LOS ANGELES (Reuters) - Strong sales of its flagship Office software suite and Halo action game helped Microsoft Corp’s quarterly results soundly beat Wall Street expectations.
“The key thing I would stress is that the twin engines of Microsoft are still firing.
“Most people are saying Windows is a dinosaur, Office is under attack from cloud-based productivity suites. While there may be some legitimacy long-term to those arguments, people are buying about $10 billion worth of Windows and Office this quarter. And that’s up sharply from a year ago.
“I would say the reports of the death of Windows and Office are premature. The company is still a cash flow machine. The company produced $8.2 billion in cash flow and they returned $5.4 billion of that to investors.”
“The numbers are very strong and I would say that considering the environment and competitive pressures, I think these numbers are very good: the beat on the top line and bottom line.
“In its environment with its mature product lines, it’s a phenomenal execution. We have to take Microsoft results in their context. Their product lines are mature and despite the headwinds, Microsoft did well in the things they can control.
“It is what it is. Microsoft is not Salesforce.com or Apple or Google. Expecting them to grow like Google does or like Salesforce.com is plain foolish.”
“I thought the results were pretty darn good. I was especially pleased to see good results in Office in the business segment. That was a good, strong start for Office.
“My biggest quick take is that the company is sticking to its new-found religion on expenses. It used to be ‘lets throw everything at it, and not care how much it costs.’ That’s great if you’re growing gangbusters but now we’re seeing growth with margins and that’s what we want to see with investors.
“Xbox sales seems strong. This really tells of their strength of franchise. This is one of their newer offshoots, where you can say look, they make new things. This hasn’t languished like their smartphone success.”
“I’m surprised. Across all sectors, they’re really discounting heavily and pushing a lot of products through enterprises and expanding their product portfolio.
“It sounds like they’re doing a good job. The Kinect is coming out and that will be an interesting trend to see what happens there. People aren’t expecting that much from it, but it’s an addition to the gaming technology they have.
“Overall it is a surprise on the margins side rather than the revenue, because they’re discounting quite a bit. They’re working with channel partners a lot more so they have to pay out commissions to the channels.
“More broadly, with tech spending, we saw this with Oracle, the spending was very good in Q3 and there’s seems to be a budget flush paying out. Whether its Windows 7, which they got traction with in Q1, spending was healthier than expected. It would be interesting to see what happens next quarter to see if that continues or if it’s flat.”
“Microsoft had a very good quarter. Windows is still doing well, Office is doing well and servers and tools are doing well. The big three businesses are firing on all cylinders as the PC upgrade cycle continues.
“These are Microsoft’s core businesses and they’re just doing really well right now.
“I think on all accounts Microsoft did a good amount better than most people thought.
“The stock never moves. It’s hard for Microsoft to get investors excited about the story because they missed out on a lot of things. They missed out on search, on mobile. So even though Microsoft is racking up these great quarters, investors are looking toward the future and saying Microsoft missed out on these big opportunities, and their business could be disrupted.”
Reporting by Liana Baker in New York and Alexei Oreskovic in San Francisco