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Microsoft (MSFT): Weak Quarter, Plenty Of Reasons For Yahoo! (YHOO) Deal

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By Douglas A. McIntyre Updated Published

Microsoft (MSFT) posted EPS of $.33 in the first quarter compared with $.47 in the same period last year.

The period, which is the fiscal third quarter for the company,  saw revenue fall to  $13.65 billion from  $14.45 billion.

Microsoft offers updated operating expense guidance of $26.7 billion to $26.9 billion, including severance charges, for the full year ending June 30, 2009. That will not go over well with investors.

Revenue in the flagship Client division dropped sharply to $4.3 billion. The revenue at the Business division was off slightly to $4.5 billion. The only division that had an uptick was Servers and Tools with revenue of $3.5 billion.

The company’s entertainment products, mostly Xbox sales, reported flat revenue at $1.6 billion. But, online services, including MSN had a drop in revenue from $843 million to $721 million. Losses at the unit rocketed up to $575 million from $226 million.

No wonder MSFT needs a deal with Yahoo!.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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