Microsoft Rushing Its Reorganization, Not Expert Enough for Smart Device Market
Last week, Microsoft announced its fourth quarter earnings for fiscal year 2013 which ended last June 30. The software company reported annual revenue, operating income, and diluted earnings per share were at $77.85 billion, $26.76 billion, and $2.58 per share with a $900 million charge, or a $0.07 per share impact, related to Surface RT inventory adjustments.
Compared to last year’s results, revenue is up this year, but operating income and diluted earnings per share were down.
“While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE,” said Amy Hood, chief financial officer at Microsoft. “While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services.”
Microsoft CEO Steve Ballmer remains positive that Windows 8.1 will “deliver compelling new devices and high value experiences” to consumers in the coming months and its recent strategic alignment will bolster the company for long-term success.
“Our new products and the strategic realignment we announced last week position us well for long-term success, as we focus our energy and resources on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value the most,” Ballmer stated.
Wikibon CTO and co-founder David Floyer thinks that overall, Microsoft posted positive numbers, but from Wall Street’s point of view, those numbers are a disappointment. Microsoft posted $77.85 billion in revenue for fiscal year 2013 which is up from 2012’s $73.72 billion. But there are still some areas where Microsoft hasn’t been doing well and Floyer believes the numbers posted were the reason for Microsoft’s recent reorganization.
“There are two different things, there’s the reorganization itself and what was said about the reorganization in particular by Steve Ballmer,” Floyer says during his appearance on this morning’s Live NewsDesk Show with Kristin Feledy. “Steve Ballmer is saying that Microsoft is going to have devices and they’re going to regain the market devices and come out with lots of devices, but they’ve just taken a billion dollar write-down on Surface RT because their first attempt to get into ARM-based devices.
“It’s clear that on their own operating system they’re very unlikely to put any significant market share. So instead of trying to say that they’re a devices company from top to bottom, I believe they should be focusing on what the enterprise wants to control over these devices, some of them Windows but most of them being Android or iOS from Google or from Apple. If they did that, that’s the problem that enterprises have and the only solution that Ballmer is talking about is, ‘You know the problem goes away if you only have Microsoft devices,” and that’s a strategy, an objective which is, in my view, very, very unlikely for them to reach. However, the reorganization fundamentally is saying that each of the division should not get in the way. They need a way to do things faster,” Floyer stated.
With that said, Floyer thinks that Microsoft is rushing into something that they are not an expert on with this reorganization and this could potentially cost them huge amounts of money for the coming years.
For more of Floyer’s Breaking Analysis, check out the NewsDesk video below:
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