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Archive for July, 2009


Sunday, July 26th, 2009

If you can believe The Wall Street Journal, the main reason Microsoft suffered reduced sales is because of the “PC Blight,” which refers to the economic downturn affecting the PC industry. They sell less, so it means Microsoft distributes fewer OEM licenses, from which they earn most of their software income.

However, millions of netbooks with Windows XP preloaded on them are selling, so didn’t that make the difference? Not quite. You see, in order to get PC makers to ditch Linux and still keep the prices ultra-cheap, Microsoft had to dump cheap XP licenses on them. In other words, they were forced to push an eight-year-old operating system, because the current one, Vista, was too sluggish to run acceptably on these little boxes and, of course, too expensive.

Supposedly Windows 7 will be beefed up enough when it comes to performance to run acceptably. At least Microsoft is banking on that to gain decent sales in the final quarter of the year, but is that true? It’s hard to know, because there’s not much beta experience to depend on. Even then, you can’t assume that a beta version of an operating system represents the final product, or even that some of the people reporting great performance and fewer problems aren’t paid shills quietly doing Microsoft’s bidding.

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Thursday, July 23rd, 2009

I am sometimes accused of writing lurid headlines just for the effect or the higher hit counts. I don’t agree. The headlines always relate to the content, and in this case, my theory is right on the money. What’s more, recent figures based on retail sales of new PCs from the NPD Group confirm the trend that will ultimately marginalize the rest of the PC makers and push Apple to the top of the heap.

Indeed, we’re already seeing how the industry trends are hurting Microsoft. For the first time since 1986, Microsoft has reported a full  year decrease in sales. Indeed, the stock market Thursday afternoon quickly reacted to the news that Microsoft’s revenue fell short of analyst expectations, dropping some 7.8 percent in after-hours trading.

For the most part, Microsoft’s excuse was to blame the economy and declining PC sales. Every PC that isn’t built means less revenue for Microsoft, which gets its OEM fee from virtually every unit sold.

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Wednesday, July 22nd, 2009

As I write this, Apple’s stock price is soaring, and that’s a surprise. Usually, after they release record-breaking financials, Wall Street seems to react negatively. No, I’m not about to explain the workings of the financial community, and I doubt anyone can with any meaningful level of accuracy.

The biggest difference this time out is the fact that the world economy is on life support, yet Apple still managed to report record revenues for a non-holiday quarter. Those Wall Street analysts, who always seem to on the wrong side of Apple’s numbers, are now surprisingly bullish.

How things have changed!

You have to wonder whether Apple is somehow using magic to defy gravity, but it may come down to something that you can understand with simple common sense, and that is that they simply build products people want to buy. This despite the fact that Apple has some serious competition in all their market segments, yet they’ve managed to surprise the naysayers again and again.

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Tuesday, July 21st, 2009

Suppose I told you a few months ago that Apple would come out of the April through June quarter with the highest revenues ever for a non-holiday period. Would you believe me, or just assume that the worldwide recession would make it impossible even for Apple to deliver credible financial results?

Certainly many financial analysts delighted in finding every single indication of faltering sales, and spent plenty of time telling us that Apple had the wrong product mix and needed to build cheap Macs, including netbooks, to remain a credible contender.

In recent days, with growing indications that Mac sales had recovered and then some, the predictions have become more optimistic, but, as usual, Apple still beat the street. Why am I not surprised?

For the quarter ending June 27, which Apple counts as the third quarter for their fiscal year, they reported revenue of $8.34 billion and a net profit of $1.23 billion, amounting to $1.35 per diluted share. This compares to last year’s totals of $7.46 billion, with a net profit of $1.07 billion, or $1.19 per diluted share.

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