08.23.10

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Microsoft Approaches New Minimums and Loses Billions Online

Posted in Finance, Microsoft at 1:15 am by Dr. Roy Schestowitz

Old road

Summary: A look at the sides of Microsoft which too few people are aware of — the ones without cash cows (Microsoft is said to have already lost more than $6 billion online, for example)

From a purely financial point of view, Microsoft is not a good company. One of its revenue sources appears to be extorting Linux vendors (thanks to Novell which initiated this), but some of its main revenue sources are the ‘cash cows’, Windows and Office which are both declining as cash cows [1, 2, 3, 4]. “Microsoft (MSFT) Approaches New Downside Target of $24.64,” says this report and the company’s current value is actually $24.22 (52-week range is $22.73-$31.58).

It is being pointed out again that “Microsoft’s lost eight years online: More than $6 billion down the tubes” and as another site puts it:

Microsoft lost more than $6 billion in operating losses on revenue over the last eight years according to Larry Dignan, ZDNet Analyst.

In fiscal 2010 ending June 30, Microsoft reported an operating loss of $2.35 billion on revenue of $2.2 billion for its online services division . Microsoft’s online services division has been building out data centers for Azure. Microsoft noted in its annual report:

Cost of revenue increased $700 million or 82%, primarily driven by increased online traffic acquisition, data center and equipment, and headcount-related costs. Research and development expenses increased $153 million or 17%, primarily due to increased headcount-related expenses.

As Microsoft’s cash cows suffer a decline (in sale numbers or margins), the company will lose its ability to operate and more layoffs will be required. More on Microsoft’s financial performance later, including downgrades of the stock.

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7 Comments

  1. Florian Mueller said,

    August 23, 2010 at 1:21 am

    Gravatar

    Interesting. You quote ZDNet but I shouldn’t?

    Dr. Roy Schestowitz Reply:

    Interesting. You have become a troll.

    twitter Reply:

    No one should quote people who are obviously wrong and ZDNet is often wrong. A mainframe expert, such as yourself Florian, should have known better than to blame IBM for the Spanair crash. Trying to pass the buck won’t work if you would like the world to have respect for you in this area.

    Roy has done his homework in this case and the facts are easily verified. Microsoft’s online and entertainment losses are longstanding facts that Roy has reported for years. If anyone thinks there’s something wrong with ZDNet’s analysis of this quarter’s losses, please examine the report yourself and let us all know. Most Techrights regulars are here because they care about facts.

    In the mean time, I have to agree with Roy that Florian is a troll. When Microsoft turns a $60 billion cash pile into debt trying to take over the internet, Florian chides Roy for listening to a reporter he trusts at ZDNet. When a Win32 virus downs an airline and kills more than 100 people, Florian blames IBM. In the last month, Florian has polluted Techrights comments with hundreds of insulting and distracting comments, all to defend Microsoft. I don’t think he’s made a single, useful correction.

  2. Florian Mueller said,

    August 23, 2010 at 1:50 am

    Gravatar

    It isn’t trolling to point out this total contradiction between this posting two days ago about me quoting ZDNet ( http://techrights.org/2010/08/21/florian-blames-ibm-for-death/ including the discussion in which you suggest ZDNet is unreliable ) and the posting above where you quote a ZDNet analyst.

    I’m not a troll for pointing out that the two things don’t mix at all. Instead, they show that you just pick targets you want to smear and you don’t seem to care about the facts. If it looks useful to you, you use it, no matter how dubious the source is (such as ‘Groklie’ quotes). In my case, I just quoted ZDNet and got bashed for it.

    Dr. Roy Schestowitz Reply:

    I’m not a troll for pointing out that the two things don’t mix at all.

    I didn’t say “troll”. I still think you are a campaigner for hire, at the very least based on your history.

  3. Florian Mueller said,

    August 23, 2010 at 2:30 am

    Gravatar

    Two days ago you blamed me for quoting ZDNet:
    techrights.org/2010/08/21/florian-blames-ibm-for-death/

    Now you just quoted a ZDNet analyst above.

    That doesn’t make *me* a troll. Just someone else.

    Dr. Roy Schestowitz Reply:

    Larry Dignan is one of the few there whom I trust. He has to be reasonable given his position. Compare to this from the ‘news’ (Google News):

    http://www.zdnet.com/blog/btl/cheating-on-ubuntu-with-a-mac/38282

    This is tabloid level, fitting alongside Justin Bieber “scoops”. There’s lots like that, but this is one which I found today.

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