WinInfo Short Takes: Week of January 21 (Quarterly Earnings Special Edition)

Microsoft Reports Revenue Thanks to Strong XP Sales
Microsoft announced record revenues of $7.74 billion for the quarter ending December 31, exceeding expectations. But Microsoft's profits were down to only $2.28 billion, compared to $2.62 billion for the same quarter a year before, thanks in part to a $660 million charge related to consumer class action lawsuits. The company said that revenues were driven by strong sales of Windows XP and the Xbox, two of its most successful products ever. Thanks to XP, Windows client sales are up 24 percent, and Microsoft reports that its Xbox game console sold 1.5 million units during the holiday season. All in all, it's pretty clear that the Microsoft juggernaut has weathered the recession pretty nicely, thank you very much.

Microsoft Elevates Woman Exec to Head Tablet PC Efforts
What is this, the 1970's? It's odd in this day and age to point out the fact that a woman (gasp!) was elevated to the position of vice president (egad!) at a major US corporation, but then we're talking about Microsoft here, and if you've looked recently at the ranks of its executive staff you'd realize that the glass ceiling is indeed still firmly in place up in Redmond. Anyway, it looks like they're doing something about it, albeit slowly: The company announce this week that Alexandra Loeb has been promoted to vice president of the Tablet PC division, making her one of only 11 female vice presidents at the company, out of a total of about one hundred. Let's hope this is the start of a trend.

Full Text of the Gates Security Memo Available
I've posted the full text of the Bill Gates memo about "Trustworthy Computing" to the WinInformant Web site. So if you're morbidly curious about how Gates likes the rally the troops, head on over and check it out.

Report: Xbox HomeStation is Real
According to Prudential Securities, reports that Microsoft will release a second generation  Xbox called the HomeStation are true, and the device will open up Xbox to a wide range of new capabilities, including Web browsing and email, Digital Video Recording (DVR), and DVD playback. Microsoft's play into the living room was supposed to be announced at CES, but apparently some manufacturing commitments haven't been finalized yet. This leads one to wonder: Was the Freestyle UI we saw really for the Xbox HomeStation? After all, the Xbox is basically a PC anyway, and it could probably be made to work with XP. And the Xbox HomeStation would be an easier sell in the living room than a PC. Stay tuned.

Apple Earnings Slightly Under Expectations
Apple Computer announced earnings that were slightly under expectations, including net income of $38 million on revenues of $1.38 billion. This represents a dramatic improvement over its earnings from the same quarter last year, when the company lost $195 million, setting the stage for a fiscal 2001 loss. Apple said that its shortfall was due to dwindling demand for the previous generation iMac, due to speculation about a new model, which was finally announced in January. Let's hope the new iMac doesn't "do a Cube" and nosedive: The company says demand for the expensive device is exceeding its estimates, though the first units won't ship until February, and the el-cheapo model won't reach consumers until March at the earliest.

Apple Debunks Mac Myths with Myths of its Own
And speaking of Apple, the company posted a bizarre page on its Web site seeking to "debunk Mac myths," but the bulleted list, predictably introduces its own set of myths. Apple says that it's a myth that "everyone" uses Windows, but the reality is that Apple's worldwide market share fell again in 2001, so only 97 percent of everyone uses Windows. Apple says that Macs and Windows machines can work well together, contrary to popular belief, but its claim that Macs connect "seamlessly" to Windows networks is a huge exaggeration, as anyone using the Mac OS X "Connect to Server" feature will tell you. Other "myths" include software availability on the Mac platform, Macs not running Microsoft Office (I don't think anyone was confused on that one), and my favorite, that Windows has caught up with the Mac. I agree that this isn't true, but then that's because Windows surpassed the Mac in most areas about seven years ago when Apple was caught in its Copland quagmire. As for Macs being "easier," the final myth, I have a recommendation: Try XP.

IBM Hit by Economic Downturn
IBM posted its third quarterly revenue decline in a row this week, with net income of $2.3 billion on revenues of $22.8 billion. The shortfall represents an 11 percent decline year over year, and sent the company's stock nose diving. Most damaging was news that IBM's historically strong services suffered a fall in revenues, which surprised analysts and angered investors. What I'm upset about is IBM's prices: Look, we all know that the ThinkPads are great, but how about pricing them for mere mortals?

Compaq Back in the Black
Compaq's merger with Hewlett-Packard (HP) may be up in the air, but its revenue stream is back on track after taking a beating last year. The company posted net income of $92 million for the previous quarter on revenues of $8.5 billion, a 26 decline over the same period last year. Compaq CFO Jeff Clarke credited the company's gains on cost control efforts and demand for Windows XP. But the market remains wary of Compaq, which is seen as the lesser suitor in the planned HP merger. If the companies do merge, it will create a power house that can rival Dell. If not... well, they're just another PC company.

Intel Revenues Exceed Expectations
Microprocessor giant Intel reported a 77 percent drop in year-over-year quarterly earnings, but profits and revenues still exceeded expectations thanks to better than expected holiday PC sales. The company earned $998 million on revenues of $6.98 billion. Intel reported that it doesn't yet see and end to the current economic conditions, and expects revenues to be flat going forward. However, the company says it can ramp up manufacturing immediately when demands increase and crush its rivals, "just like in the good old days."

AMD Surges on Stronger-than-Expected PC Sales
And speaking of microprocessors, Intel's biggest rival--AMD--also experienced higher than expected sales during the holiday season, posting better than expected quarterly results. Sadly, that meant that its loss was less than expected: AMD reported a $15.8 million loss on revenues of $951.9 million. But the company said that consumer acceptance of its Athlon XP processor line was phenomenal, with 7.8 million units sold. Not bad for a company that's had trouble keeping up with Intel in the MHz wars and has had to rename its chips to show off relative performance instead.

MSN Users Hit 7.7 Million
One gets the idea that MSN could be successful just feeding off of users that tired of AOL's insane user interface and expensive pricing. Microsoft announced this week that its MSN online service has added about 750,000 new users recently, bringing the total number of users to 7.7 million. However, it still trails AOL dramatically, since that service has about 33 million customers. Indeed, AOL added almost as many new users in 2001 alone--6.5 million--as MSN has in total. And MSN has yet to turn a profit, despite a have decade of spastic reorganizations and changes.

Sony Confirms its Dropping Tablet-based PC
I think this might have something to do with the company's decision to not make a Tablet PC device. Sony confirmed this week that it is discontinuing its VAIO Slimtop Pen Tablet, a Windows 2000-based PC that includes a Tablet PC-like touch screen. Sales of the device have been low, due partially to its cost. But I think the problem with the Slimtop is the same one Microsoft will face with the Tablet PC: It makes for a good demo, but no one really needs one.

Yahoo Loses Money, President
Online giant Yahoo announced this week that it lost $8.7 million in fourth quarter 2001, thanks in part to a $16.8 million restructuring charge. The struggling company will also lose its President as a result, with Jeff Mallet resigning to spend more time with his family and less time "struggling in a Web ad revenue death grip with AOL and Microsoft." Yahoo, with 219 million users, is one of the largest Web properties in the world, but it's suffered in the days after the dot com implosion because of falling ad sales.

Monday is a Holiday
WinInfo Daily UPDATE won't be published Monday because of the Martin Luther King Jr. holiday here in the United States. Have a safe and happy long weekend.

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