Monday, July 30, 2012

Microsoft Earnings Review: EPS Suffers From $6.2 Billion Bungled Vision!

Microsoft reported QE June 2012 financial results on Thursday, July 19

Though known in advance, you really have to see the financial statements and the charts below to appreciate the extent of what Microsoft management is capable (incapable?) of. Microsoft took the $6.19 billion non-cash accounting charge, announced 7-2-12, related to the 2007 acquisition aQuantive, Inc. Yep, they wrote off as an impairment the goodwill on that failed venture. And what a failure it was! So we begin the current quarterly financial performance in a very deep hole for this monumental loss and bungled vision.

Ignoring any hard-won bottom line gains against Apple, Google, Amazon, et. al now wiped out by a single acquisition catastrophe, year over year total revenues have been flat to decreasing recently. Earnings per share year over year was downtrending anyway. As I have noted before, the ongoing existential questions are now if Microsoft is ultimately relevant as the technology leading edge races forward and if the company life cycle has peaked.

Total assets are now a record $121+ billion. Apple, HP, and IBM are the other exclusive members of the Big Tech $100 Billion Assets Club. Liquid assets (cash, cash equivalents, marketable securities) have increased to an amazing $63+ billion. Add noncurrent equity and other investments and total asset reserves reach nearly $73 billion!

Metric, QoQ Change, YoY Change
Total Assets: $121.27 billion, +3%, +12%
Total Revenues: $18.06 billion, +4%, +4%
Net Loss: ($492 million), -110%, -108%
Loss per Share: ($0.06), -110%, -109%

“We delivered record fourth quarter and annual revenue, and we’re fast approaching the most exciting launch season in Microsoft history,” said Steve Ballmer, chief executive officer of Microsoft. “Over the coming year, we’ll release the next versions of Windows, Office, Windows Server, Windows Phone, and many other products and services that will drive our business forward and provide unprecedented opportunity to our customers and partners.” “The combination of solid revenue growth and rigorous cost discipline drove double-digit operating income growth for the quarter, adjusting for the goodwill impairment and deferred revenue,” said Peter Klein, chief financial officer of Microsoft. “We are focusing our resources in strategic areas that will deliver shareholder value and long-term growth opportunities.”


Seeking Alpha