Why Microsoft Gained Amid the Market's Carnage

Shares of Microsoft (NASDAQ: MSFT  ) rose today, after the company reported earnings last night. In particular, there were several signs that the company is making progress in its transition toward becoming primarily a devices-and-services company, as CEO Steve Ballmer had envisioned. Xbox One sales are at 3.9 million units sold, neck-and-neck with Sony's Playstation 4, and revenue from Microsoft's Surface tablet more than doubled sequentially, to $893 million.

However, the Surface has been a major trouble spot for Microsoft in the past, and still has a negative gross margin, even today. In this segment of Tech Teardown, Erin Kennedy discusses Microsoft and its future with Evan Niu, CFA, our tech and telecom bureau chief. Evan takes a closer look at sales of the Surface, as well as the Windows Phone, and discusses how important each is to Microsoft's core business going forward. He also looks ahead to the company's future new CEO, and consumer anticipation for Windows 9.

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  • Report this Comment On January 24, 2014, at 10:47 PM, techy46 wrote:

    I really get sick and tired of all your young idiots (Fools) that have suckled on Apple juice and Google bots knocking Ballmer and Microsoft. Microsoft was up today because yesterday after the market closed the reported a really good quarter of revenue and earnings. You can knock off all the subjective crap about Surface and Windows 8 because you do not know squat about enterprise technology.

  • Report this Comment On January 26, 2014, at 2:19 AM, wabartlett66 wrote:

    Bill Gates doesn't fear cloud. He and Melinda fear for the future of our planet if we all treat poverty and the third world with ongoing contempt and frankly it degrades the writer to call a man who made his money in a clean way and is now committed to using his wealth to solve major world problems in Africa and India, filthy rich.

    In my book the moniker "FILTHY RICH" can be attributed to people like Larry Ellison with his conceited displays of wealth like the Americas Cup and stopping the building of his yacht when another Billionaire commissions one bigger just so he could rearchitect his own to be bigger again.

    So back to Microsoft, how about some real analysis fools.

    Cloud services are transforming Microsoft and unlike regular licensing where the user owns something in the Cloud you are subscribing, this setting up the need to keep paying in order to consume, hence providing Microsoft with stickier long term earnings.

    The Datacenter is still overwhelmingly Microsoft, by volume and value.

    Surface has kicked started a market segment where the conventional OEM's had failed to deliver against until Surface came along, now the likes of Lenovo and Asus are designing and building amazing products that are fit for professionals, cementing Microsoft in the corporate landscape even while PC's are declining.

    As a workforce, Microsoft achieves consistently high internal scores around employee engagement and "best place to work" scores.

    Lastly, where many corporations have lost their way with uncertainty of a CEO leaving and a long search for a replacement. These latest results have shown that the Microsoft culture, instilled by Bill Gates, is still driving focus and action.

    All in all, if it where my money I'd look for these types of qualitative and quantitative indicators in an investment.

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