Investors are not happy with Microsoft’s future growth prospects as the big IT Company keep losing ground to the likes of Google and Apple. As a result their shares fell 4 percent, hitting a six-week low, despite thge Company delivering a 15 percent growth in revenue, from sales of Office 2010 and the successful launch of the Kinect motion controller for games.
Investors are not happy with Microsoft’s future growth prospects as the big IT Company keep losing ground in to the likes of Google and Apple. As a result their shares fell 4 percent, hitting a six-week low, despite thge Company delivering a 15 percent growth in revenue, from sales of Office 2010 and the successful launch of the Kinect motion controller for games.
Investors are concerned about Microsoft’s continuing lack of traction in the tablet and mobile phone arenas and continuing large losses in its online software business.
Microsoft reported net income of $6.63 billion on sales of $20 billion, up 15 percent, for the quarter. Strong uptake of Office 2010 drove business division revenue up 24 percent to more than $6 billion. Entertainment division revenue climbed 55 percent on the back of the successful launch of the Kinect, which sold 8 million units in its first 60 days on the market.
However Deutsche Bank rated the result disappointing, telling clients results for its Windows business “point towards PCs being cannibalised by tablets.”
The analyst added that “investors continued to be concerned about [Microsoft’s] lack of traction in the tablet and mobile space.”
JP Morgan said concerns regarding tablets will “hang over Microsoft like a dark cloud” and wondered “if the slew of new Android tablets expected to flood the market in the June quarter will make recently reduced PC unit shipments too optimistic.”
Others were more concerned about the continuing losses in the online software market: in the latest quarter its business reported a $543 million loss. It has lost a total of $2.5 billion over the past four quarters.
Investment Web site Silicon Valley Insider called the continuing losses over the past 20 quarters – see chart, page 1 – “astounding” and said in most business circles this would be considered a “failed business”.
It adds: ” One of shareholders’ biggest complaints against Microsoft is the fact that the company’s stock price is so stagnant, and essentially has not traded more than $10 above or below its current stock price in the past decade. How long will investors wait for Microsoft to improve its stock-market performance, when other companies like Apple and Google have run circles around it when it comes to stock performance?”
– The result was mired in further controversy after market information company Selerity was able to publish the results several hours ahead of their official release. Selerity – which sells market data it culls from the Web to investors – says it was able to use special software it has developed to access Microsoft’s press release disclosing earnings on a public area of the software maker’s site ahead of the release.
The software involved combs Web sites, e-mails and press-release services for information that investors and their computerised trading programs can act upon.
Mark Murray, a spokesman for Microsoft, said the company’s “preproduction work” is done on servers that aren’t connected to the Internet and not normally accessible to search software.