MSFT Earnings In Line

Hmm it looks like a pretty good quarter for MSFT.

For the three months ended Dec. 31, the Redmond-based software maker reported earnings of $3.65 billion, or 34 cents per share, up from $3.46 billion, or 32 cents per share, in the same period last year.

The results included a one-time tax benefit of $108 million, or 1 cent per share. Without the one-time benefit, Microsoft met the expectations of analysts polled by Thomson Financial, who were projecting earnings of 33 cents per share on revenue of $11.96 billion.
Microsoft said revenue rose 9 percent to $11.84 billion, up from $10.82 billion in the same period a year earlier.

They also guided higher but it looks like Xbox 360 fell short of estimates and that worries me. I knew that they would have shortages in components and this kind of thing is just what Sony and Nintendo is looking for. If MSFT stumbles here then they can kiss the console lead goodbye for another cycle.

This opportunity was tailor made for them. They had a Christmas all to themselves with plenty of buzz going in. It could have been a slam dunk if they concentrated on rolling it out in the US. But they may have blown it by going global before they had the units to do so.

They should have at least delayed the Japan launch until after Christmas. I know Christmas is getting big in Japan but it is nothing like the insane spending juggernaught that it is here in the US. They could have then concentrated all of their juice on rolling it out big in Japan to capture a bigger amount of sales. Instead they fell shot.

The Xbox 360 made a huge splash when it debuted on Nov. 22 in North America, where it sold 900,000 units by Dec. 31 and demand has outpaced supply. It also got a warm reception in Europe, where sales hit 500,000 at year end. But it was a different story in Japan, where response was tepid and sales came in under targets at around 100,000.

Yup 100,00 measly units was all they could muster in Japan. Oh well, I guess it may be time to take MSFT off of your watch lists. I think it will be trade ranged for a long time.