Would the Giant Weather the Storm ? Microsoft Profit Alert

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During the sell off of Microsoft shares on last Friday, 24th July 2009, investors were looking pessimistically toward it. In fact, with the latest profit result released by the software giant, it looks like Microsoft , the most powerful profit software engine just couldn’t gets on it motor amid current economy situation.
It has been investors’ great concern pertaining to the software giant technology business which is facing very stiff competition and fast losing its shine, in particular when facing with the other 2 gigantic competitors, Apple and Google . With the release of latest corporate result, investors selling off its share has caused Microsoft stocks to fall stiffly of nearly 9% , which eventually lead to 20 billions US Dollars being evaporated off the market.

If we were to look at it further, the contributing reasons that causes Microsoft’s revenue falling to a low point in the second quarter this year, could be due to following these factors :-

Current economy crisis

Nobody could deny that current crisis has major negative impact on business everywhere. With the relatively low level of revenue coming from business sector, it shows that the majority of enterprises are delaying their IT expenses, which cost Microsoft stiffly.

Product Life Cycle

It has been obvious that the issue of Microsoft’s product life cycle has seriously lagging behind, while its competitors are launching more and newer innovative products rapidly. Just look at Apple’s IPhone, Google’s Chrome ( and it’s coming Chrome OS ). Competitors has been rapid in introducing new or improved product’s line, while the software giant has been seriously lagging for years.

Market Shift

Inevitably, markets are moving, including the technology sector, toward other low cost countries. Those high cost of PC-based software that has traditionally been MicroSoft main profit engine, is starting to loss out comparing to other low cost emerging markets.

With the growing crowded and continuous inflow of of low-cost mainstream computers company , the sales projection of Microsoft’s Windows 7 is not looking bright indeed.

With these challenges ahead, whether Microsoft could innovate itself and adapt to rapid market shift, remain a major concerns for investors. Nevertheless, this quarter of losses doesn’t simply means an end to the software giant, it still has a long way to go… …hopefully it could really pump more efforts in quests with others .