Seek Nuance

When talking about revenue or profits, “plummet” isn’t a word you want to see in the same paragraph.

Two weeks ago, I predicted another Microsoft layoff this year. Today, TechFlash’s Todd Bishop reports that Microsoft reported fourth quarter revenue down 17%, and profits down to 34 cents/share. Every division had a revenue decline. Windows Clients had a 29% revenue decline.

This news only reinforces my expectation of another layoff. They’re not going to cut just window dressing this time; they’ll have to hack off some flabby meat chunks.

See the TechFlash post for more info.

I predict Microsoft will have another layoff this year.

This is either a bold or stupid thing to say, much less write in a blog. Probably both. I’m no economist, financial guru (to which my last set of brokerage statements will attest), or business seer. Nonetheless, I have two eyes, and a brain that occasionally produces a worthwhile thought.

Microsoft faces serious challenges ahead, which I think will result in another round of layoffs.

The most significant will be that the economy simply won’t recover as quickly as the company expects it to. (For that matter, this is also true of many other companies, and our Federal Government.) I say we’ll surpass 10% unemployment. And the “recovery” will be shaped like an “L,” and not a “U” or “V”. The result will be a very challenging environment for revenue and profit targets, even if all their products were on otherwise firm footing.

Another challenge will be specific to the Windows product line. Windows 7 won’t bring in the hoped-for revenue, even without this economic clime, for three separate but connected reasons.
Read more…