Reality Check

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July 22, 2011

Microsoft Announces Record Revenue

By Robert Hashemian, Vice President of Web Development


Last night Microsoft (News - Alert) released the revenue figures for its latest quarter and it didn't disappoint. At $17.37 billion, it was the best quarter ever and in terms of earnings, it added $5.87 billion to its already large pile of cash.

The street is reacting to the earning release with a yawn and the stock is just going sideways. People have been expecting that at some point devices from the likes of Apple and Google (News - Alert) will overtake the desktop and that would mean the end of good times at Microsoft. True that devices have made inroads, but the rumors of the demise of PC's and laptops have been greatly exaggerated.

I can't think of any business that can operate on smartphones and pads alone, and so for the foreseeable future Microsoft will continue to enjoy healthy sales. Of course the street doesn't just want stability, it also looks for growth. This has certainly become a stumbling block for Microsoft. Growth means expanding into new areas and capturing sizable market shares, and that has been challenging for Microsoft.

So challenging is that area that Microsoft resorted to a bit of funny math to describe the small growth of its search engine, Bing:

"Bing's U.S. search share increased 340 basis points year-over-year to 14.4% this quarter."

Who describes their market share in basis point units? But 340 sounds more impressive than 3.4% and when your market share is 14.4%, you'd better be making your statements bolder.

It's not hard to see why despite the occasional calls for his ouster, Ballmer still remains at the helm of Microsoft. Shareholders may not be excited with his performance or the current image of Microsoft, but the company is still delivering blowout results, and until that remains true, replacing Ballmer may be viewed as a risky move.


Robert Hashemian is VP of Web Development for TMCnet.com with a keen interest in financial markets. To read more of Robert’s articles, please visit his columnist page. He also maintains his personal Web site at www.hashemian.com.
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