Monday, 23 July 2012

Microsoft launches Office 2013 and announces it's first EVER loss. 492 million us dollar loss. CEO Steve Ballmer hangs on.




Microsoft really warrants a blog of its own, given that it's in the news so often now. And none of it good.


On Friday it has reported its first loss, ever
492 million usd of a loss versus a 5.87 billion profit a year ago.


Hot on the heels of the controversial acquisition of Yammer in June by Steve Ballmer which left everyone scratching their heads. 1.2 billion? You're kidding? http://streamabout.blogspot.ie/2012/06/microsoft-acquires-yammer-for-12.html


Then the controversy about Steve Ballmer work practices in a Vanity Fair article which caused rumours before it was published http://streamabout.blogspot.ie/2012/07/vanity-fair-august-article-to-add-to.html


And worse problems once it was http://streamabout.blogspot.ie/2012/07/vanity-fairs-expose-of-microsoft-and.html


And the NBC divorce last week http://streamabout.blogspot.ie/2012/07/microsoft-and-nbc-divorce-from-msnbc-it.html


All of this in less than 4 weeks and yet, CEO Steve Ballmer hangs on in there. Now comes the loss. 


Critically it's a watershed, because it's the first ever - but in reality, it's a loss because of an adjustment on the ridiculous 2007, 6.2 billion usd investment in an online business, aquantive, or so Microsoft would argue. However, if you make an awful investment of 6.2 billion usd, you have to adjust for it. In making the acquisition you took the risk that it would put profits at risk.


So there's no escaping it and the headlines will be Microsofts first loss.


Windows sales too in those figures, on further analysis, weakened with a 13% drop in Q4 ending in June although an accountancy policy change has also made the drop look worse. Even allowing for that adjustment, its sales are down.


Hopes more and more being pinned on the October release of Windows 8. Although everyone is forecasting a decline and a weakening in computer sales despite the fact that insiders are saying, it's a good version. With no one to buy, it won't matter in some ways.


This week Steve Ballmer also launched the latest version of Office (called 'Office 2013' surprisingly) which runs on around 90% of business pcs with a new focus on touchscreen and social interaction contributing more than half of microsoft's profits (or losses). So it's important and it was well received. 


The range of applications - Outlook, Excel, Word, PPT and one Note have been updated and integrated through the Skydrive (Microsofts cloud service) for instant updating. Skype is fully integrated too.


Definitely, the widely held view that this was a good launch and a step up. Weakening computer sales though, is outside of Microsoft's control and the deluge of bad publicity is gaining momentum. 


In particular, a loss, is a turning point for this money making machine. It's hard to think of anything else that could put more pressure on CEO Steve Ballmer. 


I'm actually amazed he's still standing this weekend and clearly, has a lot of friends from within, notably Gates who appointed him in the first place and at the time, surprisingly.


Microsoft is now a company in decline and as Steve Jobs said, it will remain so with Ballmer at the helm. It was the great Internet company, the great software company, the great browser supplier and great at a lot of things.


Apple's iphone does more business than the whole of Microsoft now.
It ain't what it was, anymore.


Hard to imagine that investors aren't beginning to think, it's time to get out.
Very few will be piling in.