Microsoft stock drops by billions after disappointing earnings report

When I first read this elsewhere I thought the way they had written it was that it dropped TO $4 a share, not that it had dropped by $4.

Windows 8.1's "start button" merely goes to Metro. I'm surprised Ballmer was still allowed on Microsoft property. Windows 9 isn't going to fix anything, Microsoft doesn't undo damage to itself these days. OEMs and especially Intel should seriously consider an alternative otherwise Microsoft is going to decimate their sales. None of my clients, their friends, my friends, ANYONE can tolerate Windows 8. This is what happens when a corporation starts paying attention to someone else (Apple) and stops listening to their customers.

- John

record high of $616.3 billion in December of 1999 (1 month before Steve Ballmer took over from Bill Gates).

Says it all, really.

The results are not really that bad: revenue growth in every division. Surface and Windows 8 lost a lot of money. Windows 8 is probably OK, but the $900m inventory adjustment is a bit of a loss. As far as I can tell this seems to mean that the cut in the Surface RT price means they are selling them at a substantial loss.

Any surprise the Surface RT is not selling well? Windows without Windows main advantage (that it runs almost all the applications previous versions of Windows did). That essentially makes it a new OS.

The title of this thread is wrong. MS did not lose billions (that would refer to its profits), its market cap has reduced by billions.

mod's note: thread title has been changed for accuracy

[edited by: phranque at 8:26 am (utc) on Jul 22, 2013]
[edit reason] title change [/edit]

The guy they should kick is Ballmer. I'm surprised he's still running the ship.

I would pat myself on the back for predicting this but, unfortunately, I said it would happen two years ago.

sorry to say this methinks surface and windows 8 are poor products, inferior to the state of the art, and in the case of windows 8, its predecessor too, interesting to see the market agreeing

Tis like having a stream of "Vista like" products hitting the market together

Surface is a particularly poor product IMHO

The stock will jump back when Ballmer is ousted.

When others are fearful be greedy -- Warren Buffet

I just schedule an Order to purchase a large amount of Microsoft Share as soon as the market opens up Monday. Microsoft Stock is on Sale! Buy it now while you can.

All the emotional, media investing fools have created the deal of the century! Remember Google lost like $24 Billion some month ago, then rebounded in a few weeks. I been in Microsoft stock for almost a decade, it always does good.

Microsoft's price will reset in about a month or two, and continue to grow from there. You can get a 12% or 4 point return in a few months "while being in a solid company"

@gethan - Ballmer may not be ousted or not for quite some time but it's results that matter in the long run.

@Clarence - Everything you just said is false and a fool's run. Microsoft has not been a sideways stock for over a decade until fairly recently when it made a slight run up. And now those purchasers are losing out.

Google did NOT lose $24 billion dollars.

If Microsoft were to "reset" its price in a month or two, it would drop to $24 range where it's floated around for a decade.

If you schedule your large purchase for Monday, you'll be buying a stock that's fallen far below its 50-day ma with large overhead to recover. You might see a slight rebound next week but that will be short lived.

You misrepresent what Buffet said, too. He didn't mean to buy stock in a company that's had a downturn and had a one-day crash. He was talking about the market as a whole.

[edited by: bill at 4:36 am (utc) on Jul 21, 2013]
[edit reason] see sticky [/edit]

@Clarence

Please don't buy any stock now. I agree with drhowarddrfine.

But if you still want to buy then wait and buy in or after 2nd week of Aug. Most probably you will get same share at lower price.

Google loss $24 billion on early earning release that didn't meet analysis expectation. Google that "Google's catastrophic $24 billion loss"! They loss so much that had to stop trading.

Microsoft price's over 10 year is stable because of a 2 for 1 stock splits. Google that!

And Don't forget Microsoft's Quarterly Dividend payments over that ten years! Google that!

Microsoft book value, plus low p/e,is higher then it's current price, meaning the stock is cheaper then the value of the companies cash and assets "for now". Google that!

The company didn't miss earning, just analyst expectations which were pretty high. The company made more money then last year, and is still sitting on tons of cash, with tons of new business.

People are emotional, and love doom and gloom! Great, Smart investor take advantage of it, like I took advantage of buying stock during the market crash caused by the housing bubble.

Once the media hype is gone, all the fearful "investors" scramble and sell for cheap price's, the real investor will push the price back up to equilibrium. take advantage of the fools selling short!

I'm buying "again".

>Google loss $24 billion

That was 'market capitalization'. A computation based on stock price and shares outstanding. Not assets. It happens often for a stock with an $864 price tag and millions of shares out there.

>Microsoft price's over 10 year is stable because of a 2 for 1 stock splits.

There have been NO stock splits since 2003

>And Don't forget Microsoft's Quarterly Dividend payments over that ten years!

Dividends do not equal growth

>The company didn't miss earning, just analyst expectations which were pretty high.

Your opinion alone. "Missing earnings" is the definition of "analyst expectations".

>The company made more money then last year

And lost more money this year. Past performance means nothing.

>with tons of new business.

In some divisions while poor performance in others, hence the DECLINE in sales $18 billion to $16 billion.

i bought MSFT stock and that thing was trading sideways for agggess. Sold it and only made a tiny profit.. it wasn't nice.. msft has become to big and slow.

Good!

Maybe now, for need of earnings, they will have a closer look at how Google earn their money on the web, and make a true search engine out of the toy they call Bing.

Finally, good news, provided they wake up.
(I am not holding my breath, though . . . .)


.

not a stock guru, but noted this from Graeme_p


The title of this thread is wrong. MS did not lose billions (that would refer to its profits), its market cap has reduced by billions.

Desktops and laptops can run on Win7 (great system) for years - Office 2003 and 2007 are good enough, too.
If one is not a gamer, most of their non-ffice activity takes place in the browser, be it IE or Firefox or Chrome.
Win7 does not crash, works fast, etc. Why should anyone think of upgrading?

Windows 8 will sell on new PCs even without upgrades.

Office installs will eventually be upgraded. How good is MS Office forward compatibility? Will people have to upgrade installs to read files from newer versions?

Office installs will eventually be upgraded. How good is MS Office forward compatibility? Will people have to upgrade installs to read files from newer versions?

Well, you need a new version but 99% of the population needs Google Docs functionality.

The world is changing.
MSFT has been missing the boat for quite some time, analysts are finally seeing it.

It seems to me MSFT is still not grasping the severity of their problems. And I think their proposed solution is actually going to make it even worse.

The world changed (the slower ones are still catching up, but the early adopters -where the money is- have changed).
Traditional business and consumer users are further apart than ever when if comes to "computers", moreover Microsoft is alienating rapidly their traditional allies (the PC vendors) in exchange for not even making a dent in the market of the new products the consumers love and buy.
Less traditional businesses are rapidly changing in how they work and what they buy. That is if they buy: BOYD means the consumers will chose what hardware and software gets used inside businesses just as well.

The big exception are content producers - traditionally not a market where Microsoft had much clout. But by extension us webmasters are more and more in the category of producers and not consumers anymore. It'll take time before we all grasp the full consequences of this. But I expect us to better get ready to get off of the platforms the cosumer like and buy - and instead foresee a considerably larger budget for our much less popular and mass market hardware and software needs of the future.

What the world desperately needs is a decent competitor for the office suite that's not a (poor) copycat like openoffice, But a real alternative that can take the world. Something more what Apple's iWork suite could be if it only were multi-platform and sold in other ways than the app store. Good enough for 99.9% of the uses, much more intuitive and simple to use while not lacking any power features and at a price point where everybody can afford it.

Here's what i'd do.
I'd make Win Phone 8 free to oems.
I'd ship Surface onto the market for a supe low price to win market share.

That would bring customers back to Microsoft so they could link their phones and tablets to a Microsoft environment.

I know that would not help the share price in the short term, but they should be playing the long game.

The key players for Microsoft in the whole deal is business, but if consumers are choosing android/chrome or Apple OS when they are out and about, you can be predict that businesses will do the same, or certainly be thinking very hard about it.

This is exactly why I avoid certain stocks because investors are idiots and panic like a cat caught in a cardboard box at the littlest things.

The problem isn't a weak demand for MS products, the problem is the market is saturated and people have good fast machines with a stable OS and they don't feel the need to upgrade. The only reason I got Win 8 was because my 7 year old faster than heck mother board decided to go off the deep end and Win 8 came with the new machine.

Also, they were simply too late to the game with Win 8 phones and tablets. Everyone that wanted a smart phone or tablet pretty much already has one and just like my old computer, I probably won't buy a MS phone or tablet, if ever as I love Android, until my current ones break or become too obsolete to continue using.

Investors need to learn patience because MS is playing a long term strategy and the goal is to build that customer base over time and it will take a few years to capture an audience away from Android and Apple.

Plus they need to make the desktop experience more appealing for those that don't have touch screens otherwise they're going to, if they haven't already, irritate a whole bunch of desktop users. I've managed to come to terms with Win 8 but I'm not happy about it unless I go get a touch screen I probably never will be at ease with this mess and it has nothing to do with the start button, I can live without it, it's the whole Metro and desktop lack of integration and that's another block post.

Anyway, like I said, the idiot investors need to be patient as this is a long term strategy but they just killed their own investments, not mine, so I don't really care if they start jumping out of windows (happy pun) after losing all their money over a needless panic attack.

Don't forget that the stockholders own the company!

If a company is listed on a stock market that in the vast majority of the cases means the owners of the company are in it for the (extremely) short term results. Long term thinking and stock market do not work together.

If Bill Gates came back, Google would literally be crapping their dirty pants.

Bill Gates isn't Steve Jobs. Google's climb started while Gates was still around. Google isn't afraid of Gates or Microsoft. It would take Gates many years to turn that big ship around anyway.

If Bill Gates came back, Google would literally be crapping their dirty pants

Sorry, but with the recent success of Apple and Google, the years of big companies soiling themselves every time Microsoft sneezed, like Lotus used to do, are long over.

The rest of the world uses Linux based OSs for everything nowadays and the need for Microsoft OS isn't what it was, it could be eliminated easily. There are free products that do everything MS products do, maybe not quite as good but they can improve. The fact is that MS is a has been company and if they aren't careful could fade into history like other giants of the past that dominated and were overconfident and went POOF!

The victory of the "Everything free" economy heh :) :)

It was a source of some amusement when The great G started charging for previously free Google Shopping , after all once you're the only game in town, what does one do :)

Have fun all

@engine, they are doing what you suggest.

The reason for the drop in earnings is that they have reduced the value of Surface hardware inventory because they have drastically cut the price.

They pretty much paid Nokia to use Windows phone, and I doubt they are charging other OEMs a significant amount - but there is no point it being free if its not what people want.

@swa66, what is wrong with Libre Office/Open office?

@graeme_p they are an effort to bring a MS Office compatible product for free. It's a way to cut costs.
You're not going to replace MS office in the mindset of decision makers with a free product that only works partially in their eyes.

You need a better product in every aspect, and it needs to cost just a little bit. iWorks would be the idea is it were not mac-only.

@swa66, I have not used iWorks, but from what I have read it is less functional that Libreoffice

You're not going to replace MS office in the mindset of decision makers with a free product that only works partially in their eyes.

Is that because it actually only works partially, or because it is perceived as such?

There is very little that most people need that Libre Office does not do.

IMO Office Suites do far too much.

I believe he is referring to compatibility issues. If your customers are using Microsoft Office and you edit spreadsheets with macros, complex formulas, or embedded objects, Word docs with complex formatting (using footnotes, references, etc., or even just headers/footers), or almost any Access database or PowerPoint presentation, with LibreOffice you're in for trouble. It depends on the versions used, but you're almost guaranteed to mess up the files.

As far as functionality goes, LibreOffice and the like are fine features-wise. If you and the people you're working with are all using LibreOffice there's no problem. It's when you start moving between platforms that the issues generally arise.

[edited by: bill at 8:48 am (utc) on Jul 26, 2013]