Earnings Call: Despite Down Economy, MSFT Ad Revenue Up 17 Percent; Plans To Add Jobs In Search
This story was written by David Kaplan.
[In progress]After an apt instrumental version of Phil Collin's "Against All Odds," a Microsoft (NSDQ: MSFT) rep explained that the call was moved from the scheduled afternoon time to the morning after deciding to release the news that it would be laying off 5,000 staffers over the next year, with 1,400 getting the pink slip today. Chris Liddell, SVP/CFO discussed that impact of global financial collapse on PC sales, though he did note that in spite of the weak economy, ad revenue was up 17 percent. Lidell also insisted that while it will try to cut costsincluding wage freezes and reducing vendor contractsit will continue investments in "key areas."
Advertising: Going over the ad categories, search was up in "double-digits," though display was slower, Bill Koefeod, investor relations, said, though he didn't offer specifics.
EDD: XBox sales were another positive for Microsoft in an otherwise dismal Q4. In particular European XBox sales grew double over the previous holiday season. Xbox Live membership now at 17 million. More to come
Outlook: Liddell notes the second half of the year doesn't look good, especially for the PC market. Ad spending will remain weak, with display continuing to worsen. Shrinking consumer spending will also impact XBox sales in the second half.
Ballmer's perspective: "We are in the midst of a once in a lifetime of economic conditions. The economy is not in a recession, but in a resetting of economic conditions. Neither the consumer nor the business side is immune. There are three things to focus in on: number one, innovation; number two is market share, and we always focus on this, but in these times it's more important; and three is efficiency. The question now is, how can you get more done for less. We're putting the brakes on at a new level. Even while we take out 5,000 jobs, we will add 1,000 jobs in areas like search."
Earnings release | Webcast (11:00 AM EDT)
By David Kaplan