Microsoft could use its Jan. 27 earnings call to highlight Windows 7 and Windows Phone 7 sales, and cloud-services adoption. But its profits could lag behind Apple's.
Microsoft is set to announce its latest quarterly earnings
after the market closes Jan. 27.
posted by Thomson Reuters
suggest the company's overall sales will hit
$19.15 billion, a slight year-over-year uptick, and $5.93 billion in profit.
Should the latter number come to pass, it would place Microsoft behind longtime
rival Apple, which just posted $6 billion in profits for the most recent
By comparison, Microsoft's last set of quarterly earnings
included revenues of $16.20 billion and a net income of $5.41 billion. During
an Oct. 28 earnings call, Microsoft claimed strong year-over-year growth in all
business segments, including servers and Xbox.
Granted, the Apple-Microsoft matchup is somewhat inexact-the
latter focuses mostly on software, leaving hardware manufacturing to its
partners, in opposition to Apple's hardware-and-software model-but the
blockbuster success of the iPhone and iPad have still put Microsoft on the
defensive. The recently released Windows Phone 7, along with the presumed
appearance of more Windows-powered tablets on the market within the next few
quarters, will form the core of Microsoft's attempts to make a more definitive
statement in the tablet and smartphone markets.
Even as Microsoft plays catch-up in those burgeoning
consumer markets, the company can likely take heart in the business-software
side of its operations. As the enterprise and SMBs continue to recover from the
recent global recession, IT departments across the nation have spent more on
PCs and other hardware-buoying sales of Windows 7, one of Microsoft's flagship
products and prime revenue generators, along with those of Office 2010.
Microsoft will likely tout its Windows 7 sales during the call, following a
trend extending back to the operating system's release in October 2009.
Microsoft will also likely cite a rising number of clients
for its Windows Azure platform, although its online-services initiatives have
yet to generate substantial cash-flow. The company is betting millions of
dollars and substantial human resources on an "all in" cloud strategy, which
has placed it in fierce competition with Salesforce.com and Google for business
and government clients.
The company is less likely to discuss its roadmap for the
next version of Windows, which will support system-on-a-chip (SoC)
architecture, in particular ARM-based systems. Windows currently dominates the
x86 platform leveraged by traditional PCs, but the rise of mobile devices that
leverage ARM architecture-in particular, tablets and smartphones-offers both a
potential threat and market-channel for Windows software.
During this January's Consumer Electronics Show in Las
Vegas, CEO Steve Ballmer highlighted the ARM development. "We made the
announcement now in order to allow all of our partners to work together and
build upon this innovation," he
told the audience during a Jan. 5 keynote
. "Windows support for SoC is an
important step for Microsoft and for the industry."
Microsoft could cite Windows Phone 7 sales, to a point. In
the company has confirmed that some 2 million devices
using its mobile
software platform have been sold by manufacturers to retailers. However, both
Microsoft and its carrier partners seem reluctant to discuss consumer sales in
If Microsoft does use the Jan. 27 earnings call to talk
smartphones, it will likely point to research
data suggesting that some 93 percent of Windows Phone owners
"satisfied" or "very satisfied" with the device. Consumer sales numbers,
though, may continue to prove elusive.