Sound and Fury, Signifying Nothing...

Well that was harsh. This morning we wake up to Microsoft falling 10% on the stock market having failed to meet their guidance for Q4. Revenue plunged 17% and profit was down 29%. Seems like a bad hangover from a very bad night.

Losers
Well the big losers last night, apart from Mr Ballmer, were Kevin Turner and Rob Enderle. Firstly, we will look at Rob's latest missive. Yesterday before the earnings release he was quoted on CNBC saying the following:

“I’m expecting some really good news in terms of outlook for [Microsoft],” Enderle told CNBC. “They just released their Windows 7 to manufacturing—which means they are on track to release it by the fourth quarter—and R2, their second generation of their current generation of servers come out and that’s typically a big revenue generator for the firm.”

Enderle said Microsoft has been executing well in the last several months. “They brought out a solid advertising campaign,” he said. “Microsoft has always been under-marketing and now they’re marketing well.”

It is a shame for him to be quoted so widely and yet within a few short hours to be seen to have been so badly wrong.

A Tale told by an Idiot
This leads me to my second loser. The last point highlighted by Rob, marketing, is where Kevin Turner's problems lie. Last week we had Kevin Turner crowing about the Laptop Hunter ads:

"And you know why I know they're working? Because two weeks ago we got a call from the Apple legal department saying, hey -- this is a true story -- saying, "Hey, you need to stop running those ads, we lowered our prices." They took like $100 off or something. It was the greatest single phone call in the history that I've ever taken in business. (Applause.) I did cartwheels down the hallway. At first I said, "Is this a joke? Who are you?" Not understanding what an opportunity. And so we're just going to keep running them and running them and running them."

Well Apple's sales figures released for the duration of the Laptop Hunter ads belie the fact that they "are working". Apple laptop sales went up during the period. Yes, I know that Apple revved the machines and dropped the prices BUT last month everyone at Microsoft was celebrating how dreadfully Apple did in May. Apple fixed that and had a blow-out June. It is ironic that Microsoft have managed to instill into the American psyche that the Apple is the machine with value.

But the main issue that Kevin was crowing about - he was contacted by Apple's Legal department to tell them to change the ads so that they don't feature outdated prices seems to have had someone actually do something. Microsoft have ordered YouTube to take down the original ads and are now running re-edited versions of them with no mention of the price as scripted in the original ads.

So for all his bluster last week Kevin seems to have had to heed to Apple's request. it was all sound and fury, signifying nothing.