Bonum Certa Men Certa

FBR Capital Markets and Morgan Stanley Both Cut Microsoft Estimates While Microsoft is Hiding the Losses and Layoffs Are Rumoured for Next Month

Squinting eye



Summary: Analysts take a close look at Microsoft and they don't like what they see; Microsoft is apparently trying to hide losses by merging units; alleged Microsoft employees are suggesting that more layoffs are weeks away

MICROSOFT'S financial situation is somewhat of a misunderstood subject because the company has debt and despite bragging about huge profits the company has vapourised a lot of its cash reserves. Under Ballmer's reign or era the company lost about half its value (Microsoft would rather people evaluate it by its stock alone). Microsoft's GNU/Linux-hostile COO Mr. Turner is dumping his Microsoft shares and despite some recovery in the stock market (see Red Hat's performance for example) Microsoft's performance remains rather abysmal:



Microsoft, down about 22 percent this year, is a profit powerhouse. In its last fiscal year that ended in June, it posted a 40 percent pretax profit margin and a return on stockholders' equity of 44 percent.


That's what Microsoft says, but there are more sceptical people out there.

“[T]he shell game of hiding loses, moving divisions around that are losing too much money (Kin)”
      --Chips B. Malroy
Microsoft thinks that Microsoft is cheap and some people went along with this type of headline (we found two examples), implying that Microsoft is about to surge. Well, on what basis exactly? A current/former Microsoft shareholder suggests dumping the stock. The company's financials are not so impressive (buybacks imminent) and Microsoft has debt (last covered last week and therefore not worth repeating).

"Jefferies & Co. said Microsoft Corp. could borrow up to $4.5 billion," according to two separate articles from last week [1, 2]. The latter says "Jefferies Thinks Microsoft Could Borrow $4.5 Billion" (Microsoft has already borrowed several billions).

Mary Jo Microsoft has just revealed that Microsoft may be using the old trick of merging unrelated businesses so as to make all divisions look profitable. We saw Microsoft doing this several times before. This time it's a huge stretch because Microsoft tries to merge embedded (failing) with server and tools (successful). This way, according to our reader Chips, the failure will be hidden away in a bigger bucket. It's "the shell game of hiding loses, moving divisions around that are losing too much money (Kin)," he explains.

There’s some odd reorg-related news coming out of Microsoft today, September 20. The company is announcing that it is moving its Embedded business into the Server and Tools unit.

[...]

I had been assuming Embedded might end up as part of Windows client or maybe as part of the Mobile Communications Business (since Microsoft’s Mobilebusiness is one of the biggest — though not the only — OEM for the various Embedded division products).


This is worse than the Microsoft blog makes it seem (we have not yet identified any proper analysis of this). But it gets worse. After some recent downgrades and the like from a Standard & Poor’s analyst and from Credit Suisse Microsoft takes another couple of hits. "FBR cuts Microsoft profit view" says this report which expands as follows: "FBR Capital Markets lowered its profit estimates for software giant Microsoft Corp due to softening consumer demand for PCs."

“[O]nly seen about 3 comments new on Mini msft about layoffs, maybe in Oct.”
      --Chips B. Malroy
"Morgan Stanley Cuts Estimates on Microsoft Corp.'s Slower PC Sales" says another report, just one among several. This cannot be good. It means that Microsoft's upcoming results will not impress (even it they beat already-lowered street expectations, as usual because it's easy to assure).

Chips B. Malroy says that he has "only seen about 3 comments new on Mini msft about layoffs, maybe in Oct." That's the blog where many anonymous Microsoft employees comment. Have any other readers noticed something about layoffs that are coming next month? Microsoft has had many rounds of layoffs in recent years because it's moving overseas to cut costs. This often means that the quality of products is reduced, not just working conditions and wages.

To repeat what was said at the start, Microsoft lost about half its value over the past decade (mostly under Ballmer's management) and one item of news says: "That's right, Microsoft is nearly $170 billion cheaper today than it was a decade ago. That's an eye-popping discount. Of course, there are plenty of stocks that have gone backwards during the past 10 years, however, most are just a shadow of their former selves."

Microsoft's market cap is well behind Apple's and in terms of brand value Microsoft is not doing so well, either. Its position fell over the years [1, 2, 3, 4, 5]. This is one of the more Microsoft-friendly ladders and in this specific one "third place is still occupied by Microsoft, the software giant." In some other surveys/ladders of this kind Microsoft is doing much worse (the UK one/s being the exception).

Here is a fascinating observation that we found. It just states the obvious:

It's to assuage worries that too much of MS's value is held overseas, resulting in tricky taxation situations. More than anything else this confirms one thing: Despite its PR, MS isn't in the business of serving consumers ... it's a money-making machine.


"Why Apple Beats Microsoft At Change Management" says this headline from Forbes and although we spend no time comparing Microsoft to Apple (it's the wrong comparison to have when we really deal with software freedom versus proprietary software, not brands), Chips B. Malroy insisted on pointing out (twice even) that Apple's hypePad (and to some extent Google Android too) is causing huge damage to Microsoft sales.

Recent Techrights' Posts

European Parliament and Council Directive on Privacy is Vanishing
"edited / censored some time more recently"
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Tuesday, October 28, 2025
IRC logs for Tuesday, October 28, 2025
Slopwatch: The March of Slopfarms, From UbuntuPIT to Linux Journal and to Various Fake Sites Still Promoted by Google News
It's so worrying to see what the Web has become
Links 29/10/2025: CISA, Ukraine, and Amazon Problems
Links for the day
[Teaser] The EPO's Spokesperson, a Cocaine User, Fancies Young Women
How's that for "optics" in the EU and Europe's second-largest institution?
How Will António Campinos Respond to the EPO's 'Cocainegate'?
That's the same thing we saw and still see when the press deals with enablers and partners of Jeffrey Epstein
Join Us Now and Share the News - Part IV: There Cannot be Free Software Without Free Press and Free Information
One day, one can hope, more people will recognise that for Software Freedom we need free press and free thinkers
Join Us Now and Share the News - Part III: Principled Stance Is Never Cheap
Protecting the truth and insisting that the general public is made aware of things that really happened isn't cheap
Join Us Now and Share the News - Part II: Because Scarcity of Accurate Information Breeds Collective Ignorance
we too will strive to share information that's aggressively suppressed
Gemini Links 28/10/2025: More New Arrivals at Geminispace, xkcd on "Document Forgery"
Links for the day
Join Us Now and Share the News - Part I: Defence of the Truth
This year we make a very strong, firm statement for truth, even if that means explaining our work to the top media judge in the country
Links 28/10/2025: Meta and Fentanylware (CheeTok) Age-Restricted Down Under, "Britain Needs China’s Money"
Links for the day
Links 28/10/2025: Mass Layoffs at Amazon and Charter to Cut 1,200 Jobs
Links for the day
The Cocaine Patent Office - Part II: The Person Who Planted Paid-for Fake News for the European Patent Office (EPO) is a Cocaine User, Friend of António Campinos, Now on Record as Having Been Arrested
Background: High-level manager at the European Patent Office caught in public with cocaine, arrested
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, October 27, 2025
IRC logs for Monday, October 27, 2025
Google News Drowning in Slop (and Slopfarms That Hijack About Half the Results)
Google News seems to be drowning in this stuff
Gemini Links 28/10/2025: "How to Maximize Your Positive Impact" and ASCII Art and Artist Attribution
Links for the day
PETA and Activism
Being staff or volunteer in PETA isn't easy
Big Blue, Huge Debt
debt will soar again
Links 27/10/2025: Mass Surveillance Sold as "AI", People Reluctant to Lose Physical Media
Links for the day
Parties and Milestones Again
we've begun putting up about 40 balloons
Techrights' 19th Anniversary: Bronze
Time to go back to preparing for this anniversary
Our Latest European Patent Office (EPO) Series Will Last Several Weeks, Will Ask the EPO Management and the European Union (EU) Very Difficult Questions
If nobody loses a job (or jobs) over this, then the EU basically became no better than Colombia or Nicaragua
Slopwatch: LinuxSecurity, UbuntuPIT, Brian Fagioli, and Google News
We focus on stories that are fake or LLM slop that disguises itself as "news" about Linux
Links 27/10/2025: Wikipedia Vandalism, Bruce Perens Opens up on Childhood
Links for the day
This Site Could Not be Done by LLMs Even If It Wanted to (Because It's Not a Parrot of What Other Sites Say)
LLMs have no knowledge or deep understanding
Microsoft is Disloyal Towards Its Most Loyal Employees
Against its most faithful enablers
19 Years, No Censorship
No factual information is ever going to be removed, more so if it is in the public interest
We Are Not a Conventional Site, That's Why They Hate (or Love) Us
Throughout the week this week we'll be focusing on the EPO
Following the Line of Cocaine All the Way to the Top
Even a million denials and spin-doctoring won't distract from the core issue
The Cocaine Patent Office - Part I: António Campinos Brought Corruption and Nepotism to the EPO, Then Came the Cocaine
High-level manager at the European Patent Office (EPO) caught in public with cocaine, the Office has some answering to do
Purchasing/Possessing Computers Isn't the Same as Controlling Computers
Let's strive to put computers back under the control of their users, no matter who purchased these (usually the users)
Gemini Links 27/10/2025: Alhena 5.4.3 and Fixing Bash
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, October 26, 2025
IRC logs for Sunday, October 26, 2025
Thankfully We've Made Copies of More Interesting Data From statCounter
If statCounter (the Web site or the 'webapp') vanished overnight, we'd still have something left of it
More Silent Layoffs at IBM/Red Hat
when the media counts such layoffs or presents tallies the numbers are very incomplete