Saturday, January 21, 2012

Shiny Pennies in Microsoft's Quarter

We wrote in July 2011 about how Microsoft shouldn't give up its foray into search with Bing!  Looking at the most recent quarter, the WSJ notes a few items from the corporate earnings release:

  • Revenue for the company's servers and tools products, which form the backbone of enterprise networks and private clouds, jumped 11%, as the unit's income improved 17%.
  • At the business division, which earns most of its sales from Microsoft Office, sales rose 2.8% as profit climbed 1.6%.
  • Sales at the entertainment-and-devices business, which houses the top-selling Xbox video game console--advanced 15%.
  • In online services, revenue climbed 10%. Microsoft has invested heavily in the unit, launching a splashy advertising blitz last year to promote Bing, which is the second-most-popular search engine in the U.S. behind Google, according to comScore Inc.
The market focused on the negatives of slower PC shipments and on slowing sales for disc-based Office.  We know, we know!  Servers and tools, whether for the cloud or not, are critical, along with the related consulting services, for corporate IT's support of global business, and Microsoft is clearly a player.  Xbox has become a solid platform from which to run family entertainment, television, and multimedia.  Finally, Bing which was to have been sold off according to Wall Street wisdom, is now a distinct and viable number in two in search engines.

We also wrote recently on our perceptions about Windows 8, which if successful should begin a meaningful cycle of laptop replacement for machines that can optimize the new operating system. 

The stock has had a terrific run off the financial crisis low of $16 or so, but it continues to bear watching. 

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