MS Mobile And Embedded Makes First Profit EVAR!

[Ed Hansberry]

<a href="http://www.microsoft.com/msft/earnings/FY06/earn_rel_q2_06.mspx#Channel">http://www.microsoft.com/msft/earnings/FY06/earn_rel_q2_06.mspx#Channel</a><br /><br />Microsoft just reported revenue and profit by segment for the quarter ended December 31, 2005, their second quarter. Microsoft's fiscal year runs from July to June. For the first time in the history of the mobile and embedded division, they have made a profit. On sales of $101 million, they earned $20 million in earnings. It has been a long time coming for a team that released their first major product in 1996 when Windows CE 1.0 when gold in November. Who'd have thought it would take nearly a decade to turn a profit? Any bets as to where the mobile device market and Microsoft's share of it will be in another 10 years? :) <br /><br /><img src="http://www.pocketpcthoughts.com/images/hansberry/2006/20060127-firstprofitevar.gif" /><br /><br />The October-December quarter is typically pretty big with holiday sales for Microsoft's OEM partners which in turn helps MS's licensing revenue. I'll be curious to see how their third quarter, Jan-Mar, will be with the launch of so many devices in North America, like the Treo 700w, the T-Mobile MDA/SDA devices, the Motorola Q, the Cingular 8125 and 2125, the HP 6900 series as well as others.<br /><br />This too will lay the argument to rest that Microsoft should abandon Windows Mobile as it will never be a profitable business within the Microsoft family of products, or that the only reason is that it is as successful as it is in the marketplace is it is heavily subsidized by MS. The truth of the matter is, it takes time to become a profitable line. Neither Windows nor Office were profitable in the early years. It also shows that the division is cranking out a product that consumers and IT departments are embracing, a division that has knocked its early competitor off of its 80%+ market share pedestal and gone on to claim the majority of the PDA market worldwide. It is completely capable of sustaining itself, and has its cross-hairs aimed at dominating the larger mobile computing space that is also occupied by RIM Blackberry and Nokia.

[Edgar_]

Post subject: MS Mobile And Embedded Makes First Profit EVAR!

EVAR? Is your spell check broken on your Textmaker! :devilboy:

-Edgar[/b]

[pocketpcadmirer]

Edgar, thats nit-picking 8O

It is really nice to see that MS is making profit from its mobile division. Its really odd to see that after a decade, they have starting making profit

IMO, its the PPCPEs are the main contributors as many people yearn for a PDA with phone in-built :)

Sunny

[Janak Parekh]

EVAR? Is your spell check broken on your Textmaker! :devilboy:
http://en.wikipedia.org/wiki/Evar#Frequent_misspellings

It was quite deliberate. ;)

--janak

[cmorris]

Definitely good news... now that they're in the black, I'd expect that it will also be easier for them to continue to ramp up their investment.

According to the numbers it looks like the amount spent stayed more or less the same for the past year.

[Ed Hansberry]

For those interested, there is definitely some Treo 700w licenses here. See this paragraph from their 2005 10Q to show how they book revenue:

Revenue for retail packaged products, products licensed to original equipment manufacturers (OEMs), and perpetual licenses for current products under our Open and Select volume licensing programs generally is recognized as products are shipped, with a portion of the revenue recorded as unearned due to undelivered elements including, in some cases, free post-delivery telephone support and the right to receive unspecified upgrades/enhancements of Microsoft Internet Explorer on a when-and-if-available basis. The amount of revenue allocated to undelivered elements is based on the vendor-specific objective evidence of fair value for those elements using the residual method. Under the residual method, the total fair value of the undelivered elements, as indicated by vendor-specific objective evidence, is recorded as unearned, and the difference between the total arrangement fee and the amount recorded as unearned for the undelivered elements is recognized as revenue related to delivered elements. Unearned revenue due to undelivered elements is recognized ratably on a straight-line basis over the related product’s life cycle.

Clearly not all of what Palm has purchased so far is in there as some of it falls into the "unearned revenue" section on the balance sheet, but I have no clue what that is - 10%, 90%? And, I have no idea how many licenses Palm purchased either, but it is a safe bet that Palm helped the quarter's results. :D

Interesting none of the "Palm" sites are picking up on this news. Aren't they interested in how one of their OS providers for Palm's devices is performing? :wink:

[Macguy59]

The psudo chest bumping over the mobile division finally turning a profit after 10 years is rather amusing :lol:

[Stik]

The psudo chest bumping over the mobile division finally turning a profit after 10 years is rather amusing :lol:

I nevar evar thought it would come to pass! :rock on dude!: