Microsoft Still Struggling With Vista And Office
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Bill Gates is on holiday, leaving CEO Steve Ballmer to brief analysts and journalists late last week in Microsoft’s most important investor session of the year.The general verdict: Steve’s promised “new” Microsoft failed to quash fears that Vista will be delayed again, which
means that sales and what the trade calls “a new technology cycle tied to the upgrade” look like being again put on hold.

The uncertainty led Microsoft’s shares to close down two percent at $23.87 on Thursday, despite enthusiastic talking up of  the proposed Zune music player project, and the optimistic outlook for Xbox 360. The Microsoft crew
admitted they’ll lose money on these new directions until 2008 ­ but the shares recovered 38c on Friday.

What triggered the doubts was this statement by Kevin Johnson, co-president of the platforms and services unit: “We will ship Windows Vista when it is available.”

Vista is already five years in the making. But Microsoft has postponed its debut several times. Quality assurance delays have put off the home version of Windows until after Christmas, although hopefully the corporate version
should be out in November.

Goldman Sachs analyst Rick Sherlund noted the cautious comments: “When they hesitate, that’s confirmation we were right.”

Others said further Windows delays could slowdown plans by businesses and consumers to upgrade computers and software.

The “new Microsoft” is being built on four pillars, Ballmer said in opening comments. Upgrades to two core products – Windows and Office – should act as engines to drive growth and buy it time to erect two new pillars, its
Internet and Xbox game businesses.


More losses on games, phones

Microsoft forecast another year of losses at its mobile phone, games and devices business before turning a profit in the business year ending June 30, 2008.

Executives said the prospect of another year of losses at the Xbox game unit – with the planned Zune media player joining the games machine in a bruising marketplace battle – continue to weigh on the stock price. The division posted a loss last year.