November 7th, 2006

What do Microsoft's quarterly numbers mean?

So Microsoft made a $3.5 billion profit on $10.8 billion in revenue this quarter:
http://seattlepi.nwsource.com/business/290188_msftearns27.html

It's quite impressive. What impresses me is they managed to spend $7.3 billion. That's a little over a 30% net profit margin, which is impressive but not the spectacular 80% legends say you get from software. That's gross, not net: what's important is what it actually cost them to stay in business this quarter. If their income drops 30%, they stop making money (unless they cut expenses).

Much more details here:
http://www.microsoftmonitor.com/archives/2006/10/microsoft_fisca_6.html

Including that over $3 billion of their current quarter's revenue is "recognized unearned income" which sounds darn familiar:
http://www.fool.com/portfolios/rulemaker/1999/rulemaker990120.htm
http://www.pbs.org/cringely/pulpit/1999/pulpit_19990527_000396.html

Of course the big that annoyed http://minimsft.blogspot.com the most was the 40% increase in headcount. Perhaps I'm being unreasonably optimistic, but it does seem like replacing "gravity" with "Brooks' Law" can still turn an incredibly massive object into a black hole that nothing new ever comes out of...