Robert Pogson

GAAP – Generally Accepted Accounting Principles mean getting the bottom line right. M$’s quarterly reports are awash with “reconciling amounts” that move around from quarter to quarter like snakes in the grass. Assuming they are not lying outright I thought it would be useful to look at profits, rather than revenue to judge the health of the dark empire. It includes the office suite and server stuff and gaming etc. but at least it complies with GAAP.

You be the judge. Is it flat with some sloshes or is it rising or is it falling? If the best they can do to pump up revenue is to charge OEMs in advance of shipments they are on borrowed time. The latest quarterly report shows a “pop” for revenue for “Client Division” (+11.4%) but operating income was down 6.7%. If Christmas + new release can’t beat last year they are in deep do-do.
“Revenue reconciling amounts for the three months ended December 31, 2012 includes: the recognition of $783 million of previously deferred revenue related to pre-sales of Windows 8 to OEMs and retailers before general availability (“Windows 8 Pre-Sales”); a net $161 million of revenue deferred related to the Windows Upgrade Offer; “
Figure that out. Sooner or later the OEMs will rebel. M$ blames them for the poor showing of “8″ as if they should be grateful to be M$’s slaves. Retailers should be mad as Hell because they have “8″ languishing on their shelves. It seems to me the only health in the Client Division are businesses upgrading to “7″. That will soon dry up. When the chickens come home to roost for the client division, who will need M$’s server or office suite offerings?

I think that happened by the middle of 2012 and it’s all downhill from here on. I think there are tons of unsold “8″ PCs in the channel so next quarter should be grim for M$ and great for the rest of us. OEMs know they can make money shipping other than M$’s stuff. I recommend Debian GNU/Linux to cut ~$100 from their prices. The sooner they do that the more money they will make.