Microsoft (MSFT -11%) is plunging following its FQ4 miss, and is taking other PC-related names...

Microsoft (MSFT -11%) is plunging following its FQ4 miss, and is taking other PC-related names lower with it. HPQ -4.2%. INTC -1.4%. NVDA -2.2%. Goldman (Sell) predicts lower Windows price points for smaller/touch devices and emerging markets piracy will lead Windows sales growth to lag already-weak PC shipment growth. Nomura (Buy) thinks activism (led by ValueAct?) is now more likely, and could drive shares higher. Some bright spots: SQL Server and System Center revenue grew 16% and 14% Y/Y; Lync revenue rose 30%; over 50% of the Fortune 500 is using Azure; and "Windows Phone" revenue (much of it consists of Android royalties) rose by $222M . (FQ4: I, II, III) (transcript)

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Comments (20)
  • wigit5
    , contributor
    Comments (4365) | Send Message
    it'll take a special group of people to sink this ship.... really special
    19 Jul 2013, 12:00 PM Reply Like
  • Yokyok
    , contributor
    Comments (327) | Send Message
    just fire somebody already
    19 Jul 2013, 12:12 PM Reply Like
  • David Pinsen
    , contributor
    Comments (2332) | Send Message
    Maybe ValueAct will be able to shake things up, if it gets a seat on the board. Incidentally, when Microsoft hit a new high last month, I posted an instablog about a couple of ways to hedge it. I just posted an update on how those hedges reacted to Friday's drop:
    19 Jul 2013, 11:49 PM Reply Like
  • heatnup
    , contributor
    Comments (92) | Send Message
    "emerging markets piracy will lead Windows sales growth to lag"


    If by that comment do they mean that these markets will install pirated Windows 8 operating systems? If so, have you tried this recently, Microsoft has made it almost completely impossible to pirate windows 8 and keep it running for more than a few months if you use the Internet. I do not do it, no reason, but I have seen others try. If Microsoft has done one thing well in the last couple years, it is block piracy of new software. And now they are canceling TechNet which will kill just about the rest of all piracy.
    19 Jul 2013, 12:29 PM Reply Like
  • Stock Market Mike
    , contributor
    Comments (3787) | Send Message
    Piracy of Windows in emerging markets has always been huge - and when they do get sales, the pricing is paltry at $5-20 per copy. (rather than $100+ as in North America) I don't see that as significantly affecting profit/revenue... or even growth, if you consider piracy a $0 sale that adds to growth.


    "If by that comment do they mean that these markets will install pirated Windows 8 operating systems? If so, have you tried this recently, Microsoft has made it almost completely impossible to pirate windows 8 and keep it running for more than a few months if you use the Internet."


    I doubt that. I know college students that have been running pirated versions from launch day with no maintenance required. Choice of crack probably matters the most. I know of one launch-day Win7 crack that still functions, but most have had to continually be patched/updated to keep ahead of Microsoft.
    19 Jul 2013, 01:00 PM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
    What's really amusing about people who pirate stuff is, those same people go out and bitch about no jobs and poor economy... without realizing that they are part of the problem...
    19 Jul 2013, 01:07 PM Reply Like
  • heatnup
    , contributor
    Comments (92) | Send Message
    Yes and those college students use special crack programs that work, but the often need to redo the hack on Windows 7 and 8 on a regular basis a you mention.


    It would be impossible for any regular no tech user to run a hacked windows 7 or 8 for very long now without some intervention. You could not sell these machines to someone. With that said, alot of people are still using hacked XP, but they will have to upgrade soon. So I still don't get how this matters much going forward.


    And Windows is one thing, Office is a completely different animal, Microsoft has really fixed thins with office especially on 365 with its subscription linked to a live account that tracks each machine. VERY hard to crack.
    19 Jul 2013, 01:17 PM Reply Like
  • onyxtape
    , contributor
    Comments (17) | Send Message
    Where there's a lock, there's a key. There's no "impossible".


    I know the team lead there who does the security stuff. Some guy in Eastern Europe will break their security scheme. It takes his team a month to figure out how they did it, and another couple weeks to fix it. Then some other guys in Asia or Eastern Europe will break into it again in 2 days. These guys have lifetime job security.
    19 Jul 2013, 01:39 PM Reply Like
  • Andy Zelenak
    , contributor
    Comments (411) | Send Message
    I've been on the other side of this, where Win7 comes to think it isn't genuine (it was). Then you get a black screen and constant interruptions. Worst virus I've ever had, basically, put there by windows itself and damn near impossible to get rid of
    20 Jul 2013, 12:59 AM Reply Like
  • lildimsum7
    , contributor
    Comments (683) | Send Message
    I guess you haven't heard of Windows Loader...
    20 Jul 2013, 09:57 AM Reply Like
  • Stock Market Mike
    , contributor
    Comments (3787) | Send Message
    Andy: I too have had that happen. I also had a copy of Windows XP permanently deactivated back when Microsoft was aggressively disabling copies.


    Probably my biggest annoyance with WinXP was how it wouldn't let you logon to install network drivers if your machine wasn't activated. Just how do you activate without network drivers and with phone activation disabled? PITA! Had to reinstall XP SP2 overtop to rollback that behaviour - activate, then re-patch to SP3.


    DRM seldom affects its intended audience (pirates) and usually limits its impact to legitimate customers.


    wigit5: I'm surprised you got 8 likes. Your statement couldn't be further from the truth. The unfortunate reality is, to get jobs you must have skills - and to get those skills, you must have familiarity with the software - and to get that familiarity, you must have access to the software. Some companies are good about offering cheap educational licenses, but many are not, or they only do it for certain regions, or they strip so many features out that it's irrelevant compared to the Pro versions. Since the software that is in highest demand costs $1000+ per product, you would likely have to pay $40,000+ to buy it all. Thus, the pirates get ahead, get the skills, get the jobs, and although they never paid for any of the software, the businesses that they eventually work for do pay for it. The moral individuals that refuse to pirate fall behind and have a tougher time.


    Thus, your statement about pirates complaining about lack of jobs and the economy is likely inverse to reality.


    In most 2nd world countries, a high ~90's percentage of students are pirates. (Ex: ~97%) It's just accepted as what you do. In first world countries, only a high ~80's percentage are pirates. (More than 4/5 or maybe 5/6)
    22 Jul 2013, 02:00 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message


    I bet you get surprised a lot in life.
    22 Jul 2013, 08:27 AM Reply Like
  • twist54
    , contributor
    Comments (246) | Send Message
    BTW, HPQ is not just a PC company......
    19 Jul 2013, 12:54 PM Reply Like
  • investingInvestor
    , contributor
    Comments (2578) | Send Message
    Maybe Mr. Market has this situation wrong. If Microsoft lowers the WINTEL tax on devices, the ecosystem's HW vendors keep more money. If Microsoft Windows 8 is slowly dying, the HW vendors use Linux/Android instead and keep more money. More money equals more growth.


    As PC device sales drop year after year, mobile smart devices way more than make up for that drop. Anticipate that mobile smart devices continue to ramp up to 2-3 billion in use (1.5 per person in developed, 0.5 in developing). Anticipate that IoT sensor devices continue to ramp up to 100-500 billion in use. This is the sixth wave of computing. Some companies have already been left behind.
    19 Jul 2013, 01:12 PM Reply Like
  • 8747S1115R
    , contributor
    Comments (292) | Send Message
    I don't understand why no one is talking about MSFT's dividend. They have raised it in the fourth quarter for the past three consecutive years, last I checked their payout ratio was only 25%. I think we are in for an above average raise by the end of this year. I was buying @31.40 today. LONG!
    19 Jul 2013, 09:14 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1416) | Send Message
    Because if you had bought into this stock when the dividend was last raised, you just had 2 years of dividend earnings wiped out in the last 24 hours. The yield is decent, but there are a LOT of other places with better growth projections to be right now then owning MSFT here. Basically, MSFT has turned into a utility with little or at least shaky future growth. And frankly, if I'm going to own a utility-like investment, I'll own a utility company that doesn't have product concerns or other retail worries.


    Make no mistake... this was a truly horrendous earnings report. HIDEOUS might be a better way of describing it. MSFT is a trade at this point - not an investment. Under $28.50 it starts to look interesting again.
    19 Jul 2013, 11:08 PM Reply Like
  • Greg NYC
    , contributor
    Comments (93) | Send Message
    Carl Icahn should buy and take over Microsoft for the turnaround play, and walk away from the pile of crap called Dell. $MSFT has the right pieces to succeed, but can't put it all together. Bill Gates influence is missing on a day to day hands on basis. Stock is not worth a buck over it's $28.85 April price, when Goldman correctly downgraded it. Buyer Beware, it's going lower. If you are looking for a Tech play with a good Dividend, Apple is the better play near it's 52 week low, Microsoft has a lot more room to retrace it's "10 year" moving average.
    20 Jul 2013, 12:38 AM Reply Like
  • Zeus2012
    , contributor
    Comments (714) | Send Message
    Waiting for MSFT to drop below $30. The stock is oversold.
    20 Jul 2013, 10:24 AM Reply Like
  • romilar
    , contributor
    Comments (779) | Send Message
    I think shorts -patiently waiting in the wings for the right moment - made a bunch of money yesterday.I hope you're right Greg and it drops lower.If it gets close enough to my share average price,I will add substantially to my position.The mkt.reaction to MSFTs' numbers (in my opinion) is an instruction worthy example of herd fear and greed. Weather the price is there or not - NOTABLE bad news not withstanding - the buy limit order goes in on Mon......Rom
    20 Jul 2013, 11:36 AM Reply Like
  • Swisser998
    , contributor
    Comments (166) | Send Message
    Revenue is still up YOY, looks like a good time to get long MSFT!
    21 Jul 2013, 11:09 AM Reply Like
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