Microsoft stock at 10-year low

Microsoft stock just hit a new 10-year low.

Analysts cut forecasts for Microsoft, citing "downward pressure on PC unit sales.".

[Mr_Potato_]

This could spell major trouble for microsoft, especially since it comes after multiple failures like Zune, the Yahoo bid, Vista failure, Xbox 1 failure, the RROD, the Xbox Live downtime failure, and the 360 failure to gain market share worldwide vs the PS3 (although it's doing ok in one country, the US).

I wouldn't be surprised if they try to cut their losses by giving up on gaming much sooner than expected. After all, they were outsold by the PS3 last year and this year too, and the 360 is basically dead or dying everywhere except in the US.

If MS doesn't intend to stop with gaming, why was there only one AAA exclusive this year (Gears 2) compared to so many on PS3 (MGS4, LBP, Resistance 2, Wipeout...). Why did they close studios like Ensemble too ? They need to cut their losses right now.

[P4KY B]

All stocks are low.

GM, Ford, Sony, every bank on the planet.

[YouNoob]

i hate when little kiddies are trying to talk business. Sony share is down to currently $20.92 from 57.09 in mid 2007. MS is down to 19.32 from 37.06 in 2007. take out a calculator and see which one is the bigger loss. according to #1 logic, that would mean sony has to close down business immediately. and many others too.

go play lbp (which btw isnt a AAA game by any standards).

[Mr_Potato_]

@Noob : your pseudo suits you perfectly. LBP is AAAA, otherwise Fable 2 is CC- . Go check metacritic, a website you like so much since it's full of MS fanboys like you.

I'm sorry if I hurt your feelings and your love for microsoft, still MSFT is at 10-year low, I can't do anything about it. It clearly reflects MS multiple failures and troubles.

I work in banking and financial services, so don't expect teaching me anything on the subject.

[OOG]

I work in the banking industry bahahhahaaha yeah....you must be one of those fools who brought down the banking industry then if you think that MS is in any worse of situation than any other company in the world right now.

[Anon1974]

Sony's down the same as any other stock, but since the stock is Japanese there is foreign exchange to factor in as well. The current weakness in the US dollar is responsible for almost 30% of the decline in Sony stock - just like every single other company that's valued based off the yen (check out Pioneer, for example). Sony and Microsoft when you take away the foreign exchange are down almost exactly the same - down about as much as the market as a whole.

"I hate when little kiddies are trying to talk business."
Indeed...

[Rigmaster]

Not really trouble for Microsoft.

But it is the end of the Xbox fiasco.

Right now Microsoft has a hiring/pay raise freeze and they are going to be doing massive cost cutting on the order of 500 million to a billion dollars across the company.

MSFT share prices have been flat to down for eight years now. The Xbox and other products outside of the core OS and office software was supposed to create huge new revenue streams for the company to get the stock moving upward after the company saturated their core monopoly market segments.

Over the past seven years the Xbox fiasco has cost the company over seven billion dollars for absolutely nothing of value. The 360 is selling at virtually the same poor rate worldwide as the first Xbox - 25.5 million over 3.5 years vs. 21 million over 3 years for the 360. And it did absolutely nothing to stop BluRay from becoming the next gen movie format.

Microsoft is spending tens of billions on stock buybacks to prop the stock price up and looking at tens of billions of dollar purchases of companies like Yahoo.

There is going to be no hurried follow up console to the 360. The 360 will be left to slowly die out in the market. Microsoft has been one by one shutting down their first party development houses over the past couple of years to now they only have about three.

The days of Microsoft being a company willing to throw unlimited amounts of cash at a product or market are over.

[akohut]

Lol @ Krakdol working in banking and finance other than putting his allowance in his piggy.

All stocks are down. ALL of 'em. Guess what? Sony is at record lows - do you predict them to get out of the gaming business as well?

[Blades08]

Microsoft buying back stock is normal for a company with lots of cash, they buy low then sell high to generate profits. Yes, companies buy and sell stock too to generate money just like you and I would. It also gives the company more control back when they own more shares of stock. MS stock is flat because MS is controling the stock, if you look at the the transactions you will see a good volume of purchase of MS both buying and selling keeping the stock stable. If you check SEC filings you will see the management MS of constantly buying and selling. I was suprised to see Bill Gates when he was at MS constantly doing this and making tens of millions of profit a pop which contributes to his personal net worth.

[ultimolu]

It won't be the end of Microsoft but it'll teach them a lesson about throwing money around like candy.

[The Lazy One]

M$ makes a profit off the "xbox fiasco" now.

[baum]

"go play lbp (which btw isnt a AAA game by any standards). "

You call everyone else kiddies and yet you use the "ITS AAA!!!" fanboy moniker.

That speaks volumes of your intelligence, hypocrite.

[Tarasque]

This site is truly awesome.

@krakdol thanks for the great laughs i really needed it today, nerve of some people.

[YouNoob]

yeah, why not...

@krackdoll: you just proved yourself to be the super NOOB. So metacritic decides what triple A is? LOL. sure. you work in financial and banking? LOL, haven't we just all seen how useless you folks are? i own a real business that makes real money, thanks. so a share losing over 60% is doing better than a share losing 40%? sure...

@darkride: another wanna be financial hero... we just sold $300k this morning due to the highest exchange for the dollar in many months. you said what? go away little kiddie.

@baum: and now to the last NOOB. you're not old enough yet to read properly? i replied to the banking noob about him mentioning AAA. Triple A ratings are not determined by review scores, LOL! I got my name in the credits of over 20 games, so please, do not talk about things you dont know.

Not expecting the 3 of you to understand what I'm saying, as you are all still too little. but why not try, it's all about paricipating, LOL!

[Deviant]

....just wait for fanboys spinning this story as if they know what it is all about.

[ultimolu]

They're already doing it.

B-B-But Sony stocks are down too!

Newsflash! All companies are in a bit of trouble right now! It's affecting everyone!

[Sharingan_no_Kakashi]

Didn't they just say they were recession proof?

[Death]

You don't know what stock is, do you? This isn't about the anount of Xbox 360's available at retail, it is about the value of the shares in the company.

-Death

[Sharingan_no_Kakashi]

I don't understand a word you're saying so I'll just leave it at that.

[Capt CHAOS]

Lol!

[ultimolu]

Yep.

[Blades08]

The "gaming industry" seems recession proof from a recent article posted at N4G. MS and Sony have other products such as software and movies that are not. So it's not the entire company that is recession proof. You guys realize the actual stock certificates are worth less then a penney. The price of a stock is basically what the initial IPO (company and broker) think they can get from them based on company performance and the market, then the rest is based on performance, supply and demand, and emotion. So say something bad happens (like war) then a lot of stocks go down for that reason alone or if a virus is found then a lot of software companies stocks go down even if a company is doing gangbusters.

[Death]

Check your 401k, ALL stocks are down. We are in a recession gang.

-Death

[OOG]

yeah...but you know most N4G members they specialize in everything..... lol wait till they start throwing fictional numbers around.........

[Anon1974]

Yes, all stocks are down - but not all stocks are being downgraded due to shrinking revenue. The story isn't that Microsoft stock is at 10 year lows, like many, many other stocks. The story is that this analysts is saying that Microsoft's revenue growth is now in questions. As yourself this question, after the bear market plays itself out and starts to recover, which companies will recover faster? Companies with strong revenue growth and good balance sheets that probably shouldn't have been trading that low in the first place or companies with deteriorating revenue streams due to pressures (like contracting PC sales, or poor sales of ones new operating system) that aren't necessarily related to the recession?

[ultimolu]

But when Sony stocks were down, 360 fans were having a fiesta!
Woo-hoo! Party time!

The recession is affecting every single company. There's no reason why a console war should have been dragged into this in the first place!

[sonyfanonly]

everything is down - the economy is crashing but mark my words the one company to pull out of this whole thing will be sony because M$ will abanden their gaming market before it costs them alot of money and nintendo has already abandend theirs - to be honest i dont know how the wii is still selling without any games i would pick a 360 over a wii but im happy with my ps3 - and another thing sony will stay with the ps3 for as long as it takes

[Capt CHAOS]

Sony is currently on a 14 year now (check stock prices..)
Either way, Stock markets are a funny thing to be taking too seriously at the moment.

[ultimolu]

ALL companies are going through it. 360 fanboys were all giddy when Sony stocks were down. This shows that you don't drag a console war into something as serious as this.

[Mr PS3]

Because That's at an All Time Low

AHAHAHAHAHAHAHAHA

[Citizen Cook]

Still losing £50 on ever PS3rd i hear...

[ultimolu]

And you're still a n00b and a child...so I heard.
Grow the hell up dear. This is a serious situation. Put aside the damn console war for once.

Yeah, slam the disagree button and run off like the n00b that you are.

[akohut]

Stocks are down!!!

Also the sky is blue and water is wet.

[LeonSKennedy4Life]

How dare you try to tell these gamers the truth!

They want to hear lies!

Gears of War 2 has the best multi-player, no matter how much of a LAGfest it is!
LittleBigPlanet sold poorly, which makes it a bad game!

COME ON! Tell them lies! This is what they want to hear! This is where power is derived! That is what we all seek here, correct? POWER!?

*smile*

[Raoh]

actually this might shed some light on the drastic price cut and promotion of late.

microsoft has to do something in 2009 and on. Tighten its belt. that means fewer buyouts of DLC. Less first party (will probably still publish but not produce in house as much, rare might get canned). if it maintains a large enough lead, it can cut back on promotion dollars as well.

one of microsoft's strength is reliability. it isnt innovation. its spending cash. so it may have to cut back on its spending. i dont think its in trouble just has to change its spending practices.

again i'll say it for those that dont know. many companies like, HP, Time Inc., microsoft etc are going to go Private. for the past 2 years have all been buying back their own stock to eventually not be public company anymore.

with a low stock. microsoft saves money by not spending all the money they allocated to buying back stock which i think was roughly 40million.

[Anon1974]

It pains me as a gamer but MS already has been openly discussing a cheaper console/digital distribution hub. It sounds to me like they're taking a cue from the Wii and not spending billions in cutting edge technology that they can't seem to recoup last gen or this gen, instead opting for cheaper hardware and digital distribution. It makes sense when you consider the Wii's success, the billions MS unexpectedly lost on the 360, the growing issue of piracy again and the lost revenue from the explosion of the used game trade. By switching to digital distribution, MS insures developers that their games won't be traded in and that they can keep on top of piracy by being always connected to their new consoles. And by not maxing out the tech they'll save a bundle and probably move more consoles with a lower price point - leaving Sony unchallenged in the hi-end gaming market and instead meeting Nintendo head on. I fear the days of gaming consoles pushing the technological envelope in people's homes may be drawing to a close.

[The Lazy One]

they're making a profit off of the xbox division! HOLY BALLS.

They take in around 750 million in revenue from XBL subscription fees on top of what they make off the marketplace, game sales, and they probably still break even or make a very little profit on average across their three systems.

Also, of course they're talking about the next xbox. It should be here in the next 2-3 years. When are they supposed to start developing it? after the announce it?

[Anon1974]

@ The Lazy One.
I know that MS Games division is making money now, but it doesn't look like it'll be enough. MS Games was in the hole 3 billion up to the point where there started eeking out a profit. Now they're making approx $400-500 a fiscal year (so it looks like they won't be removing XBL fees anything soon - it's the only thing keeping the games division afloat). You do the math. They'll need 6 years at this rate to break even from the losses associated with R&D and their hardware trouble. Given that the games division revenue is decreasing year over year, that they've taken a pay cut due to the price cut - there are rumors in the financial circles that Microsoft may not even participate in the next gen and instead focus on their strength - software. Personally, I think having invested this much into the Xbox brand they'll most likely do what they say they'll do, put out a less expensive, Wii-like digital distribution hub that handles games, tv, web and movies which was their dream back when they tried their hand at the WebTV box that failed so badly.

[The Lazy One]

did you get that number?

they're making a small profit or breaking close to even on the systems sold, they have the best sales hands down software wise, I think they still make close to the most money off their accessories, and they make a lot of money off XBL/marketplace. Where do you get them only making money off XBL?

They're still in the hole from before, but they're climbing out not continuing to fall. It would be flat out dumb of them to back out of the market when they start making a profit. That's just a horrible investment. You don't cut your losses when the investment starts to pay off.

[Anon1974]

Those figures are from Microsoft's fiscal updates, available on their investor relations site. They break down all the divisions, revenue, profit/loss - a blurb on what happened that fiscal quarter (or year) and the comparison to the last quarter (or year). They don't specifically give XBL numbers but you know that XBL revenue should be somewhere between 600 and 700 million based on Microsoft's claims at E3 on their Gold subscribers. Given the games division only makes 400-500 a year total, just subtract 600 million from that and you've got a games division back in the red.

I'm not saying MS is bailing out on this gen - you're right. They're finally making some money so why pull out now. I think the next gen is what's in doubt. Mind you, Microsoft might just cut their loses, like they did with WebTV, or Windows ME and move on. You never know. It's a different company from the Bill Gates days.

[The Lazy One]

you're mixing revenue and profit. While XBL makes around 700 million in revenue, it doesn't make 700 in profit, so it's unfair to subtract their total revenue from the profit of the division and expect that it's an accurate representation of the losses for a single different product.

There's also the fact that research and development for products we don't know about (future zunes, nextbox, advanced PDA/Notebooks etc.) sees no revenue, but massive RnD.

From their site:

"EDD operating income increased primarily due to decreased cost of revenue and sales and marketing expenses, partially offset by increased research and development expenses and decreased revenue. Cost of revenue decreased $251 million or 21%, primarily driven by decreased Xbox 360 manufacturing costs. Sales and marketing expenses decreased $27 million or 10%, reflecting a decrease in product advertising and bad debt expenses. Research and development expenses increased $145 million or 46%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform"

[ultimolu]

...And MS says they're recession proof.

Newsflash Microsoft, no company is recession proof when there's an economical crisis? You have two huge automobile companies asking for bailout money. Citigroup just cut thousands of jobs. Investors are biting their nails. People are losing homes and turning homeless.

They're full of it.

[v1c1ous]

otherwise you would have noted they were talking about the 360 gaming section in the other topic, not the entire company overall.

but keep on tugging that string. it makes you seem smarter. no really, it does.

[ultimolu]

Does it MATTER which sector it is?

This deals with Microsoft, as in M-I-C-R-O-S-O-F-T.

I'm pointing out that this is a situation that's affecting all companies. Microsoft just said they were recession proof. I'm sorry but no company is recession proof when the economy hits the crapper!

And I read the article thank you very much. I have an understanding of what's going on because things are rough right now.

Stop making excuses for this company.

[The Lazy One]

They said they expected the recession to not affect their xbox 360 business.

http://news.softpedia.com/n...

what does the headline say? does it say microsoft is recession proof? no.

it says:

"Mindy Mount, the vice president and Chief Financial Officer of Microsoft's Entertainment and Devices Division, has argued... that the Xbox 360 gaming console is a recession-proof product that might even benefit from the economic downturn that the world is experiencing."

I reed gudder then u?

edit: NPD data would argue differently. 360 sales were up 34% from september to october, and still better than october 2007.

edit2: I got what you were saying. That microsoft is not recession proof. They never claimed to be. They claimed one of their products was, and sales data backs up their claim, so deal with it.

[ultimolu]

...Lazy One, I read that article as well. Is the 360 NOT part of Microsoft? Does it matter whether I mention the 360 or not? Does anyone not get the point of what I'm saying? Or am I talking to a wall?

No product is recession proof. It doesn't matter which sector it is. People are not buying electronics these days. Consumer spending is at it's all-time low. People are focused on buying food to feed their families.

Is this not true or what? Microsoft should not assume a product is recession proof when things are this bad!

Don't get on as if I don't know what the hell I'm talking about. If this is affecting part of their company, chances are it'll affect other parts as well.

Edit: Yes, throw the NPD numbers at me. It shows that you missed my point yet again.

Congratulations.

[ultimolu]

Lazy One: I see the sales for myself. Impressive but can they keep it up?

[karlostomy]

Sony's stock is malingering at the lowest price it has been since 1988. YES 1988!

That's the lowest in twenty years!

http://finance.google.com/f...

Quick! Someone write a blog and post to n4g! /end sarcasm

[ultimolu]

...And you're full of it as well.
ALL COMPANIES ARE GOING THROUGH IT.

Citogroup are laying off thousands of people. Investors are worried. People are worried about their families and whether they're going to be able to put food on the table. And it goes on and on.

Who the bloody hell is getting excited again?

Any company going down under is a sign that we're heading for even worse times.

The disagrees show just how much of a baby 360 fanboys are doesn't it. They never think about real life issues. It's allllways about the console war.

Pathetic.

[HemDroid]

You Fat Trollop

[ultimolu]

Hemroid, and you can shove a big one up the you-know-where.

If you think your childish insult affects me.

Grow the hell up child.

[karlostomy]

....i didn't see you use those very same arguments in defence of Microsoft.

It's only when Sony is under fire that you, rather reliably, show up.
and spout your rehashed diatribe.

[ultimolu]

I said the same damn thing when Sony stocks were down you imbecile. I said that all companies are going through the same thing because of the economical crisis.

Clear the crust from your eyes and learn how to read.

Whenever there's a Microsoft issue, you ALWAYS turn it into a Sony issue. What exactly does this have to do with Sony?

You're a disgrace to gamers karl.

[karlostomy]

you didnt read what i said.

I saaaaaaiiid.... that you only SHOW UP when Sony's under fire.

you never extend that same courtesy to MS. Go on .. at least be honest with yourself!

I think maybe YOU are the disgrace to gamers... XD

[DJ]

Now's the time to upgrade.

[LeonSKennedy4Life]

I hate this economy!

Thanks a lot, Clinton! I don't care what you Bush haters say, this is Clinton's fault. It usually takes a 10 year cycle before a president's economic plans take effect. Even Obama claims this to be true...which was really funny, because he went on to blame Bush for the economic problems.

I'm really glad you've elected ignorance into our government. Of course, the literacy of most Obama voters is still in question.

[dkgshiz]

You do all know LBP was released oct 28. That gave it 3 days to sell. Plus it was only released in the states on oct 28. Its pretty obvious.

[Magic_The_Celt]

haha

[schoas1]

@1.3
no wonder our financial system is breaking down if guys like you work in banking and financial services

[kwyjibo]

All stocks are down right now, but I think Microsoft is a safe bet for 2009. You've still got a lot of volatility around right now, so it's impossible to predict in the short term, but Microsoft are sitting on a pile of cash and they have a fairly low P/E ratio for a tech company.

I share the same sentiment as YouNoob above, in that "I hate it when kiddies talk business", it's especially true in the gaming press, as even publications like Kotaku know nothing about the market.

You have idiots like Krakdol above suggesting that Microsoft get out of gaming just as it's becoming profitable. With investments in in-game advertising, and the recently relaunched Games For Windows Live shows that Microsoft see big potential growth in gaming. And gaming really has little bearing on Microsoft as a whole.

I suggest that it's a good time to go long because I think Windows 7 will be a success. It will be what Vista should have been, and Microsoft will finally be able to force OEMs from supplying XP. Their Office sales may suffer in a recession, with firms still happy with Office 2000, but I think that it won't be a big negative.

There's a big question mark over what they're doing online, and it's one I can't answer. Like Einhorn, I think their strategy of blindly copying Google has been an ongoing failure, but with Yang out, they can easily borg Yahoo at a knockdown price.

So yeah, there are questions, and it all depends on confidence, but I'm confident that Windows 7 will deliver.

[Blades08]

I agree with you! Just a heads up Windows 7 is the Vista just renamed and upgraded.

Win NT 4.0 = v4
Win 2000 = v5
Win XP = v6
Win Vista =V7 = Windows 7

[Anon1974]

kwyjibo said "Good time to go long."
Indeed, but not on Microsoft. True, MS is looking attractive in light of the current P/E ratio in relation to other tech stocks but with slowing PC sales impacting their revenue and future PC growth in doubt due to the slow down, now is not the time. Windows 7 may spike revenue again but not for some time and things will be slowing down from last when Vista was launched. And buying Yahoo might work for them in the long run but in the short term this would put tremendous pressure on Microsoft financially and significantly cut into their cash flow. While most analysts aren't recommending a sell on MS stock at the moment, they certainly aren't pounding the table to buy it. There's better deals to be had.

[Bebedora]

http://www.youtube.com/watc...

Speaks for it self

[paul-p1988]

does this mean M$ are gonna go bankrupt??? *rubs hands together eviley* haha