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12.26.08

We Live in Interesting Times

Posted in Apple, Finance, GNU/Linux, Microsoft, Novell, Red Hat, Windows at 5:38 am by Dr. Roy Schestowitz

Hourglass

Apple’s difficulties were noted here last week, although they are not of much concern to us given that Apple harms the freedom of software [1, 2, 3, 4]. It would only be fair to state that any business which relies on sales is likely to suffer a bit (or a lot), and it’s a problem that hardly affects Free software, bar donations and subscription renewals to those who offer support and/or services.

The Inquirer had this article about Apple’s shares falling after a series of unfortunate events and speculations. A pro-Microsoft Web site, Barron’s, presents this analysis which predicts further declines in Windows and Office sales.

Thomas Weisel analyst Tim Klasell this morning cut estimates for Microsoft (MSFT) for the current quarter ending December, Microsoft’s fiscal Q2, and slightly for the 2009 and 2010 fiscal years, citing slowing PC demand, but also lower demand than might have been expected for Microsoft’s server packages, which include the Exchange email server, and the Microsoft Office productivity suite and Microsoft Dynamics, programs for customer relationship management and the like.

Windows and Office are two among the few profitable products from Microsoft, so this could be interpreted as a major blow. Analysts predict that Microsoft will issue a warning, probably some time in the next year and layoff rumours simply carry on. These persist following actual layoffs that we already know about [1, 2, 3, 4, 5].

More headlines have appeared just before the holidays. One news site, for example, somehow concluded that “Microsoft Plans To Cut Jobs By 10 Percent.”

“The news is in. All the money making groups cut 10 percent of the workforce,” says another Microsoft employee.

An analyst defends such a decision, assuming it comes next month.

Analyst: Microsoft staff cuts would be “healthy”

[...]

“While a 10 percent (reduction in force) would be hard for those impacted, we believe it would be a healthy move for the company as it would help rationalize the tens of thousands of employees who have been hired over the past several years,” Reback wrote.

Microsoft would not be the only Washington-based technology company to see the guillotine coming down.

CUTBACKS: October and November brought a series of layoffs at Seattle-area technology companies — nothing like the dot-com meltdown, but still substantial enough to make it clear that the belt-tightening is serious.

We’re anticipating another wave after the holidays. Rumors have already started about possible cuts at Microsoft next month. And venture-backed companies that have yet to turn a profit may be forced to further reduce expenses as it becomes harder to raise capital. The only question is how deep the cuts will go.

As usual, there must be a dose of damage control from Microsoft Jack, who is like some sort of Microsoft spokesman in the Guardian [1, 2, 3], just like Ina Fried is the company’s sworn booster in CNET.

“Their reports were already tackled and financial practices criticised.”Jack writes about these layoff reports and also adds that “Microsoft has plenty of cash,” but apparently he does not know (or does not want his readers to know) about Microsoft reaching debt [1, 2, 3, 4, 5] and also losing billions in most of its divisions. Their reports were already tackled and financial practices criticised [1, 2]. Only 1 or 2 divisions at Microsoft are profitable and those that are profitable see their margins shrinking due to increased competition, mostly from SaaS, FOSS, and GNU/Linux. In the area of sub-notebooks, for example, they reportedly dropped the price of Windows to just $5 because otherwise GNU/Linux would reign.

As the classic saying goes, “may you live in interesting times.” Red Hat’s results, which came out on Monday, were impressive. The other publicly-traded company that sells GNU/Linux is Novell, and it continues to lose money because of its dependency on proprietary software.

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