have layoffs
anywhere that doesn't produce short-term revenue.

Profits soar. Share prices soar. A few years later, as reputation catches up
with quality and support, as there are no new products in the R&D pipeline,
and as you have no core competencies, and as your best employees leave, the
company tanks.

You walk of with a ton of cash from early-year bonuses.

~~~
debacle
HP's reputation was also destroyed over that time period. We and many other
companies we worked with switch to Dell during Fiorina's tenure.

------
Zenst
I can't help but feel that they are leveling the books on any bad or potentual
bad area's and might even put all the Win8 production costs into that quarter
as well. Motivation being that you have win8 and other goodies comming out and
your now in a more comfortable position to imply look the news windows 8 must
be good as we have not made a lose this time. That is nomater how well sales
actualy go. I suspect the upgrade price is tempting for people to try dual
booting it as a alternative to there current flavour of windows choice and
trying it out. But clearing out any damaging impact onto the accounts and
bunderling them into one bad month prior to your new OS will only help make
the new OS seem better that it may or may not be. This and cheap upgrade price
I suspect I can see how the next quarter goes and how that can only help
promote windows 8 at a share level as apposed to user level. Which they cater
for with a cheap upgrade price. Also better to get a bad period out of the way
now before RIM falls as the bad market internet will suddenly all turn onto
Microsoft as its next target to say is doomed. Sad how markets work nowadays.

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kirillzubovsky
Putting aside Microsoft's current financial performance, and the fact they
still have stockpiles of cash in the bank, I think they are doomed. It might
take them 20 more years to fail, but unless they radically change, they will
fail.

In the last few months I had a chance to meet some folks from Google,
Facebook, Apple and Microsoft. Some are my friends and some I've only met a
few times. The first three companies seemed to have retained a ton of
engineers that are hard working, driven, passionate about their products and
their field. Meanwhile, I only met 1 person at Microsoft who truly was excited
about being at MS. Everyone else, who was passionate, left MS either a few
years ago or just recently.

You may think that my sample size is too small, but I tend to trust the gut
feeling. What saw at MS was a company full of good people, but no one in
particular cared about the success of the company. They were all there because
it was a good job, a stable pay check, maybe even an educational experience.
Meanwhile, folks I got to talk to at Google and Facebook and particularly at
Apple were all committed to the cause, hungry to outsmart and outdo their
competition. I think that speaks to the company culture and culture speaks to
success.

All said, I think MS is doomed because they got too comfortable, too used to
the easy money. Microsoft is really good at piloting a massive ship that
slowly and steadily moves through the deep waters. But, as the waters are
drying, they may just get stuck. To continue prospering, Microsoft needs to
innovate, to reinvent themselves, to be agile again. They may get lucky and
acquired the next big thing, which will bring them prosperity for years to
come, but they may not and if they don't, they will be toast at the current
state of affairs.

Lastly, this is a lesson to all of us. If you want your company to succeed,
you cannot get comfortable. Like Steve Jobs said in his biography, you have to
cannibalize yourself or your competition will do it for you. Your and your
company has to keep running the marathon as if you have just started the
journey.

Agree with me, disagree with me, bash me for not believing in Microsoft,
that's okay. All I know, I will be sure to run this marathon fast and smart
and I won't let my company to slow down and get on the death spiral. Come, run
along, we'll have a good time.

~~~
marshray
> Microsoft needs to innovate, to reinvent themselves, to be agile again

But MS was never particularly innovative. Seriously, how many _significant_
innovations did they come up with?

> All I know, I will be sure to run this marathon fast and smart and I won't
> let my company to slow down and get on the death spiral.

:-)

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akshat
2 take aways from this:

1> Microsoft continues to place big bets on markets which matter. It is not
sitting on fancy profits. 2> It has a terrible management team.

------
pedalpete
I'm more curious about the timing of the write-down. Are they taking the
write-down now, in an attempt to put the Microsoft of the last decade to rest
as they prepare for the new Windows 8 lines?

How does company marketing influence these decisions?

Was their a financial reason to take the write-down in one large chunk? Or
within a certain timeframe?

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nkp007
Technically accurate, but the headline is misleading. The loss was because of
a non-cash write-off of a transaction made a few years ago (2007-aQuantive).

Microsoft's core businesses, especially Office, are humming along. The
franchise is pretty strong and the overall company is a cash generating beast.

------
jarek
Discussion earlier today with 75 comments:
<http://news.ycombinator.com/item?id=4266155>

------
lionhearted
It wasn't an _operating_ loss -- it was a writeoff of a bad investment. They
took the loss right now, but their cash position didn't change. Just, their
reported income and taxes due got lower.

Still significant a bit, but much less than an operating loss instead of a
writeoff would've been.

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einhverfr
Hard to say what this means.

Revenue is up on the whole except Windows, where it is down slightly even
before the deferral.

Expenses are up much more, resulting in the loss. It isn't clear what they are
spending on though.

Moreover cash income is up. Even Windows grew when you add revenue to unearned
cash.

This tells me some interesting things:

* Orders are up, fulfillment is up everywhere except Windows where orders are up and fulfilment is down even before adding in the deferral.

* Microsoft's spending us significantly up.

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zem
that just goes to show that quarterly accounting is basically a flawed metric

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mittermayr
I just wanted to add a few more words to this from my experience with working
at Microsoft and why I think people should seriously calm down more on
Microsoft. [http://mittermayr.tumblr.com/post/27582543470/microsoft-
the-...](http://mittermayr.tumblr.com/post/27582543470/microsoft-the-shoes-of-
a-giant)

------
ars
See also: <http://news.ycombinator.com/item?id=4266155>

------
thisismyname
Steve Jobs said it best. They just don't have any taste and in a world where
people will pay a premium where taste has been considered when products are
being developed (apple, tesla, etc), companies like MS will be left in the
dust.

~~~
drzaiusapelord
Does taste mean not being able to understand what the aQuantive writedown is
about?

Also, a mass produced phone built in China and sold in Walmart is a lot of
things, but tasteful it is not.

~~~
chris_wot
_Does taste mean not being able to understand what the aQuantive writedown is
about?_

Excellent point...

 _Also, a mass produced phone built in China and sold in Walmart is a lot of
things, but tasteful it is not._

... terrible point!

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tysonjennings
Wouldn't have happened had they not wasted 6 billion on aQuantive trying to
buy their way into search. Google paddled that bottom.

~~~
recoiledsnake
Funny how Eric Schmidt thinks Bing is a huge threat to Google. The corporate
spin at the hearings is just too ironic.

[http://cnnmoneytech.tumblr.com/post/10483503055/eric-
schmidt...](http://cnnmoneytech.tumblr.com/post/10483503055/eric-schmidt-
thinks-bing-rules)

~~~
nostromo
Reminds me of Microsoft's investment in Apple in 1997...

"There was some suggestion that Mr Gates may be anxious to keep Apple afloat
to forestall a scenario where, following an Apple demise, a virtual monopoly
hold by Microsoft on the software market would inevitably attract negative
attention from fair competition regulators in Washington."

[http://www.independent.co.uk/news/business/apple-
grabs-150m-...](http://www.independent.co.uk/news/business/apple-
grabs-150m-microsoft-lifeline-1244198.html)

~~~
mamp
Apple should invest something back into Microsoft to get them to make Office
2013 for the Mac.

~~~
tallanvor
Well, an update to Office 2011 for Mac is being released to add skydrive
integration. There are also rumors of iOS and Android versions that will be
released, but I guess we'll have to wait and see what actually happens.

------
cooldeal
And the stock is actually up after hours. Go figure.

Edit:

"The server and tools unit delivered fourth quarter revenue growth of 13
percent and the business division, which features Office, was up 7 percent.
Microsoft's entertainment and device division saw revenue jump 20 percent
largely because it now includes Skype."

~~~
tsotha
So they took a big chargeoff on an old mistake so they didn't have to pay
taxes on a great quarter? That's what it looks like to me, anyway.

~~~
tomkarlo
GAAP earnings are not necessarily the same as earnings for taxes. IANA tax
lawyer, but I don't think you get a tax break on the write down unless you
shut down the acquired business entirely. Otherwise it would be too easy to
game your taxes simply by declaring these kinds of goodwill write downs.

------
sbashyal
Finally it is clear that Apple's record profit is at Microsoft's expense.

Note that some major acquisition costs are responsible for the loss this
quarter. Also given the right moves Microsoft seems to be making (for e.g.
Surface announcement and Low pricing of the Windows 8 upgrades), it will be
interesting to see what direction it takes from here onwards.

~~~
Zenst
Given the number of people I know who use iTunes on windows and have greif so
think about getting a Mac instead is only equaled by the number of people who
do music and saw apple buy up the good players software and make the mac the
more robust platform.

But I bet Office runs better under windows than it does under osx, its the way
- code bitching, just hate it.

~~~
veb
Dunno. I prefer Office on OS X, seems so much faster and easier to use. But
that's just me.

