Aug. 5, 2014, 6:50 PM
- Microsoft (NASDAQ:MSFT) has hired Peggy Johnson, an EVP for Qualcomm's (NASDAQ:QCOM) chip unit (Qualcomm Technologies), to be its new business development chief. Johnson arrives 5 months after Microsoft announced her predecessor, one-time CEO candidate Tony Bates, is leaving.
- At Qualcomm, Johnson was responsible for creating new business opportunities and strategic relationships, a role not too different from the one she'll have at Microsoft. Johnson was also in charge of Qualcomm Labs, the mobile chip/IP giant's business incubation arm.
- "Peggy shares our worldview and knows what it takes to drive new growth in mobility and the cloud," says Satya Nadella. The hiring of a mobile exec to run business development comes shortly after Microsoft added mobile industry vet John Stanton to its board.
Aug. 1, 2014, 6:11 PM
- Microsoft (NASDAQ:MSFT) has sued Samsung (OTC:SSNLF) for alleged breach of contract over unpaid Android royalty payments related to the companies' 2011 licensing deal.
- Microsoft suggests Samsung stopped paying per-device royalties in late 2013 due to the Nokia deal, with Samsung arguing the deal nullifies the 2011 pact. Microsoft wants a ruling on Samsung's claim, and is also seeking unpaid interest.
- Likely at issue: Samsung and Nokia have a patent cross-licensing deal in place for each others' patents, one that was extended for 5 years last November. Though the deal involves payments from Samsung to Nokia, Nokia's phone unit (now a part of Microsoft) has made use of Samsung's IP through it. That opens the door to Samsung arguing a new/separate cross-licensing deal with Microsoft is needed.
- The financial implications of the legal spat could be big: Though struggling a bit lately, Samsung still had a 25.2% Q2 smartphone unit share (per IDC).
- Surging Android royalties led Microsoft's "Windows Phone" revenue to rise $1.2B in FY13 (ended June '13). With Samsung apparently halting payments midway, "Windows Phone" licensing revenue grew by $822M in FY14 to $2.54B. Nokia payments accounted for $382M of the total.
Aug. 1, 2014, 4:55 AM
- U.S. District Judge Loretta Preska has ruled that Microsoft (NASDAQ:MSFT) must turn over a customer's emails stored in a data center in Ireland to the U.S. government, following the company's refusal to do so due to privacy concerns.
- AT&T, Apple, Cisco and Verizon have all backed Microsoft's objection to hand over the information, as they are concerned about billions of dollars in revenue loss if customers fear their data is subject to seizure by U.S. investigators anywhere in the world.
- Microsoft and other U.S. companies have challenged the criminal search warrant for the emails, stating federal authorities cannot seize customer information held in foreign countries. However, Preska says, "It is a question of control, not a question of the location of that information."
Jul. 29, 2014, 6:30 AM
- Chinese regulators are investigating Microsoft (NASDAQ:MSFT) over anti-monopoly concerns, saying the firm did not fully disclose information about its Windows operating system and Microsoft Office application.
- China's State Administration for Industry & Commerce is additionally probing the company's vice president and senior managers, and has made copies of the firm's financial statements and contracts.
Jul. 23, 2014, 8:09 AM
- "We are becoming more constructive on Microsoft (NASDAQ:MSFT) as the company starts to provide more compelling evidence of its move to the cloud," says Pacific Crest's Brendan Barnicle, boosting the stock to Outperform with $54 price target. He notes an acceleration in the company's cloud business last quarter thanks to increased adoption of its Azure and Office 365 offerings.
- BofA's Kash Rangan throws in the towel on his Underperform rating, saying his team's concerns are apparently not so worrisome to those who invest in the stock.
- Shares +2.3% premarket
- Previously: Microsoft Corporation misses by $0.06, beats on revenue
Jul. 22, 2014, 6:58 PM
- Microsoft (NASDAQ:MSFT) guides on its FQ4 CC for FQ1 revenue of $21.2B-$22.3B, below a $23.1B consensus. But the company has shown a habit of guiding conservatively in recent quarters.
- Also likely playing a role: The Nokia phone unit (about to see massive job cuts) is expected to see FQ1 revenue of $1.9B-$2.3B; that's down from a year-ago level of $3.9B. 5.8M Lumia phones were sold in FQ4 during the 2 months following the closing of the Nokia deal, with low-end phones making up "a majority" of the volume; 7.4M Lumias were sold over the unit's full June quarter last year.
- Microsoft's unearned revenue balance rose 13% Y/Y to $25.2B. Its contracted not billed balance totaled $24B (up $3B Y/Y), and total bookings rose 29% (20% exc. Nokia).
- Other details: 1) Office commercial revenue (inc. Office 365) grew 4%. 2) Surface revenue totaled $409M, and 1.1M Xboxes were sold. 3) The benefit to Windows business revenue that came from the end of XP support "moderated" towards the end of FQ4. 4) $1.3B was spent on capex in FQ4, and $5.5B overall in FY14. 5) "Commercial licensing" accounted for 65% of FQ4 gross profit.
- MSFT +1.3% AH. Earnings slides (.ppt), guidance (.ppt).
- Prior Microsoft earnings coverage
Jul. 22, 2014, 4:18 PM
- Microsoft's (NASDAQ:MSFT) Commercial revenue rose 11% Y/Y in FQ4 to $13.48B, an improvement from FQ3's 7% growth. Commercial cloud revenue +147% ($4.4B/year run rate), Windows volume licensing +11%, enterprise services +11%, SQL Server and System each up double-digits.
- Thanks to two months of Nokia phone revenue, devices & consumer revenue rose 42% to $10B. Windows OEM revenue +3%, with Pro revenue rising 9% and non-Pro revenue falling 9%.
- Office consumer revenue +21%, with the Office 365 home/personal sub base growing by over 1M to 5.6M+. Bing search ad revenue rose 40%, but display ad sales fell 11%.
- The Nokia unit contributed $1.99B in revenue, but only $54M in gross profit. It took an $0.08 toll on EPS. On the other hand, the end of Microsoft's commercial agreement with Nokia provided a $382M one-time op. profit boost.
- MSFT +0.2% AH. CC at 5:30PM, guidance will be provided.
- FQ4 results, PR
Jul. 22, 2014, 4:08 PM| 2 Comments
Jul. 21, 2014, 5:35 PM
Jul. 17, 2014, 3:21 PM
- As part of the company's huge layoffs, Microsoft (MSFT +1.3%) is shutting down its Xbox Entertainment Studios unit. The unit, which was working on original programming for Xbox Live, was formed in 2012 and headed by ex-CBS Network chief Nancy Tellem.
- Microsoft also plans to wind down the Nokia unit's long-struggling feature phone ops. In an internal memo picked up by The Verge, Nokia phone chief Jo Harlow says the unit's Asha, Series 40, and Nokia X lines will shift to "maintenance mode," with services supporting existing hardware closing within 18 months.
- The Verge adds Microsoft is planning to hand off Nokia's MixRadio music service to a third party. Meanwhile, a memo from hardware chief/ex-Nokia CEO Stephen Elop suggests multiple manufacturing/engineering sites will be closed, and says the Nokia unit will "focus on driving Lumia volume in the areas where we are already successful today."
- Nosediving feature phone sales led Nokia's phone unit to post a 30% Y/Y Q1 revenue drop to €1.93B, and a -16.9% op. margin.
- ZDNet's Mary-Jo Foley reports Windows engineers (mainly testers) are among the 5K+ non-Nokia employees set to be laid off, and that Windows product managers and development engineers will gain new responsibilities. She adds Microsoft's goal is to "make the OS team work more like lean startups."
Jul. 17, 2014, 9:16 AM
- Microsoft (NASDAQ:MSFT) is cutting ~14% of its 125K-strong workforce. 12.5K of the cuts will hit Nokia's phone unit, thereby reducing its size by roughly half.
- The layoffs are expected to be finished by the end of FY15 (ends June '15), and to result in a $1.1B-$1.6B charge. $750M-$800M of that total will be related to severance and other benefit costs, and $350M-$800M will be tied to asset-related charges.
- In a new employee memo, Satya Nadella says Microsoft is now moving to eliminate the first 13K positions, and will still continue to add jobs in some areas. "We will simplify the way we work to drive greater accountability, become more agile and move faster ... we plan to have fewer layers of management, both top down and sideways."
- He suggests Microsoft will streamline the Nokia phone lineup, and will "focus on breakthrough innovation" on the high-end. Certain low-end Nokia X (Android) devices will be migrated to Windows Phone.
- The move comes after last week's memo shied away from Steve Ballmer's "Devices & Services" mantra, and suggested big changes in product strategy and engineering processes were afoot.
Jul. 16, 2014, 1:00 PM
- Microsoft (MSFT +3.4%) has surged to new post-Dot.com bubble highs following Intel's Q2 results and multiple reports pointing to big layoffs in the wake of Satya Nadella's memo.
- In addition to beating Q2 estimates, Intel provided strong Q3 and full-year guidance, and respectively reported 6% and 19% Y/Y sales increases for its PC and server CPU reporting segments. On its CC, Intel noted it's seeing "clear signs" of a business PC refresh cycle, while adding consumer/emerging markets PC demand remains soft.
- Intel's cloud, HPC, and enterprise server-related sales each rose over 15% Y/Y. The upcoming launch of Intel's Grantley Xeon CPUs is expected to provide a boost to server demand, as is Microsoft's plan to end Windows Server 2003 support by July 2015. A shift in spend towards Internet companies using cheap white-label hardware (often running on Linux) remains a headwind.
- The layoff reports suggest roughly 1/5 of the Finnish workers that joined Microsoft via the Nokia deal will be cut loose. Look for details to be provided during the July 22 FQ4 CC.
Jul. 16, 2014, 3:24 AM
- Microsoft (NASDAQ:MSFT) is preparing to cut 1,000 jobs at its Nokia unit in Finland. The plan is line with a Bloomberg report from earlier this week which suggested a large amount of pending lay offs.
- The reductions will close former Nokia research and development unit in Oulu which employs 500 people, Reuters reports. The other cuts will come from other areas across Finland.
- Total Microsoft job cuts may exceed the 5,800 record lay offs in 2009.
Jul. 15, 2014, 10:51 AM
- As part of their longstanding alliance, Cisco (CSCO - unchanged) and Microsoft (MSFT +0.1%) have signed a new 3-year "go-to-market plan" featuring tech integration and sales/marketing partnerships for a slew of data center products.
- On Cisco's side, the products covered include its Nexus data center switches and UCS servers - two bright spots for the company. On Microsoft's site, they include Windows Server, SQL Server, System Center, and Azure.
- The deal, which comes amid Microsoft's partner conference (previous), also features a program to migrate Windows Server 2003 clients to UCS systems running Windows Server 2012 R2. Nonetheless, Microsoft and Cisco remain rivals in the unified communications software space.
- Separately, the WSJ reports Microsoft is close to buying Aorato, an Israeli developer of cybersecurity/identity-protection software, for $200M.
- Aorato's products analyze interactions with Microsoft's Active Directory (enterprise authentication/ID management) service to detect suspicious activity, and prevent unauthorized access to IT resources.
- The report follows the launch of an Azure identity/access management service in March, and comes amid a flurry of cybersecurity M&A activity.
Jul. 15, 2014, 2:11 AM
- Microsoft (NASDAQ:MSFT) is preparing for its next round of lay offs as it looks to scale back and streamline its Nokia Oyj's handset unit, Bloomberg reports.
- The restructuring may end up being the largest in Microsoft history, exceeding the 5,800 jobs cuts in 2009.
- The company added around 30k jobs after it acquired Nokia’s mobile device business, and it will announce the reductions centered around its Nokia unit and marketing and engineering divisions that overlap with the business.
Jul. 14, 2014, 2:30 PM
- H-P (HPQ +0.6%) will offer a quality $199 Windows laptop for the holidays, Microsoft (MSFT +0.3%) COO Kevin Turner promises at his company's partner conference. Turner also says H-P will sell 7" and 8" Windows tablets for $99, and that Toshiba will sell a $249 notebook with an 11.6" screen and 32GB SSD.
- "We’ve got a great value proposition against Chromebooks," claims Turner, driving home whom he considers competition. IDC noted last week Chromebooks, which added offline app support last year, contributed to a Q2 rebound in low-end notebook sales.
- Turner's remarks come as Digitimes reports Microsoft is planning to end Windows license fees for all sub-$250 tablets. The company has already eliminated fees for all sub-9" mobile devices.
- Turner also declares SharePoint to be a $2B/year business, says Office has "rescued" 785 Google Apps customers in the last 18 months, and reports Azure added 42K+ customers in FY14 (ended in June). (live blog)
- He claims (citing market share data) Microsoft's Hyper-v is "eating VMware's (VMW +1.8%) lunch" in the server virtualization market. Wells Fargo cited slowing server virtualization growth as a reason for downgrading VMware last week, while asserting "most industry analysts agree that Microsoft has essentially closed the functionality gap with [VMware's] vSphere."
- Microsoft and VMware both report on July 22.
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Microsoft Corp is engaged in designing, manufacturing, selling devices, and online advertising to a global customer audience. Its products include operating systems for computing devices, servers, phones, and other intelligent devices.
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