Microsoft (MSFT) / Bill Gates

[millionairemind]

Microsoft Holders Say Ballmer's Web Spending Masks Idea Drought
By Amy Thomson

July 23 (Bloomberg) -- Microsoft Corp. Chief Executive Officer Steve Ballmer says he plans to spend hundreds of millions of dollars to fix the company's unprofitable Internet business. His investors say they want proof he knows what to do with the money.

After walking away from six months of on-again, off-again talks about buying all or part of Yahoo! Inc., owner of the No. 2 Web search engine, Ballmer has left shareholders wondering if he has a plan B.

Microsoft, the biggest software maker, has lost about $90 billion in market value this year as Ballmer vacillated on Yahoo and failed to show how he would crack Google Inc.'s dominance of Internet advertising. Shareholders will look for ideas at a meeting with Ballmer tomorrow, said Kim Caughey, a Fort Pitt Capital Group Inc. analyst in Pittsburgh.

``I'm a little concerned; I'll be honest,'' said Caughey, whose firm manages $1.2 billion and owns Microsoft shares. Ballmer needs to ``put a hot, bright light of clarity on where's all the money going.''

Ballmer, along with Chief Financial Officer Chris Liddell and the presidents of Microsoft's three businesses, will address analysts and investors tomorrow at company headquarters in Redmond, Washington. Spokesman Frank Shaw declined to comment because the information is scheduled for release at the meeting.

Drag on Earnings

The company has spent about $9 billion in the past 2 1/2 years building its Internet business, according to Directions on Microsoft, a research firm in Kirkland, Washington. Microsoft doesn't provide figures.

Liddell said on a conference call after last week's earnings release that spending on the online business, which includes the MSN Web site and Live search engine, will rise by ``several hundreds of millions of dollars'' in the fiscal year that began July 1.

The online business is in a ``period of significant investment'' and will ``be a drag on an otherwise exceptionally good performance'' this year, Liddell said on the July 17 call. Net income rose 42 percent last quarter to $4.3 billion on an 18 percent sales increase.

Microsoft also lowered its full-year earnings forecast. The stock sank 6 percent the next day. It rose 16 cents to $25.80 in Nasdaq Stock Market trading yesterday, and is down 28 percent this year.

The online division is Microsoft's smallest with $3.21 billion in sales last year, or 5 percent of the total of $60.4 billion. The business lost $1.23 billion last year, double the previous year's loss, as it hired more people, built computer data centers, and made acquisitions including $6 billion spent on Seattle-based ad company AQuantive Inc.

`Backup Plans'

In May, Ballmer abandoned his bid for all of Yahoo. The acquisition would have tripled Microsoft's share of U.S. online queries. Sunnyvale, California-based Yahoo rejected a bid of $47.5 billion.

He then attempted to persuade Yahoo to sell its search business. Instead, Yahoo struck a deal to carry ads from Mountain View, California-based Google.

Ballmer next may look at Time Warner Inc.'s AOL unit, said Laura Martin, an analyst at Soleil Securities Group Inc. in Los Angeles. ``AOL is more valuable to Microsoft in a world where Yahoo is aligned with Google,'' Martin said in an e-mail.

``It seems like somewhere there's just a whole bunch of backup plans and he's working through all of them,'' said analyst Tony Ursillo at Loomis Sayles & Co. in Boston, which manages more than $135 billion and owns Microsoft shares.

Not Chasing Microsoft

Ballmer should fund a startup company within Microsoft that would have a relatively small budget but creative freedom, Ursillo said.

``It would be nice if they could somehow create a group from scratch there that could tackle this space with some new ingenuity and someone could chase Microsoft for once,'' he said. ``The consistent element throughout that series of `me too' investments has been heavy investment of capital.''

Advertisers in the U.S. will spend $51 billion by 2012 on Internet promotions, according to technology researcher EMarketer Inc. in New York.

Microsoft had 9.2 percent of U.S. searches last month, up from 8.5 percent in May, Internet site tracker ComScore Inc. in Reston, Virginia, said. Google's share fell to 61.5 percent from 61.8 percent, while Yahoo's grew to 20.9 percent from 20.6 percent.

Yahoo Possibility

A deal with Yahoo may still be possible. Yahoo gave billionaire investor Carl Icahn three seats on its 11-member board this week to end a proxy fight before its Aug. 1 annual meeting. Icahn had pressed to replace the Yahoo board and make the sale to Microsoft.

Yahoo's value may be declining, Fort Pitt's Caughey said. Yahoo yesterday said its second-quarter profit fell 18 percent to $131.2 million, or 9 cents a share, as the Internet company spent more to develop new technology.

``Part of what Microsoft is buying is that base,'' Caughey said. ``If that base is shrinking, sorry, you don't get the same price.''

The bid for Yahoo shows Ballmer is aware that Microsoft has been lacking in ideas for the Internet age, said Andy Miedler, an analyst at Edward Jones & Co. in St. Louis.

``They know they were behind in their innovation,'' said Miedler, who has a ``hold'' rating on Microsoft shares.

[millionairemind]

For those interested in Cloud Computing, there is an article in this weeks' Economist that took an indepth look at the new tool.

Microsoft opens a new Windows in the ‘cloud’By Richard Waters in Los Angeles

Published: October 27 2008 20:16 | Last updated: October 27 2008 20:16

Microsoft on Monday unveiled an early version of its Windows operating system that is designed to run over the internet, marking a milestone in the company’s attempt to reposition its core software business around the web.

Ray Ozzie, chief software architect, called the new software “Windows in the cloud” – a reference to “cloud computing”, which relies on running applications in massive centralised data centres, rather than on a company’s own servers or on desktop PCs.

In spite of releasing a limited version of the software for developers to experiment with, Microsoft did not say when the full version would be released or disclose how it would make money from the project.

For Microsoft, the web-based operating system, named Windows Azure, signals a potentially disruptive shift to a world in which it tries to make money from internet-based computing through subscriptions and advertising.

“The significance is immense,” said Sandeep Aggarwal, an analyst at Collins Stewart.

He said that the new revenues the company would make from its web push would be complementary to its traditional software licensing business, rather than replacing it.

But he also warned that the experience of other companies that have tried to create subscription businesses around software – an approach known as “software-as-a-service” – showed that “margins are very low and it takes years and years to show profitability”.

Mr Ozzie said that Windows Azure was aimed at “an entirely new tier of computing: the web tier”.

The software was intended to support a new web-based software infrastructure on which mass-market services could be built and deployed, making it far more ambitious than earlier generations of centralised computing, he said.

Mr Ozzie outlined a vision for web-based computing with Azure as the basic foundation, in much the same way that other versions of Windows support computing on PCs, servers and mobile handsets.

To run on top of this, Microsoft outlined web-based versions of its existing tools for software developers so that they could create applications to take advantage of the new web-based computing power, and said the technology would also underpin Microsoft’s own online consumer and business services.

“We ourselves are betting on our own platform with our own apps,” Mr Ozzie said.

The announcement was made before an audience of several thousand independent developers at a Microsoft conference in Los Angeles.
Copyright The Financial Times Limited 2008

[kennynah]

i;ve not even started using Vista....

[iam802]

Microsoft on Monday unveiled an early version of its Windows operating system that is designed to run over the internet, marking a milestone in the company’s attempt to reposition its core software business around the web.

They have been attempting to position for the web for the past 10 years, right?

They nailed Netscape. But, can't kill SUN, RedHat, Google, Apple etc.

And Sony and Nintendo aren't going to make it easy for them at the game console area either.

This is one big company that has some cash but little innovation.

[winston]

i;ve not even started using Vista....

You did not miss much...

They are still a lot of stuff that cannot be run on Vista ...

[winston]

Time to buy Microsoft ...

Big news for Microsoft... A Chinese court convicted 11 people of pirating Microsoft products worth $2 billion.

The counterfeiting syndicate was huge. It had a larger production facility than Microsoft has in Europe, the Middle East, and Africa combined. The group distributed fake copies of 19 Microsoft products in 11 languages and 36 countries.

It's a long-held joke (with a great deal of truth in it) that there was only one legal copy of Windows in China, and all the rest were pirated. Microsoft's competitive advantage is that it's the incumbent operating system of choice, and that its products are well protected by U.S. intellectual property law.

Now that China is showing some respect for Microsoft's intellectual property, the company should make a lot more money in that country going forward. In addition to its competitive advantage, Microsoft has a pristine, triple-A balance sheet and gushes free cash flow.

– Dan Ferris
Extreme Value

[kennynah]

i think this wont make a damn difference... there'll be another group who will surface.... MS products are too damn expensive for the Chinese and most people.... compared to a totally workable RM10 version...

[winston]

When you buy a PC or lap-top from Lenovo in China now, it is loaded with an original Microsoft software. It's the same for all the major brands.

Now, if you want an English version, then that one is pirated.

[iam802]

Microsoft Seals The Deal With Verizon

http://www.mediapost.com/publications/i ... 3&p=988455

Beating out rival Google, Microsoft announced a five-year deal with Verizon Wireless to be the default search provider on the wireless carrier's phones as well as handling mobile advertising services.

The long-rumored agreement with the nation's No. 1 wireless operator gives Microsoft a stronger position to challenge Google's commanding share of the mobile search market and make inroads into mobile advertising. Microsoft CEO Steve Ballmer announced the deal Wednesday in Las Vegas at the Consumer Electronics Show.


.....................

[millionairemind]

Even MSFT is not spared....

Jan 23, 2009
Microsoft to axe 5,000 jobs

SEATTLE - MICROSOFT Corp will make the first mass layoffs in its 34-year history, cutting 5,000 jobs as demand for personal computers falls and even one of the world's richest companies gets burned by the recession.

The company announced the cuts on Thursday as it reported an 11 per cent drop in second-quarter profit, which fell short of Wall Street's expectations. Microsoft shares plunged nearly 12 per cent.

'We're certainly in the midst of a once-in-a-lifetime set of economic conditions,' Chief Executive Steve Ballmer said during a conference call. With less access to credit, businesses and consumers are spending less and stretching the life span of their existing computers.

The biggest names in the technology sector have been no stranger to layoffs lately. Giants such as chip maker Intel and even Google are among the companies that have pulled back on jobs to hunker down in the recession.

At Microsoft, the cuts appeared to reflect uncertainty about when times will get better. The company said it could not issue a forecast for earnings and profits for the rest of the year.

The software maker was already facing tough problems, among them its inability to snag a significant share of the lucrative Web search advertising market from leader Google. It tried to fix this by buying Yahoo and pouring money into its own technology, all the while relying on Office programs such as Word and Excel, and on Windows to keep bringing home huge profits. Now, with the recession pinching software earnings, Microsoft's problems seem even harder to fix.

Microsoft, which has US$20.7 billion (S$31 billion) in cash on hand, said its business prospects were hurt by the deteriorating global economy and lower revenue from software for PCs.

The holiday quarter of 2008 was the worst for the PC market since 2002, with computer shipments declining about a half of 1 per cent, according to IDC, a technology research group.

Making matters worse, the one type of PC consumers have warmed to in tight times - the low-cost, low-power 'netbook' - actually cut further into Microsoft's earnings. The tiny portable computers run on Windows XP, which is older and less profitable for Microsoft than Windows Vista.

The layoffs, starting with 1,400 on Thursday, will affect workers in research and development, marketing, sales, finance, legal and corporate affairs, human resources and information technology, and mostly in Redmond, Wash., where the company is based.

The cuts are expected to touch virtually every division and include the computer programmers who write code for existing and future applications.

Employees reached by The Associated Press declined to comment on the news, saying it was against company policy to speak to reporters.

Microsoft had never done layoffs on this scale before - it had only made relatively limited staff cuts after acquiring companies or reorganizing product groups.

The software maker won't stop hiring entirely. During the conference call, Mr Ballmer said the company will add new jobs in the next 18 months to support key areas, including web search, so the total number of employees will drop by 2,000 to 3,000. Microsoft employs 94,000 people overall.

'I would have expected a more aggressive cut,' said Cowen and Co analyst Walter Pritchard. 'They're trying to have their cake and eat it too, in terms of not cutting and hoping to have everything they were going to have before.'

The software maker is trimming costs for travel, freezing wages, scaling back a massive expansion to its Redmond campus and looking to cut what it spends on contractors and vendors by up to 15 per cent.

Mr Ballmer said Microsoft cut operating expenses by US$600 million in the quarter, but that it wasn't enough.

The job cuts will reduce operating costs by US$1.5 billion as Microsoft prepares for lower revenue and earnings in the second half of the year, the company said.

Chief Financial Officer Chris Liddell said during the call that Microsoft will write down severance costs for the 1,400 workers laid off on Thursday in the third quarter, and record the rest as they occur. Mr Liddell said he expects the total charges to be less than US$100 million.

Mr Liddell told analysts to expect the second half of the year to look about as grim as the second quarter, with weakness persisting in Windows sales as PC shipments remain depressed.

Beyond the next six months, Mr Ballmer added that he doesn't expect the technology sector to bounce back to recent highs. Instead, said he expects the stagnation to persist for a year or more, followed by slow growth.

Microsoft said profit in the last quarter fell to US$4.17 billion, or 47 cents per share, from year-ago earnings of US$4.71 billion, or 50 cents per share.

Total revenue edged up 2 per cent to US$16.63 billion.

The results missed Wall Street's forecast for earnings of 49 cents per share on sales of US$17.08 billion.

Microsoft shares fell US$2.27, or 11.7 per cent, to end at US$17.11 after sinking to a 52-week low of US$17.07 earlier in the day. -- AP