The Writing Is On The Wall And The Correspondence

In the past year or so, some here have repeatedly claimed that M$’s OS is thriving and the only way to go.“the factors contributing to the decline in Windows PC operating system are addressed in various disclosures in our Segment Results of Operations, including D&C Licensing, Commercial Licensing, and Corporate and Other.” Why then do M$ and the SEC openly discuss the decline in the OS? It’s because it’s happening and affects the bottom line. I’ve been reporting that for years now and the SEC is concerned that investors may not be getting the full story because of the layout and detail of M$’s filings. I like that. The US government barely managed to get M$ to quit doing illegality in the market. Now they seem to be on top of the situation with disclosures.

That’s good. Those disclosures are one of the few reliable means of measuring the health of the monopoly. I think it’s safe to call it “declining health” because many more personal computers running */Linux are sold each year than the monopoly sells licences. In fact, M$ is giving away licences to try to hold back the tide. Tomorrow’s filings should be informative. Note that the next item in the filings was a reminder that the SEC does not consider the correspondence sufficient to get the SEC to drop its guard… Chuckle. Expect greater disclosure/quantification of the decline real soon now. “In future filings, we will provide a reconciliation to our tabular disclosure of operating expenses by segment group noting that integration and restructuring expenses have been excluded from this presentation.” Yes, it seems M$ intends to work for a living instead of coasting from now on.

See Correspondence Between M$ and The SEC.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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15 Responses to The Writing Is On The Wall And The Correspondence

  1. ram says:

    It is interesting that all the world’s biggest banks and hedge funds run Linux on their quant servers (and most of their desktops). Looks like that bet has been placed quite some time ago 😀

  2. oiaohm says:

    Next report will be interesting to see what happens to that extra 6 billion in short term debt Microsoft managed to clock up since June.

    Lower income increasing debt equals disaster sooner or later.

  3. DrLoser wrote, “Current bets stand at -5% to +5%.”

    Wow! I was way off. Revenue was down 25%. They must have given away a lot of licences or else made fewer sales…
    “D&C Licensing revenue decreased $1.4 billion or 25%, mainly due to a decline in Windows Phone revenue, as well as lower revenue from licenses of Windows OEM and Office Consumer. Windows Phone revenue decreased $635 million or 61%, primarily due to prior year revenue associated with joint strategic initiatives with Nokia that ended in conjunction with the acquisition of NDS. Windows OEM revenue declined $455 million or 13%, due to a 13% decrease in both OEM Pro revenue and OEM non-Pro revenue. Windows OEM Pro revenue decreased, primarily due to benefits realized from the expiration of support for Windows XP in the prior year and an increased mix of lower-priced licenses for devices sold to academic customers. Windows OEM non-Pro revenue declined, mainly due to an increased mix of opening price point devices sold. Office Consumer revenue declined $208 million or 25%, reflecting the shift of customers to Office 365 Consumer, and declines in the Japan PC market where Office has high attach to PCs. ”

    Competition works if it’s allowed.

  4. DrLoser says:

    So, o prediction on the Client Division then, Dougie?

    As I suspected. Robert has balls. You do not.

  5. DrLoser says:

    After gazing at this and seeing that ~42% of revenue is commercial, it makes one wonder if M$ is not double-counting by accounting for licensing in thier own data-centers.

    Could be, Dougie. Could very well be.

    Now, once you’ve sat back in your comfy chair, checked how “their” should be spelled, smoked a Sherlock Holmes pipe or two and availed yourself of a devilled kipper, courtesy of Jeeves, I sincerely look forward to your no doubt wise and informed — after all, you are somebody who intuitively understands how corporate accountancy works — estimate on how long the Feds will take to catch up with this nefarious practise.

    Could be a long time, couldn’t it? I mean, the accounts of a Software Corp are incredibly different to the accounts of, say, GE.

    I need this Wisdom, Dougie. I Need it. Two years, maybe? I could rake in the Bit-Coins on a simple Arbitrage deal given this Valuable Insight from a small-town loser snake-oil salesman such as yourself, who Knows All and Is Prepared To Share His Ineffable Wisdom!

  6. dougman says:

    After gazing at this: http://www.statista.com/statistics/273482/segment-revenue-of-microsoft/ and seeing that ~42% of revenue is commercial, it makes one wonder if M$ is not double-counting by accounting for licensing in thier own data-centers.

    “Hey lets build a data-center!…Why??…We can deploy countless servers and count them as revenue from XYZ front company!…GENIUS!!”

  7. dougman says:

    Here is a better breakdown:

    http://techcrunch.com/2015/01/26/microsoft-slips-2-after-reporting-26-5b-in-fq2-revenue-1-1b-in-surface-revenue/

    “Here’s how Windows performed across its three main revenue silos:

    – Windows OEM Pro revenue declined 13%; revenue was impacted by the business PC market and Pro mix returning to pre-Windows XP end of support levels and by new lower-priced licenses for devices sold to academic customers

    – Windows OEM non-Pro revenue declined 13%, with license growth from opening price point devices

    – Windows volume licensing revenue increased by 3%, with annuity revenue growth partially offset by declining transactional revenue

    All told, it was a solid quarter for the company, but not a corker when it came to raw financial performance. Microsoft has been on something of a product roll lately, with its Windows 10 operating system picking up decent early reviews, and its Surface Hub and HoloLens devices stoking mass-market interest. Today earnings underscore that uptick in corporate momentum.

    Cloud and devices each did well. Windows had a predictably rough quarter. The metamorphosis of Redmond continues.”

    So it seems things have slipped a wee bit and I suspect the snowball will grow.

  8. DrLoser says:

    But it would be unfair to leave Dougie out. Dougie … Dougie? Try and tear yourself away from that high-quality Linux Desktop Porn …

    Dougie? A prediction, please. The Microsoft Client Division. Over and under. Current bets stand at -5% to +5%.

    It would be a rotten shame if you didn’t contribute your expertise as a salesman, wouldn’t it?

  9. DrLoser says:

    And whoops again. You do indeed have a backbone. (I really do apologise — I’m used to gibberish from oiaohm. It’s my fault. Yes not good insane reading failure, to quote the master.)

    You say minus 4-5%. I say plus 4-5%. Well, we both have something to work with there. As to the long-term impact … well, to quote JMK, in the long term, we are all dead.

  10. DrLoser says:

    Oops, I didn’t notice your presumably authoritative rebuttal, Robert. My apologies:

    Not likely unless they pull some cash out from a mattress. The global market for legacy PCs is about flat. They’ve given away many copies of that… So, I would predict a 4-5% downturn compared to the same quarter last year. Either way, it doesn’t matter much. I know M$ is declining. It’s too bad that it’s such a slow process. The world deserves to be free of them.

    So, no prediction, then? Get some backbone, Mr Pogson!

  11. DrLoser says:

    Oh yes, headset will sell more M$ devices…*rolls-eyes* Perhaps games and such thats about it.

    Well, there goes SteamBoxen, the Saviour of the Linux Desktop, Dougie.

    Isn’t it interesting to speculate on how a company with $172 billion in assets (June 30th, 2014) is going to splurge on random tech possibilities? A completely different thing to Google splurging on Da Glasses, of course.

    But, worthless as your comment was (I deeply admire your consistency in this regard), it does at least offer me the chance to ask Robert one more time:

    Got an estimate for the M$ Client Division performance in the upcoming quarterly results? To remind you, my estimate is a 4-5% uptick. And yours, Robert?

    If you’ve answered this on another thread, please forgive my impertinence. Sometimes snake-oil salesmen get in the way.

  12. dougman says:

    Headsets are the new desktop? LOL..

    “Microsoft CEO Satya Nadella Just Said These Weird-Looking Goggles Are ‘The New Desktop”

    http://www.businessinsider.com/microsoft-alex-kipman-hololens-kinect-2015-1

    Oh yes, headset will sell more M$ devices…*rolls-eyes* Perhaps games and such thats about it.

  13. DrLoser wrote, “I proposed that the client division will see a 4-5% uptick.”

    Not likely unless they pull some cash out from a mattress. The global market for legacy PCs is about flat. They’ve given away many copies of that… So, I would predict a 4-5% downturn compared to the same quarter last year. Either way, it doesn’t matter much. I know M$ is declining. It’s too bad that it’s such a slow process. The world deserves to be free of them.

  14. DrLoser says:

    Tomorrow’s filings should be informative.

    Indeed they should, Robert. I look forwards to them. And don’t forget: with no pressure, I proposed that the client division will see a 4-5% uptick.

    I notice that you’ve made no such prognostication. Well, there’s still a little while to go.

    Even stating that you expect a year-on-year decline would work. I mean, who’s going to argue with less than 0%, if it turns out that way?

    Go on, Robert. You know you want to.

  15. dougman says:

    No more “cookie jar” accounting!

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