Update II: Watch the whole play-by-play >>>
Update I: At about 10:50 ET this morning, CNBC and WSJ’s Digits Blog reported that Microsoft had lowered its REVENUE guidance on its conference call. Not surprisingly, the stock immediately tanked.
But what Microsoft actually lowered was EXPENSE guidance. In other words, the company said it would spend less than it previously thought. This is good news, not bad, so all else being equal, it’s good for the stock.
About 10 minutes after reporting a revenue guidance cut, CNBC came back and said the lowered guidance referred to costs.
Look at the stock dip around 10:50:
Here’s the transcript via TV Eyes:
CNBC 10/23/2009 10:55:24: …>> sorry, we have breaking news. jim goldman? >> Microsoft lowering its full year revenue guidance to a range of 26.2 to 26.5 billion. the company says that ongoing head winds on a macroeconomic bases are not going to effect the company too significantly. there’s also 100 million associated with yahoo!. back with more on the show coming up after the break.
CNBC 10/23/2009 11:09:43: …>>we have to interrupt for a second. we have to go to jim goldman. >> a clarification. Microsoft is offering a full year operating expense reduction as far as the expectations are concerned. the rain we talked about earlier is for operating expenses, not the full year revenue. they’re not offering full year revenue guidance. just want to make sure we understand that. >> so, jim, that’s a pretty big clarification. >> absolutely. this is — we’re talking operating expenses and not, not full year revenues. >> wow. all right.
Original: On its earnings call, Microsoft (MSFT) lowered its guidance for cost in the next quarter to $26.2 to $26.5 billion from $26.7-$26.9 billion.
- Headcount reduction of 4% was biggest in company’s history.
- Online ads were down 3%
- Xbox revenue up 50%
- Microsoft says it will get not revenue contribution from the Yahoo deal this fiscal year.
- As a matter of fact it expects $200 million in costs from the deal.
- Excited about Windows 7
- Cashback program on search not much of an impact in the quarter
Microsoft’s stock is pulling back from its highs. Though, the market at large is falling.