
Microsoft Reports Record Revenue of $24.52 Billion in Second Quarter - harryzhang
http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY14/Q2/default.aspx
======
ljd
Like many on HN, I'm not a fanatic MS guy (despite having a deep C#
background) but I'm happy to see them do well this past quarter. They've only
had a series of bad PR recently, epitomized by the CEO stepping down being the
highlight story of the year.

But this doesn't talk about specifics. Consumer devices? I don't really
understand which product is doing so well for them? I know it's anecdotal but
I still have yet to hear someone recommend a microsoft product in the last
6-12 months. The only people that bought their phone were people that bought
because of price point.

Can someone shed some light on what microsoft has been selling that everyone
wants? I'm really curious now.

~~~
rbanffy
> what microsoft has been selling that everyone wants?

Continuity.

If you have a full Windows shop, with hundreds or thousands of users on Active
Directory, with e-mail and calendars on Exchange, all their important
documents made in Office and stored on SharePoint, all their internal apps in
VB/C# storing their data on SQL Server (or Oracle running on Windows Server)
you'll have a hard time selling anything much different. It's always easier to
upgrade to a newer release of Windows than to Linux or OSX.

Microsoft has perfected the art of vendor lock-in. I believe only IBM's zOS
customers "enjoy" a similar situation.

~~~
powertower
Or perhaps it's because they have solutions, features, industry leading
backwards-compatibility, competent support channels, _and a slew of other
things_ \- that their nearest competitor does not have.

~~~
code_duck
I assume you mean their nearest competitor for consumer and small to medium
business desktop operating systems? Because that statement isn't true for say,
mobile phones, video game systems, cloud services, or database, enterprise,
and web server software.

~~~
MichaelGG
Right, now that Postgres 9.3 just added materialized views, perhaps they'll
have a super-easy system for replication, DR, and HA.

~~~
code_duck
Microsoft offers product to compete at many different levels of the market.
Postgres is their competition for some needs, but I would think that if you
need more advanced features like you mention it would be more of a comparison
to Oracle and db2.

------
guelo
If you look at the segments report[1] you'll find that the real drivers of the
increase was Devices and Consumer Hardware, which was mostly driven by the
Xbox launch, and Commercial Licensing.

But the Gross Margin tells a different story. When you subtract the cost of
making the Xbox consoles the D&C Hardware segment actually decreased from last
year. The only real increase is Commercial Licensing, which is mainly Office
and servers.

[1]
[http://www.microsoft.com/Investor/EarningsAndFinancials/Fina...](http://www.microsoft.com/Investor/EarningsAndFinancials/Financials/fy14/q2/SegmentRevenues.aspx)

~~~
camus2
Does the licensing include the "Android Tax" ?

~~~
guelo
I think so. Here's their description of the segments,
[http://www.microsoft.com/investor/CompanyInfo/SegmentInfo/Ov...](http://www.microsoft.com/investor/CompanyInfo/SegmentInfo/Overview.aspx)

------
ChuckMcM
Nice. I wish they would break this out a bit more:

    
    
       > Bing search share grew to 18.2% and search
       > advertising revenue grew 34%.
    

It echos what we're seeing in terms of more people using alternative search
channels (which, on a per page view basis, increases revenue in those
channels). But for me the interesting bit is that their revenue grew twice as
fast as their market share. That could be because they have moved to a point
where incremental share is entirely accretive to their revenue, or it can mean
that they are getting more for their ads. That would help understand whether
or not Google's CPC is going to go down a little or more than a little :-).

~~~
spullara
That sentence doesn't read like that to me. Their search market share is 18.2%
and is not a growth number. Advertising grew 34% from some unspecified base.

~~~
ChuckMcM
Fair enough, the previous quarter they just said this : "Search advertising
revenue grew 47% driven by an increase in revenue per search and volume."

Google's CPC in their third quarter 2013 was down 4%. If the ratio holds then
a 34% increase in revenue would translate into a 2.9% decrease in CPC. Of
course that assumes they are trading traffic 1:1. Hence my curiosity. Google
will announce in a couple of weeks and we'll get to see.

~~~
ChuckMcM
And from Google _" CPC ... decreased approximately 2% over the third quarter
of 2013."_

------
sgolestane
It seems Microsoft
([http://finance.yahoo.com/q/ks?s=MSFT+Key+Statistics](http://finance.yahoo.com/q/ks?s=MSFT+Key+Statistics))
is doing financially better than Google
([http://finance.yahoo.com/q/ks?s=GOOG+Key+Statistics](http://finance.yahoo.com/q/ks?s=GOOG+Key+Statistics))
in every aspect. Microsoft also has a more diversified business so I wonder
why Google still has a larger market cap.

~~~
smackfu
MSFT has been flat for so long that no one wants to buy it.

~~~
nivla
>MSFT has been flat for so long that no one wants to buy it.

What? You call this flat? [1] The dividend payout has gone up, the price has
been rising. If you call that a flat and that there is no interest in it, then
I am sorry for the following remark: You have no idea about stocks and stock
markets!

[1][http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&c...](http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1390515621962&chddm=49657&chls=IntervalBasedLine&q=NASDAQ:MSFT&ntsp=0&ei=epXhUujpCcf4sQfKIA)

~~~
smackfu
Let me rephrase. They aren't a growth stock anymore, so no one who wants
growth stocks wants to buy it. Very recently, they have made some gains, but a
lot of people remember the previous 10 years.

~~~
edias
Microsoft has been doing fantastic over the past 5 years, especially when you
take into account dividends. Just cause they were massively overvalued during
the dot com bubble does not mean it has been a flat stock.

I really don't understand how you can dismiss market data that's right in
front of you, it's bordering on denial.

------
mmahemoff
Up 14% from $21.5B from a year earlier, which was also a record:

[http://www.microsoft.com/investor/EarningsAndFinancials/Earn...](http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY14/Q2/default.aspx)

Key difference probably being Xbox launch.

~~~
gtirloni
So what's it? Xbox division is a loss leader and should be dumped or a revenue
source? HN can't make its mind :)

~~~
czr80
Loss leaders are sources of revenue, but not sources of profit.

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mtgx
Holiday season, Xbox One launch - it's much easier to make "revenue" off $500
hardware, than from $5 a month Office services. 4 million Xbox Ones is already
an extra $2 billion in revenue, regardless of what the profit is.

I expect their revenue to continue to increase a little bit in the next
quarters (YoY), as they keep focusing on selling hardware. I don't think their
profits will improve too much, and might even see a decline within a few
quarters, as it gets harder and harder to sell Windows 8 licenses, since most
people don't like it too much, enterprise customers don't like it, and they've
just announced a year and a half before release that Windows 9 is coming next
year, which is pretty crazy on their part. Android and iOS will also keep
affecting the sales of PCs, and therefore the sales of Windows licenses, too.

~~~
Mythrl
They didn't announce Windows 9. Those were tech sites just reporting on
rumours. And considering that the last couple OSes have been released on 3
year cycles, mid-2015 is exactly when you would expect Windows 9 to come out.

------
Goopplesoft
> 3.9 million Xbox One consoles and 3.5 million Xbox 360 consoles.

Is anyone else surprised by the sales numbers for the Xbox 360?

~~~
polyomino
I think the 360 is going to be like the ps2 was last generation. An obsolete
console with a surprising number of sales.

~~~
canistr
To echo this point, there are many people who take the PS2 approach of buying
a console at the end of its lifecycle to take advantage of buying all used
games or old games and rock bottom prices.

~~~
pyrocat
This is what I'm doing with the PS3. Looking to buy one right now so I can
finally play (and own) all the PS3 exclusives that will only be available on
PS4 via their subscription streaming service.

------
thebouv
Like it or not, their services are pervasive in the enterprise. Office 365 is
the future for so many Fortune 500 companies and Sharepoint 2013 is a huge
push too.

As much as I wish there was more Unix/Linux at my company, all eggs are in the
MS basket for sure.

~~~
bediger4000
That pervasiveness seems like a double-edged sword. First, what if Microsoft
really does lose it in a big way (rather than just remaining stuff, boring and
unimaginative)? Enterprises will really be on the hook to find replacements,
and to create portable versions of all that documentation that's in .doc and
.docx format. Second, does "the enterprise" and "the rest of the world"
divergence have any consequences? The Sharepoint thing is a good example.
Everybody else uses Apache, nginx or something, but corporations use
Sharepoint because it lets them keep a thumb on their employees. Won't any
innovation made by The Rest of the World just pass them by? Will Sharepoint
admins end up making the big bucks because there's no easy to find, off-the-
street source of those folks?

------
Nate630
Nice EPS @ $0.78 as well.

~~~
Goopplesoft
Yup the street had them at $0.67 [http://www.nasdaq.com/symbol/msft/earnings-
forecast](http://www.nasdaq.com/symbol/msft/earnings-forecast)

Why did they release this after hours?

~~~
drglitch
> Why did they release this after hours? All earnings/major news releases are
> pre/after hours in order to reduce volatility on the news. Look at pre/after
> hours spikes of anyone (including MSFT) releasing earnings to see the effect
> earnings have on stock. Netflix yesterday was also a good example.

------
Tloewald
Am I being overly cynical in 1) they bought nokia, 2) revenue != profit, 3)
nokia sells a lot of cheap phones.

~~~
kvb
Yes, because the purchase hasn't closed yet, so those revenues aren't
included. Also, there was near-record profit to go along with the revenue, so
margins aren't down too badly.

------
polyomino
What is Windows OEM Pro revenue?

~~~
Goopplesoft
OEM is their one time install version of windows (with switches). This is the
license usually carried by most hardware retailers.

------
hawkharris
I'm a new investor who's learning about technology stocks. Will someone with a
better understanding of the market explain what this news means to prospective
investors?

~~~
pyrocat
That's not really HN's forte. You may have better luck over at the Motley Fool
([http://www.fool.com/](http://www.fool.com/))

~~~
hawkharris
Thanks for the resource!

------
codex
Microsoft is still milking slow to change enterprises. That is the main story
here.

------
jasonlgrimes
Now they can afford to buy some new tech. Cheaper than innovating weak
product.

~~~
taspeotis
I wish they'd buy:

* Xamarin and polish the debugging, VS integration and Mono in general (maybe replace a lot of it with MS' .NET implementation? I can dream)

* MvvmCross and polish it and put it into the .NET BCL

* JetBrains (or just ReSharper) and give it a once over (performance- and code analysis-wise) and ship it with VS.

* Maybe Digia for Qt to replace MFC (this one's kind of selfish since Qt is used in places Microsoft probably doesn't care for - maybe they could sponsor the Windows side).

> Cheaper than innovating weak product.

Aside from MFC I think Microsoft has fairly solid solutions to a lot of
problems (Azure, Active Directory, Exchange Server, Visual Studio, Office,
.NET).

~~~
boyter
Agreed. I wish they would would buy Xamarin and make it easy to build C# MVC
applications and deploy on Linux/BSD. Give me that with entity framework to
MySQL/Postgresql and I am sold. Will convert over to using it for everything.
Add in ReSharper and it has the potential to be the most productive
environment on any platform.

~~~
goofygrin
Can't sell windows server licenses if you let people run on Linux.

Xamarins price is way too high and I bet apple would block the apps built with
it if msft bought them (and they'd likely sue for reverse engineering).

~~~
taspeotis
> apple would block the apps built with it

Apple went there [1] and failed [2].

[1]
[http://daringfireball.net/2010/04/iphone_agreement_bans_flas...](http://daringfireball.net/2010/04/iphone_agreement_bans_flash_compiler)

[2]
[http://en.wikipedia.org/wiki/Apple_and_Adobe_Flash_controver...](http://en.wikipedia.org/wiki/Apple_and_Adobe_Flash_controversy#History)

