Microsoft Reports Third Quarter Earnings - CE Revenue up 26.7%

[Ed Hansberry]

Microsoft reported earnings for the third quarter. I haven't dug into the number yet because, well, they are obscenely profitable so what difference does it make? :wink: What I am interested in though are the business segments, namely one called "CE/Mobility" and how that compared to PalmSource.<br /><br /><a href="http://www.pocketpcthoughts.com/images/hansberry/2003/20030416-revlarge.gif"><img src="http://www.pocketpcthoughts.com/images/hansberry/2003/20030416-revsmall.gif" /></a><br /><b>Chart:</b> CE/Mobility Revenue for the past 7 quarters. <i>(Click to see 11 quarters)</i><br /><br />In the above chart, you can see, in millions, for both the CE/Mobility group in Microsoft and PalmSource. Note that for the PalmSource 11 month figure, I knew that the first two quarters were $42M, but didn't have a quarterly breakout, so I just divided by two. If anyone has the actual figures for those quarters in 2000, let me know. Also note that these are Microsoft quarters. MS has a year end of June 30, so their quarters are Sept 30, Dec 31, March 31 and June 30. Palm is one month offset. Their year end is around May 31, so their quarters are approximately Aug 31, Nov 30, Feb 28 and May 31. I say approximately because Palm counts days in their quarter and doesn't use the calendar month ends.<br /><br />Below, you can see this data charted.<br /><br /><img src="http://www.pocketpcthoughts.com/images/hansberry/2003/20030416-revchart.gif" /><br /><!><br /><br />The two upper lines, red for Microsoft, blue for PalmSource, use the Y axis on the right and are the trailing 4 quarters revenues. You can see that Microsoft's revenues from the CE/Mobility division are clearly growning. PalmSource's, well, aren't. They are declining in fact. No big surprise as Palm's marketshare numbers have been steadily sliding since early 2000.<br /><br />The two lower lines, yellow for Microsoft, light blue for PalmSource, show the quarterly numbers and use the Y axis numbers on the left. Again, MS is steadily climbing except for the last two quarters where it has jumped up considerably. Revenues are up 26.7% over the quarter ended December and up an astounding 81% over the same quarter last year!<br /><br />To be fair, I don't really know how much of the CE/Mobility revenue is Pocket PC and Smartphone vs the embedded CE business. By the same token, I don't know how much of PalmSource is PalmOS vs Palm Digital Media, or Peanut Press. Given revenues from Palm Digital Media have doubled in the past 12 months (See Jan. 7 press release at Palm's site - no direct link available - darn java :evil: ) and PalmSource revenue declined overall, it is masking an even sharper decline in PalmOS revenue than we are seeing in the financial statements.

[krisbrown]

Ahhh..the spoils of a monopoly :D

[darrylb]

You can see that Microsoft's revenues from the CE/Mobility division are clearly growning. PalmSource's, well, aren't. They are declining in fact. No big surprise as Palm's marketshare numbers have been steadily sliding since early 2000.

Looks to me like IE vs NetScape all over again :bangin: (except that this time nobody is giving anything away )

Question is - what will MS do once they get the market share they want? We all know what they did with Windows :roll: but with IE, I think they have actually improved things for customers, but the browser is now their target platform for "Windows Everywhere" - if only they would beef up the browser in PPC :really mad:

[marlof]

Question is - what will MS do once they get the market share they want? We all know what they did with Windows :roll: but with IE, I think they have actually improved things for customers

What do you mean with this comment? I find Windows XP one of the better operating systems around, and MS launched this after they already had quite some marketshare.

[bdegroodt]

Question is - what will MS do once they get the market share they want? We all know what they did with Windows :roll:...

Ummm...Continue to invest R&D dollars into making it better? Say what you will about MSFT's business practices, but one thing they can't be accused of is not continuing to evolve their products on a continuous basis.

[Jason Dunn]

Ahhh..the spoils of a monopoly :D

Ah, an ignorant comment. :roll: I would love for you to explain how the CE group, which has perhaps 30% of PDA market share world wide, and perhaps 0.01% of Smartphone market share worldwide, could possilby be considered a monopoly. I think the CE group is still losing money overall, so yes they're dipping into the Microsoft war chest, but as Ed points out, they're actually making significantly more money than they were last year.

If you have a point, make it, but FUD like that won't go unchallenged here.

[Jason Dunn]

...but one thing they can't be accused of is not continuing to evolve their products on a continuous basis.

I'd agree with you in general, but gosh, I've been staring at IE 6 for a looooong time. :zzz: They really haven't improved the browser much at all since winning the browser battle. I think that's the fear that the other person had...

[Ed@Brighthand]

This is strange. According to the figures Ed quotes and Microsoft's investor site, the CE/Mobility group had $30 million in revenue during the quarter which ended in December. According to reports from the time, this figure was $21 million. Here's Ed's article:
www.pocketpcthoughts.com/forums/viewtopic.php?t=8211
This wasn't a typo. Both he and I confirmed this number independently.

Anyone know where the extra $9 million came from?

[Ed Hansberry]

This is strange. According to the figures Ed quotes and Microsoft's investor site, the CE/Mobility group had $30 million in revenue during the quarter which ended in December. According to reports from the time, this figure was $21 million. Here's Ed's article:
www.pocketpcthoughts.com/forums/viewtopic.php?t=8211
This wasn't a typo. Both he and I confirmed this number independently.

Anyone know where the extra $9 million came from?
Good catch Ed - and no clue. Now that I go back and look, none of the numbers tie.

See http://www.pocketpcthoughts.com/forums/viewtopic.php?t=4906

for the 5 quarters from Sept 01 through Sept 02, http://www.pocketpcthoughts.com/forums/viewtopic.php?t=4906 shows revs of:

17-18-16-21-17

This shows, for those same 5 quarters:

21-22-21-27-22

:?

So going back to the total, the line called "Information Worker" is coming down by the same about that CE/Mobility is going up - a simple reclass. Now to find out what "Information Worker" is and why some of that would be reclassed to CE/Mobility.

[LarDude]

Question is - what will MS do once they get the market share they want? We all know what they did with Windows :roll: but with IE, I think they have actually improved things for customers

What do you mean with this comment? I find Windows XP one of the better operating systems around, and MS launched this after they already had quite some marketshare.

Better, maybe. But also far more draconian (vis-a-vis product activation).
For tinkerers that like to change HW components, having to phone in to ask
for permission to use what you've already paid for seems excessive. (And
as mentioned on this site in the past, why isn't this "draconian" anti-piracy
initiative accompanied by a commensurate reduction in price??).

[Ed Hansberry]

Better, maybe. But also far more draconian (vis-a-vis product activation).
As much as I like WinXP and Office, you'll never get any argument from me on activation. :evil: I'm right there with you.

[darrylb]

I'd agree with you in general, but gosh, I've been staring at IE 6 for a looooong time. :zzz: They really haven't improved the browser much at all since winning the browser battle. I think that's the fear that the other person had...

My Point exactly. IE6 has a copyright date of 2001, IE4 and IE5 came out close together to upgrade capabilities, now that MS have won the war, the R & D is going into other places (.NET) to ensure that they also own the back end.

I also agree that XP is a great product (I am writing this on it). But the competition (read Apple) is now struggling to find areas to innovate in that MS dont already own. The big areas of development are around "Windows Everywhere" i.e. PDA's Phones, Embedded devices and the enabling technology (another MS buzz word) to tie all this together using the MS back end.

Dont get me wrong, I love MS products, and I even like the company, but once they own the market for something, the improvements and innovation is minimal (take for another example office - can anyone tell me any must have features you must :!: upgrade for between office 2000 and XP?) There are some nice interface features in Office 11 tho :)

I hope I am wrong about this though! I think there are some big changes coming overall in the next 7 to 10 years!!