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Microsoft Makes More Money

RCPU's incontrovertible rule of the technology industry passed another test last week. The rule, of course, is that no matter what happens -- with the economy, with the industry or within the hallowed walls of Redmond itself -- Microsoft makes more money.

And so it came to pass last week, as you probably know by now, that MSFT (cool financial writers love to refer to companies by their ticker symbols) tore through Wall Street expectations again and reported another blockbuster quarter for the period ended Dec. 31, 2007. Plus, the company said that fiscal 2008 will also beat the Street's expectations. Microsoft makes more money. And, hey, for partners, that's a good thing.

(By the way, a parenthetical note here not specific to Microsoft or its earnings release: Don't be too impressed when companies -- and most of them do this -- talk about reporting "record revenues" for a quarter. All growing companies should report higher revenues for their most recent quarters than they did for the quarter before or for the year-ago quarter. If they don't, that's a sign that the company is shrinking, not growing -- and that's usually a very, very big problem. Record revenues just means that a company is still growing -- which is totally normal and healthy, but not always terribly impressive.)

In case you missed them, there were a few interesting little tidbits from last week's earnings report. First of all, SharePoint is now a $1 billion earner for Redmond, which goes some way toward muting claims from competitors (hello, that nobody really wants it or likes it. (We always suspected that the folks at were engaging in a little hyperbole when they said that, anyway -- although, to be fair, the exact phrase we heard was that SharePoint was "owned by millions, used by few and loved by none," which could still be true, although we kind of doubt it.)

Also, the Entertainment and Devices division -- the much-maligned (sometimes in this space) folks who bring you the Xbox and Zune -- finally came up profitable for a quarter, and Microsoft says that the division will turn a profit for the fiscal year. The one technology division that's still in the red is the infamous Online Services Business, which actually lost more money in the last quarter than it did in the same quarter a year ago. Yes, that's the stuff that competes with Google.

Perhaps the most interesting feature of the earnings news -- and it hasn't escaped the notice of the press -- is that Microsoft brought in $77 million through anti-piracy activities. It's a drop in the revenue bucket, but it's some quantification of how much piracy actually costs Microsoft (and partners) and how much the company can regain by fighting it.

So, Microsoft's making more money, but are you, partners? Are you reaping any of Microsoft's windfall? Sound off at

Posted by Lee Pender on 01/29/2008 at 1:21 PM


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