Liveblogging the Microsoft First-Quarter Earnings Call: Look, Wall Street–Jazz Hands!
by Kara Swisher
Posted on October 23, 2009 at 7:42 AM PT
Well, well, well, that financial imp at Microsoft–CFO Chris Liddell–pulled a fast one on Wall Street and turned in first-quarter earnings that blew away all estimates and even the whisper numbers.
While revenue and net income were down for the third consecutive quarter, they were not as bad as investors had expected.
Perhaps those Microsoft (MSFT) financial predictions were no good, but the results were a strong sign of recovery at the software giant.
BoomTown liveblogged the morning conference call with Liddell, which took place at 7:30 am PT–thanks for the Kiwi-laced wake-up call, Chris!
(You can see the financial slides of the Q1 performance here.)
7:34 am: “It might have been the bottom of the economic reset,” said Liddell in the opening. “I’m very happy.”
Still, Liddell, who has been a glum goose for many quarters now, could not quite do cartwheels, noting that the economy was “still challenging.”
He also still repeated his favorite term for the market, calling it: “The new normal.”
7:38 am: Other investor guy, whose name I always forget (and who is Bill Koefoed, by the way), got on and went through the numbers. He also sounded deeply relieved and noted that it looked pretty good out there.
Liddell returned and said Microsoft was “well-positioned” to exit the econalpyse stronger than competitors.
Not so bad, although he expected personal computer and hardware sales be weak still and was not promising anything.
The online and search and advertising partnership with Yahoo (YHOO) was also on track, said Liddell.
“In summary, I feel great about how we are executing,” said Liddell, who made sure to give credit to “cost discipline.”
It was nowhere near the strong performances of Google (GOOG) and Apple (AAPL) recently, but allowed Microsoft some much needed breathing room.
7:51 am: Question time!
The first was about when the launch of Windows 7 would start bringing home the bacon.
The next was about “channel inventory build,” which was like asking Liddell to be a soothsayer. “Net positive,” he opined.
The third question was about costs from the transition of the Yahoo deal and the contribution.
Costs will up front and there will be a contribution in the “hundreds of millions.”
Next: The future of cost cuts.
“I see that as the journey that never ends,” said Liddell.
Memo to PR head Frank Shaw: Cancel the truckload of caviar for a big honking party in celebration of these results. Stat!
7:58 am: I missed one question, since it was so boring, as was the answer.
Then a good one came about the deployment of Windows in corporate environments and elsewhere.
“All of the feedback we get so far is positive,” said Liddell, not that he is bragging or anything. “The sales in retail, we are expecting to be very good.”
Another cost question, this time about whether more investments are coming in the years ahead.
No ramping back, thank you very much!
The next question was about the impact of netbooks on the bottom line.
Not bad, but not huge, said Liddell.
What about display advertising online? In line with the weaker market, said Liddell, but it should improve.
8:09 am: PC demand? Liddell notes the “robustness” of the PC, which Microsoft has actually been pooh-poohing over many quarters.
Liddell said he saw better days ahead, perhaps because past ones had been weak, especially business PCs. “That can’t continue forever,” he noted.
A question about Europe. “Relatively weak,” said Liddell, while emerging markets were stronger.
“This calendar year is transition to next calendar year,” said Liddell.
A query about Windows 7 revenue recognition, which comes when Microsoft sells to OEMs.
8:14 am: More on OEMs, who are the big buyers of Microsoft’s operating system software.
Next up: Another question about outlook.
“Generally speaking, we are seeing good adoption of our products,” said Liddell, but the true rebound is coming next year.
The last question is about Windows Live.
It’ll get better, but next year, folks!
Translation, if you imagine Liddell channeling “Annie”: The sun’ll come out tomorrow. Bet your bottom dollar that tomorrow, there’ll be sun!
Enjoy this lovely video of the classic song:
