Microsoft Remains Upbeat Despite Slowing U.S. Economy

By Peter Galli  |  Posted 2008-01-24 Print this article Print

Microsoft's CFO predicts that the company will grow faster than overall global software spending.

The slowing U.S. economy is not affecting Microsoft's upbeat financial outlook, with the software firm expecting revenue in the region of $60 billion for its fiscal year that ends in June 2008.

Microsoft also reported on Jan. 24 a 30 percent rise in revenue to a record $16.37 billion in its fiscal second quarter that ended in December, on the back of what company officials said were "robust holiday sales and enterprise demand."

It also said it has sold more than 100 million Windows Vista licenses in the year since the new operating system was released, and that the client business has grown by about 20 percent over the same period.

In a teleconference with financial analysts and the media, Microsoft Chief Financial Officer Chris Liddell said the company had just finished its midyear review. This looked at every country and every segment across the world, and included Microsoft's sales force, whose views were factored into the guidance the company gave, he said.

While Liddell declined to say what he expected to see in fiscal 2009, he said Microsoft felt "very good" about the next six months.

Liddell also noted that about 60 percent of all its sales came from outside the United States, and said, "I feel good about global GDP over the medium to long term and I think software spending is going to be faster than global GDP." He predicted that Microsoft's sales "would grow faster than overall global software spending."

However, he did acknowledge that Microsoft could be affected by a global slowdown, but pointed to the overall growth rate of the company's products in the markets in which it competes. "We still feel very good when we think about our business on a multiyear basis."

Kevin Turner, Microsoft's chief operating officer, was equally upbeat, saying the software company continues to see healthy demand from both businesses and consumers in the United States, while growth in emerging markets is especially strong.

"Looking across Brazil, Russia, India and China, our field revenue reached a combined growth rate of more than 65 percent this quarter," Turner said in a statement issued Jan. 24 with the second quarter results.

That bullish outlook was shared by Rob Enderle, principal analyst for the Enderle Group, who told eWEEK that Microsoft's financial outlook was impressively strong.

"Given how much of Microsoft's revenue is effectively locked in, they appear to be well situated to ride through what may be a recession relatively unscathed. This suggests that while there may be things broken at Microsoft, financial management isn't currently one of them," Enderle said.

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel