Microsoft: Still a fair bit of juice left

Gobsmacked. That’s what the Brits call it when something jaw-dropping happens and you can’t think of anything to say. Microsoft’s blockbuster quarterly results kind of fall into that territory for me. I have to admit that I’m one of those skeptics who has been talking about the gigantic software maker as yesterday’s company: slow-growing, boring, etc.

Don’t get me wrong — I still think that Microsoft is most of those things, except maybe for the “slow growing” part. Who knew that the company had a quarter like that in it? Profit up 23 per cent to $4.3-billion, revenue up 27 per cent to $13.8-billion. To put that in perspective, Microsoft made almost $50-million in profit a day during the quarter, which means it took less than a week to pay for its recent Facebook investment.

Apparently the skepticism about Vista (which I have also shared) has been more or less misplaced (although it is important to remember that the 88 million copies sold are to retailers, not to consumers), and a strong Halo 3 launch also boosted the software behemoth’s bottom line by a substantial amount. And yes, all you Microsoft critics can rest easy — I know that a lot of those Vista sales and Office sales are a result of Microsoft’s virtual monopoly.

The only issue for Microsoft now is the curse of inflated expectations: can the company produce a quarter like this one every time? Unlikely. And if there’s one thing the company likes to do, it’s to talk down expectations and then outperform. That could be a little harder to do now than it has been in the past.

4 thoughts on “Microsoft: Still a fair bit of juice left

  1. Mathew,

    I don’t think the scepticism has been misplaced.

    Vista still is a nightmare, but customer satisfaction and market success have little do do with each other in a monopoly. Vista sells, because we’re buying computers, and have no choice. It’s clear from their 10-Q.

  2. I know that, Zoli — that’s why I mentioned it in the post. But there were other growth drivers as well.

  3. Yes, Microsoft is great – at making money – this has been the case for a long time. That hardly makes them a great company however.

    The Halo sales are impressive, but I’ve long thought the Xbox division was the only division within Microsoft that seemed to do things that made sense, that appears to be panning out now.

    The 88 million is a big number, but you hit it right on the head, Microsoft won’t give out the number that actually sold to consumers. As I’ve said before it’s like if a crappy movie opened at #1 at the box office because theaters are giving away tickets due to long-standing relationship with the studio behind it.

    As you noted, the likelihood they have another quarter like that every quarter is not so good moving forward. Halo 4 isn’t coming out next quarter and Vista will still be Vista. Expectations could be their worst enemy now.

  4. As much as we all hate microsoft, I bet you they aren’t worried a bit about expectations – after all, they’ve had strong growth for the last 88 or so quarters.

    I don’t think that the fact people are buying more copies of Microsoft’s Windows XP rather than Microsoft’s Windows Vista is going to bother them too much.

Comments are closed.