Microsoft Highlights 2007 Business Challenges, Opportunities

By Peter Galli  |  Posted 2006-04-27 Print this article Print
There are a number of challenges and opportunities that will affect Microsoft's financial performance in the fourth quarter of 2006 as well as its 2007 fiscal year, the company said.

During a media and analyst call on April 27, Chris Liddell, Microsoft's chief financial officer, spent a lot of time detailing the key assumptions the company used when forecasting expectations for those periods.

PC unit growth was estimated to rise between 10 and 11 percent in the fourth quarter, while total server growth was likely to remain unchanged at between 11 and 13 percent for the full fiscal year, Liddell said.

Microsoft also expects overall IT spending, and its ability to participate in the marketplace, to remain healthy, he said.

On the client side, Microsoft expects revenue growth of 7 to 8 percent for the fourth quarter, with OEM unit growth likely to grow in line with the market, but commercial and retail business growth is expected to lag in its overall growth, Liddell said.

With regard to servers and tools, expected revenue growth is 17 to 18 percent in the fourth quarter, buoyed by strong demand for SQL Server, Liddell said.

Click here to read about the release of Service Pack 1 for SQL Server 2005.

On the information worker side, revenue is expected to rise between 5 and 6 percent in the fourth quarter, with a broad public beta for Office 2007 to be released this spring.

But revenue for MSN is expected to fall between 4 and 5 percent in the fourth quarter, reflecting continued decreases in its Access business and the continued transition to its AdCenter. MSN is also not expected to be profitable in fiscal 2007, he said.

On a more positive note, home and entertainment revenue is expected to surge between 85 percent and 110 percent in the fourth quarter.

While the fourth quarter's guidance is below the numbers supplied in January, this is because of the higher product costs involved in delivering as many Xbox 360 consoles to market as quickly as possible, which would cost some income growth in the short term, Liddell said.

Other contributors to the shortfall, he said, were the marketing, partner readiness, increased hiring underway in Microsoft's sales force for those soon-to-be-released products. He also attributed it to Microsoft's move to quicken the pace of development of business where it could drive growth and build meaningful share, including services, unified communications and collaboration, business intelligence, security and high-performance computing. nave

Read the full story on eWEEK.com: Microsoft Highlights 2007 Business Challenges, Opportunities

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.


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