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3 O'Clock High: The Aging Mr. Softie


"And what's Justin Timberlake really like?"

"There's nothing sadder than an aging Hipster" Austin Powers

The company reports tonight. In the short term:

"The Street is generally expecting an in-line quarter and guidance, with slight variations in revenue possible depending on Xbox 360 shipments. First Call consensus is $0.33/$11.96B, with the earnings figure including stock-based comp, which compares to company guidance of $0.32-$0.33 on revenue of $11.9-$12.0B.

StreetAccount consensus estimates by category (6-9 firms): Client $3.47B, Server/Tools $2.79B, Information Worker $2.96B, Business Solutions $235M, MSN $598M, Mobility $91M, and Home/Entertainment $1.75B. Estimates were fairly tight for all divisions except Home/Entertainment, which fluctuated somewhat depending on Xbox 360 figures.

Though the Xbox information could grab headlines, several analysts noted that the company-wide impact is minimal and lower-than-expected shipments would actually be accretive due to negative margins on the console. MSFT guidance for f06 (June) Xbox shipments is 4.5-5.5M units.

As usual, deferred/unearned revenues will also be closely watched. SA consensus is at $9.11B, reflecting a +$304M sequential increase. Q3 consensus is $0.33/$10.99B and f06 is $1.32/$44.23B, which compares to guidance of $1.28-$1.32 on revenue of $43.7-$44.5B. Conference call at 17:30 ET: 517.308.9218 pw MSFT."

Microsoft is whetting our collective conference call appetite by leaking/ ghostwriting mainstream press stories of their plans to destroy the i-Pod. Check that, "It can't just be our version of the iPod" comments "Xbox Boss" Peter Moore in the afore linked article, implying that the MicroPod would be a game-playing super hand-held of video entertainment.

I find it odd for Microsoft to be pondering phantom products prior to reporting tonight. It begs some questions, only some of which will be answered on tonight's call:

  • Is Bill Gates a Minyan and, if so, do I owe him a "Thank You" for giving me such a timely illustration of Step 2 in the Conglomerate Stages of Threat Response we discussed just the other day? I mean, am I the only one who can all but actually see them sitting around Redmond getting all furious about the iPod? "We can be trendy with the young people" they nasally cry, hitching their trousers up to just under their nipples in determination then rushing out to create a nine pound iPod that serves as a camera, phone and homing device.
  • Why is the Xbox Boss being allowed to serve as the mouthpiece for anything other than an explanation as to why Microsoft still can't produce the Xbox 360? Not to pick on the guy twice in one day but it seems like a massive problem that under 700k Xbox360's have shipped in the US so far. I don't care what MSFT says in the call tonight, that's just terrible. "Word on the Street" is that the PS3 from Sony (SNE) is going to be a better machine. That's why Microsoft spent millions on hyping the release of the 360. That's why Bill Gates was on TV, cutting to the front of the line and buying a 360 that could have maybe gone to Jeffmacke. You've got scores of game titles rotting on the shelves because you can't make the hardware.
I'm just saying that I'd be focusing on making working Xbox 360's, were I the Xbox Boss, that's all.

  • Is that Operating System (Code Named: Pet Sounds) going to be released anytime soon? Yeah, we know, it's a real huge chunk of software.
No positions in stocks mentioned.

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