Wow, they missed by .02 cents and they even brought out a bad outlook for the next few quarters. At least the reasoning about why it will be incuring these higher expenses is sound. They are trying to become a market leader in other spaces which seems sound:
In an interview with The Associated Press, Chief Financial Officer Chris Liddell said its third quarter earnings and fourth quarter outlook were below Wall Street's estimates in part because the company has decided to increase research and development spending in areas where it isn't a market leader but sees potential.
These include things like security, high-performance computing and voice over Internet Protocol, VoIP, or Internet calling. In the current quarter and beyond, Microsoft also plans to invest more heavily in its Internet properties, MSN and Windows Live, he said.
It also is taking it on the chin from the Xbox360 shortages. They must be paying top dollar to get components so they can rush more machines to market. I wonder which components are the ones that they are paying more for. Could be worth investigating since that company will probably have a better then expected quarter:
In the third quarter, Liddell said Microsoft also had higher-than-expected expenses for Xbox 360, because of the cost of rushing to get consoles into consumers' hands amid a shortage. Microsoft loses money each time it sells an Xbox 360, although the eventual goal is to break even.
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