Feeds

Microsoft 2.0 feels data center pinch

'Low-priority' spending

Reducing security risks from open source software

Microsoft's burgeoning online strategy is beginning to feel the spending pinch as the company battens down against a potential recession.

The company said it's "pulling back spending in lower priority areas" including the rollout of data centers, along with reduced hiring, marketing and travel spending.

Chris Liddell, Microsoft's chief financial officer, said Thursday the goal is to reduce capital expenditures this year by $300m, "mostly in the data center side". He added: "Each division has had lower-priority spending taken out" on marketing and people related expenses like travel.

It's the first sign Microsoft is cutting costs in non-core areas and re-ordering its priorities to focus on the core.

Data centers are a key to Microsoft's online strategy, and the company has spent millions of dollars this year rolling out the centers to support its cloud-computing initiative.

All that spending, though, has meant losses and increased costs associated with any revenue that it does earn. Losses more than doubled suddenly in the summer's fourth quarter while revenue has fallen each quarter since January.

For the first fiscal quarter, announced Thursday, Microsoft's online business revenue was up 14 per cent year on year but down eight percent compared to the summer's fourth quarter. Losses were also up year on year - 81 per cent to $480m - but down fractionally against the fourth-quarter's loss of $488m.

Cost of revenue in the first quarter grew $183m or 47 per cent, "primarily driven by increased data center and equipment costs, online content expenses and agency expenses," Microsoft said.

Sales and marketing expenses increased $54 million or 23 per cent, and research and development $54 million or 19 per cent - largely due to increased "staff-related expenses".®

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple ran off to IBM
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.