Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: MicroStrategy (Nasdaq: MSTR) dropped 10% in intraday trading today after reporting an earnings miss that was a MacroTragedy.

So what: How'd they do that? EPS of $0.26 fell 73% year over year and was less than half of the $0.57 consensus estimate. Revenue of $138 million grew 28% year over year and was above the $130 million consensus forecast.

Now what: Gross margin deteriorated to 74.5% from 77.4% in the year-earlier quarter, but it was operating expenses that really whacked profits. Operating expenses grew to 72.4% of revenue from 64%, with the big increases in R&D and sales and marketing personnel. The CFO explained, "Companies are seeking to capitalize on the emergence of big data, mobile, cloud and social media ... We have made significant investments to position ourselves to capitalize." Isn't that type of investing standard operating procedure for a tech company? In any case, the higher expenses are likely to remain and continue pressuring profits in the near term ... and potentially longer.


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