Feeds

Microsoft predicts 'some' ROI for online millions by 2010

Wall St slaps back

Secure remote control for conventional and virtual desktops

Two years after Microsoft rattled Wall St committing to spend millions against Google, the company's said it'll be at least another two years before investors see any return on the investment.

Chief financial officer Chris Liddell, announcing Microsoft's fourth-quarter and fiscal 2008 results, told Wall St it'll likely be fiscal 2010 before the impact of Microsoft's increased spend positively impacts its loss-making online business.

Against a backdrop of increased costs in R&D, sales and marketing, and general admin for the unit, Liddell said two-thirds of Microsoft's investment is going toward search.

He committed to "targeted investment" in OEM toolbar deals similar to the agreement with Hewlett Packard to put the Live Search toolbar on HP's consumer PCs. There will be an "accelerated rollout" of the kind of cash-back programs that have been gamed by users on eBay. There will also be spending on local engineering and data centers, acquisitions and partnerships.

All this for a business that doubled its year-on-year loss to $1.2bn despite a 32 per cent increase in revenue, and that's dwarfed by the Windows client business of $16.8bn revenue - this grew 13 per cent - and server and tools unit that grew 18 per cent to $13.1bn during Microsoft's fiscal 2008.

No wonder Wall St wanted to know how much longer Microsoft was going to spend and whether this would continue if Microsoft failed to secure Yahoo!.

"Overall, regardless of what happens to Yahoo!, it's a space we are committed to," Liddell told investors during a results call. "I can't promise a massive turn around in the short term and fiscal 2009. It's going to be a continuation of an investment."

Client, meanwhile, wasn't exactly the golden child and - like online - saw its R&D and sales and marketing costs go up. Sales and marketing expenses increased 10 per cent to $149m while the overall cost of revenue jumped 13 per cent to $115m, driven by Windows Vista "product costs".

Microsoft claimed more than 180m Windows Vista licenses have now been sold, up 40m from the last official figure.

For the fourth quarter, net income grew 40 per cent to $4.2bn on an 18.7 per cent increase in revenue to $15.8bn. Earnings per diluted share grew two cents to $0.46 - Wall St expected $0.47. As for the fiscal year, Microsoft reported a 25.7 per cent increase in net income to $17.6bn on revenue that increased 18 per cent to $60.4bn. Earnings per diluted share were $1.87, up from $1.42. .

Microsoft said growth was primarily driven in the year and quarter by licensing of Office 2007, Windows Server, SQL Server and Windows Vista, and Xbox 360.

With creeping costs, an open-ended commitment to spend and having missed the share price consensus by one cent, though, Wall St rewarded Microsoft by taking its share price down nearly six per cent in after-hours trading to $25.88.®

Beginner's guide to SSL certificates

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
prev story

Whitepapers

Designing and building an open ITOA architecture
Learn about a new IT data taxonomy defined by the four data sources of IT visibility: wire, machine, agent, and synthetic data sets.
5 critical considerations for enterprise cloud backup
Key considerations when evaluating cloud backup solutions to ensure adequate protection security and availability of enterprise data.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Protecting against web application threats using SSL
SSL encryption can protect server‐to‐server communications, client devices, cloud resources, and other endpoints in order to help prevent the risk of data loss and losing customer trust.