Last night's earnings report from Microsoft (NASDAQ:MSFT) was full of surprises and not all of them were welcome. While the company managed double-digit revenue growth in its $8.1 billion fiscal fourth quarter, it also missed earnings by a penny. That shiny Lincoln cent is not insignificant as the company has traditionally guided analysts toward lowball targets that it could then go on to clear with ease.

That wasn't the case this time.

Microsoft's move to replace employee stock option grants with actual shares of restricted stock was applauded in Fooldom earlier this month, but it won't come cheap. The company is looking for the tab to run close to $4 billion this new fiscal year. That's steep even when one considers that it earned nearly $10 billion in fiscal 2003.

Operating margins fell this past year, too, as its 13% top-line growth outpaced its 11% spurt in operating profits. While this has happened because the company is successfully growing in lower margin areas like its Xbox video game business and MSN Internet, it just goes to prove that not all diversification, even if successful, is for the better.

Microsoft is still losing money on every Xbox console it sells. It's losing even more after May's $20 price cut. It was supposed to make up the difference -- and then some -- as diehard gamers would load up on software, but that hasn't happened. The average Xbox owner has picked up just five games. While developers aren't abandoning the system the way they have Nintendo's struggling GameCube, for a company used to being the top dog it will be years before Microsoft's Xbox even approaches the market dominance of Sony's (NYSE:SNE) PlayStation2.

Sure, the company's got $49 billion in poker chip liquidity; it can sit and play in the high-stakes table for as long as it wants. Patience pays as Nintendo looks like it's about ready to fold soon, too. But Microsoft investors have been spoiled by decades of fat margins. How long they would be willing to stand by the company as it plays the game remains to be seen.

For the other side of the investing operating system -- er, coin -- enjoy Tom Jacobs' commentary this week, Why I Bought Microsoft , and Matt Richey, who put forth Microsoft as a Stock for Mom .

Should Microsoft ditch the Xbox? Is a penny missed really a penny unearned? What will the company do with nearly $50 billion sitting in cash? All this and more -- in the Microsoft discussion board . Only on