Seek Nuance

I’ll stick my neck out again with a Microsoft prediction. CEO Steve Ballmer will be out of a job within the next 12 months.

The major reason, whether stated or not, will be Microsoft’s staggering incompetence in adapting to (much less anticipating) changes in the online and real-time computing landscape. It may not be all his fault, but the buck stops with him.

In July, I predicted that Microsoft would have another layoff. Today, the news came down: Another 800 employee layoff. That’s slightly less than 1% of its worldwide headcount. (John, I beat the year’s end with 58 days to spare.)

I’m grumpy about the local Seattle media’s self-serving Web 2.0 / blogosphere circular hand-tugs.

I’m grumpy about obvious toot-your-own-horn tweets on Twitter. (Hint: If I’m interested in your blog, it’ll be in my RSS reader. Tweeting that you just wrote a blog post is inane.)

I’m grumpy about how the main stream media writes about the stock market. It’s up, it’s down, investors are bullish or bearish. Here are two news flashes: Investors are clueless. And an index of 30 stocks doesn’t represent the economy, or even the rest of the stock market.

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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.
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